Harvest Natural Drops After ‘Going Concern’ Warning
Harvest Natural Resources Inc. (HNR), the Houston-based energy company with production in Venezuela, fell the most ever after reporting a 2012 loss and disclosing a “going concern qualification” by auditors because of its liquidity.
Harvest declined 33 percent to $3.69 at 10:16 a.m. in New York. Earlier the shares fell 47 percent, the biggest intraday drop since the company began trading publicly in 1989, according to data compiled by Bloomberg. It has fallen 60 percent this year.
The oil and natural gas company has identified “material weakness” in accounting that will require revision and possible restatement of results for 2010, 2011, and 2012, Harvest said today in a filing. Harvest, which also has operations in Oman, Gabon, Indonesia and China, will delay filing its 2012 annual report.
Harvest announced Feb. 20 the termination of the planned $725 million sale of its stake in Venezuelan oil explorer Petrodelta SA to Indonesia’s state-owned PT Pertamina after Indonesia’s government rejected the deal. Harvest has a 32 percent equity stake in Petrodelta and Petroleos de Venezuela SA owns 60 percent.
“All of this is a surprise,” Jason Wangler, a Houston- based analyst for Wunderlich Securities Inc., said today in a telephone interview. “Since the time the Venezuelan deal fell through, they’ve not said much anything about anything. I’m not saying the market is overreacting, because we don’t know that.”
Wangler doesn’t own Harvest stock and said his hold rating has been under review since the Venezuelan deal failed.
Harvest Chief Financial Officer Stephen Haynes wouldn’t comment on the filing when reached by telephone today.
For 2012, Harvest had a loss of $9.6 million, or 26 cents a share, compared with net income of $51.8 million, or $1.32, a year earlier. Harvest was expected to report profit of $22 million, the average of two analysts’ estimates compiled by Bloomberg.
Harvest found an error in cash flow items and determined that certain assets have been impaired, it said in today’s filing. The management also concluded there were errors in certain leases and internal costs.
The company said its auditors’ opinion of 2012 results will include a going concern qualification. The company had $20.4 million in cash and near-cash items as of the end of September.
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