Harvest Natural Resources affiliate, Harvest Vinccler, signed a Memorandum of Understanding (MoU) with Corporacion Venezolana del Petroleo S.A. (CVP) for the addition of three fields to Empresa Mixta Petrodelta, S.A. The three fields are Isleno, Temblador and El Salto.
The MoU amends the Memorandum of Understanding signed by HVCA and CVP on March 31 2006 to form a mixed company, since designated as Empresa Mixta Petrodelta, S.A. (Petrodelta). Petrodelta will be a joint venture mixed company in which a Harvest Natural Resources affiliate will own 40% of the shares (32% net to Harvest Natural Resources) and CVP will own the remaining 60%. In addition to the Isleno, Temblador and El Salto fields, Petrodelta will operate and develop the three South Monagas Unit (SMU) fields to be contributed to Petrodelta by HVCA. All of the fields will be developed under a 20-year grant from the Venezuelan government.
Harvest President and Chief Executive Officer, James A. Edmiston, said, ‘The addition of the Isleno, Temblador and El Salto fields combined with the SMU fields will give Petrodelta a portfolio of both cash flow and growth assets. The fields provide Petrodelta with significant oil development opportunities upon which to apply the same technologies which have resulted in substantially improved recovery from SMU, but on a much broader scale.’
Upon formation of Petrodelta, proved reserves as of April 1st for the mixed company will be 211 MMBOE, or 45 MMBOE net to Harvest. The discovered unrisked resource potential of the fields is approx. 705 MMBOE, or 150 MMBOE net to Harvest. The proved reserves net to Harvest and the unrisked resource potential have been evaluated by the independent engineering firm of Ryder Scott Company L.P.
Edmiston added, ‘The plan being jointly developed by HVCA and CVP projects rapid growth for the Petrodelta fields during the next five years with production from proved reserves increasing at a compound annual growth rate in excess of 20% to approx. 75,000 BOE per day by 2011, or 16,000 BOE per day net to Harvest. Further, the target production rate from the unrisked resource potential is in excess of 130,000 BOE per day, or 27,000 per day net to Harvest. The development costs of the net undeveloped resources in these fields are projected to be very competitive in the $3.50 per BOE range. We expect Petrodelta to both fund the development programme and pay dividends to its shareholders with its internally generated cash flow.’
The Isleno, Temblador and El Salto fields are located in the same geographic area as SMU and have the same geology and productive formations as the three SMU fields developed and operated by HVCA since 1992. Like SMU prior to Harvest's entry in 1992, there has been minimal development activity in the three newly awarded fields during the last 20 years.
More in-depth information regarding the development and cash flow potential of the Petrodelta fields is available at www.harvestnr.com.