Harvest Natural Resources, Inc. announces 2009 first quarter earnings and provides an operational update.
Harvest reported a 2009 first quarter loss of $4.8 million, or $0.15 per share, compared with earnings of $1.2 million, or $0.03 per share, for the same period last year. The first quarter results include exploration charges of $1.0 million. Petrodelta reported first quarter earnings of $17.0 million, $5.4 million net to Harvest's 32 percent interest, under International Financial Reporting Standards (IFRS). After adjustments to Petrodelta's IFRS earnings, primarily to conform to U.S. GAAP, Harvest's 32 percent share of Petrodelta's earnings was $4.2 million.
Highlights to date for 2009 include:
- Increased oil production from Petrodelta's self-funded drilling program to an average of 19,200 barrels of oil per day (BOPD), a 44 percent increase over the first quarter of 2008 and a 13 percent increase over the fourth quarter of 2008. Petrodelta's current rate of oil production is approximately 24,000 BOPD;
- Petrodelta commenced an appraisal drilling program in the El Salto Field;
- Signed an Exploration and Production Sharing Agreement with Oman for the Al Ghubar/Qarn Alam license block in April 2009;
- Leased additional acreage in the Antelope prospect, bringing leased acreage to 52,000 gross acres (26,000 Harvest net) at the end of the first quarter. Also, continued preparations for a deep natural gas test well expected to spud late in the second quarter of 2009.
Harvest President and Chief Executive Officer, James A. Edmiston, said:
"Petrodelta has increased oil production through development drilling from 12,200 BOPD in April 2008 to a current rate in excess of 24,000 BOPD. Until now, the drilling has been focused on the Uracoa and Temblador Fields. This month, Petrodelta began appraisal drilling with the first of two wells in the El Salto Field which has discovered oil in place of 3.6 billion barrels. Petrodelta will also drill an appraisal well in the Isleno Field later this year. We believe these fields offer significant growth potential to Petrodelta, as the company continues to pursue growth in both production and reserves."
Edmiston continued, "In the first quarter, we also made significant progress in our previously announced exploration programs and we remain on track to test the Antelope block in Utah and the Budong Budong block in Indonesia this year. In April, we celebrated the signing of the Al Ghubar/Qarn Alam Block in Oman. We now have an exploration portfolio with the potential to redefine Harvest's future."
EXPLORATION AND PRODUCTION PROGRAMS
Venezuela
Petrodelta delivered 1.7 million barrels of oil or an average of 19,200 BOPD, and 1.4 billion cubic feet of natural gas (BCF) to PDVSA Petroleo, S.A. for the three months ending March 31, 2009, as compared to 1.2 million barrels of oil or an average of 13,300 BOPD, and 3.2 BCF of natural gas to PDVSA Petroleo, S.A. for the same period in 2008.
Sequentially, Petrodelta oil production increased 13 percent over the 2008 fourth quarter average of 17,000 BOPD.
During the first quarter of 2009, the world market price for the quality of oil produced by Petrodelta averaged approximately $40.60 per barrel, or 94 percent of the price for West Texas Intermediate. The natural gas price received by Petrodelta is contractually fixed at $1.54 per thousand cubic feet.
Petrodelta Development Activities
Petrodelta drilled and completed six commercially successful oil wells in the first quarter of 2009, with an average initial production rate per well of 1,500 BOPD. Two additional wells were successfully completed and began production on April 9, 2009 and April 24, 2009, respectively. The drilling program and field improvement activities resulted in average production rates of 19,200 BOPD during the first quarter and 22,800 BOPD on March 31, 2009.
In regards to production from the Temblador Field, oil production has increased from 1,200 barrels of oil per day to a current rate of 9,400 barrels of oil per day since Petrodelta started drilling in the field late 2008. During this period five successful wells have been completed. The number of days to drill these wells has been reduced from 21 days to between 12 and 15 days.
United States
Western United States - Antelope
Operational activities in the Antelope prospect primarily focused on leasing activities, concentrating primarily on Allottee leases administered by the Bureau of Indian Affairs. Other operational activities included surveying, preliminary engineering, and permitting preparations for a deep natural gas test well that is expected to spud late in the second quarter of 2009. During the three months ended March 31, 2009, Harvest spent $8.3 million for lease acquisition, seismic program planning, surveying, permitting and site preparation. The dry hole costs of drilling the test well are projected to be $10.0 million. As of the end of the first quarter, Harvest had leased 52,000 gross acres (26,000 Harvest net).
Indonesia - Budong-Budong
Harvest completed the acquisition of 650 kilometers of 2-D seismic data in 2008 and currently, the data is being processed and interpreted. Planning is underway for exploratory drilling to commence in the second half of this year. In accordance with the farm-in agreement, Harvest expects to fund 100 percent of the well costs to a maximum of $10.7 million to earn a 47 percent working interest. Thereafter, the company will incur costs in proportion to its working interest. During the three months ended March 31, 2009, the company incurred $0.6 million for seismic processing and interpretation. Expected 2009 project expenditures (net to Harvest, including the company's funding commitment) for drilling the first exploratory well are $8.1 million.
Oman - Qarn Alam
On April 11, 2009, Harvest signed an Exploration and Production Sharing Agreement ("EPSA") with Oman for the Al Ghubar/Qarn Alam license block. The company will have a 100 percent working interest in the EPSA during the exploration phase. Oman Oil Company will have the option to back-in up to a 20 percent interest in the block after the discovery of commercial quantities of natural gas.
The Al Ghubar/Qarn Alam license is a newly-created block designated for exploration and production of non-associated natural gas and condensate which the Oman Ministry of Oil and Gas has carved out of the Block 6 Concession operated by Petroleum Development of Oman ("PDO"). PDO will continue to produce oil from several fields within the block area. The 3,867 square kilometer (955,600 total acres) block is located in the natural gas and condensate rich Ghaba Salt Basin in close proximity to the multi-TCF Barik, Saih Rawl and Saih fields. Harvest expects to invest $4.8 million in 2009 for signature bonus, processing and interpretation of existing 3-D seismic data and drilling preparations. Harvest has an obligation to drill two wells over a three-year period.