Harvest Natural Resources Announces Fourth Quarter and 2006 Results
* Mixed Company Conversion Continues to Affect Venezuela Financial
Reporting
* Shareholders Approve Conversion
* 2006 Operating Advances Reimbursed by PDVSA
HOUSTON, March 13 /PRNewswire-FirstCall/ -- Harvest Natural Resources,
Inc. (NYSE: HNR) today announced a 2006 fourth quarter loss of $8.6
million, or $0.23 per diluted share, compared with net income of $10.5
million, or $0.27 per diluted share, for the 2005 fourth quarter.
Like the second and third quarters, the Company did not recognize the
equity earnings for its producing operations in Venezuela for the fourth
quarter. The equity earnings for the three quarters starting April 1, 2006
will be reported upon completion of the conversion to the mixed company
(Petrodelta).
The Company had a loss of $58.6 million, or $1.57 per diluted share,
for the twelve months ended December 31, 2006 compared with earnings of
$50.8 million, or $1.32 per diluted share, for 2005. The loss for 2006 is
due to the inability to recognize equity earnings for the producing
operations in Venezuela beginning with the second quarter and charges of
$73.8 million, or $59.0 million net to the Company's 80 percent interest,
for additional taxes and related interest in Venezuela for 2001 through
2006.
Harvest Vinccler, S.C.A. (HVSCA), the Company's 80 percent owned
affiliate, has resolved and substantially paid all of the tax claims made
by the SENIAT, the Venezuelan income tax authority. The additional taxes
were primarily due to the SENIAT's retroactive tax rate increase for 2001
through 2004. Resolution of the tax claims was a necessary step in the
transition of HVSCA's operations to Petrodelta.
Harvest President and Chief Executive Officer, James A. Edmiston, said,
"During the fourth quarter, we received approval from our shareholders to
execute the conversion contract, cancel our operating services agreement
and transfer all of our tangible assets, contracts and rights related to
the South Monagas Unit (SMU) fields in Venezuela to Petrodelta after
receiving government approvals. In addition, Petrodelta would operate the
Isleno, Temblador and El Salto fields upon their award by the Venezuelan
government. The conversion contract is expected to be signed and Petrodelta
is expected to be formed after receipt of Venezuelan government approvals.
The Company will own a 32 percent net interest in Petrodelta."
Edmiston continued, "Although we made progress towards the completion
of the conversion during 2006, the complexity of the issues involved has
increased the amount of time we and the Venezuelan government believed
would be needed to complete the process. However, a number of other
companies have now signed their conversion contracts and formed their mixed
companies. Moreover, we understand three companies have completed the
entire conversion process and are now ready to invoice PDVSA for the oil
and gas delivered since April 1, 2006. With the precedents established and
issues resolved by the companies more advanced in the conversion process,
we expect to be able to expedite the conversion process and issuance of
invoices for payment once we receive the government approvals."
HVSCA continues to operate the SMU fields in Venezuela and advanced
$36.3 million to fund operations for the last three quarters of 2006 of
which $21.2 million, representing the second and third quarter advances,
have been reimbursed by Petroleos de Venezuela, S.A. (PDVSA). The fourth
quarter advances of $15.1 million were invoiced to PDVSA in February 2007.
A Memorandum of Understanding between Company affiliates and Corporacion
Venezolana del Petroleo S.A. and PDVSA Petroleo S.A. provides that upon
conversion to Petrodelta, there will be an economic adjustment as if the
conversion had been completed on April 1, 2006.
For the nine months ended December 31, 2006, operating statistics (on a
100% basis) for the SMU fields operated by HVSCA are as follows:
* Production of 5.2 million barrels of oil and 11.5 billion cubic feet
(Bcf) of natural gas. Average daily production for the last three
quarters was 25,900 barrels of oil equivalent. Oil production for the
fourth quarter was 1.6 million barrels and 3.6 Bcf, or average daily
production of 23,900 barrels of oil equivalent.
* Crude oil prices that would be paid for the oil production if the
conversion contract were in place cannot be calculated as two elements
of the pricing formula have not been set. Market prices for crude oil
of the type produced in SMU averaged approximately $47 per barrel for
the nine months ended December 31, 2006 and $41 per barrel for the
three months ended December 31, 2006. The price for natural gas that
would be paid under the conversion contract is $1.54 per thousand
cubic feet.
* Taxes and royalties for Petrodelta will be 50 percent and 33 percent,
respectively.
Harvest will hold an earnings conference call today at 10:00 a.m.
Central Time to discuss 2006 fourth quarter results. To access the call,
dial 785-832-0301, conference ID: Harvest, five to ten minutes prior to the
start time. A recording of the conference call will also be available for
replay at 402-220-2650. To listen to the live webcast of the call, please
visit our website at http://www.harvestnr.com .
Harvest Natural Resources, Inc. headquartered in Houston, Texas, is an
independent energy company with principal operations in Venezuela and
business development offices in Russia and the United Kingdom. For more
information visit the Company's website at http://www.harvestnr.com .
CONTACT:
Steven W. Tholen
Senior Vice President, Chief Financial Officer
(281) 899-5714
Amanda M. Koenig
Investor Relations
(281) 899-5716
"This press release may contain projections and other forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. They include
estimates and timing of expected oil and gas production, oil and gas
reserve projections of future oil pricing, future expenses, planned capital
expenditures, anticipated cash flow and our business strategy. All
statements other than statements of historical facts may constitute
forward-looking statements. Although Harvest believes that the expectations
reflected in such forward- looking statements are reasonable, it can give
no assurance that such expectations will prove to have been correct. Actual
results may differ materially from Harvest's expectations as a result of
factors discussed in Harvest's 2006 Annual Report on Form 10-K and other
public filings."
"Cautionary note to investors -- The United States Securities and
Exchange Commission (SEC) permits oil and gas companies, in their filings
with the SEC, to disclose only proved reserves that a company has
demonstrated by actual production or conclusive formation tests to be
economically and legally producible under existing economic and operating
conditions. From time to time, we use certain terms such as resource
potential, risked potential, probable reserves, possible reserves,
non-proved reserves or other descriptions of volumes of reserves that SEC
guidelines strictly prohibit us from including in filings with the SEC.
These estimates are by their nature more speculative than estimates of
proved reserves and accordingly, are subject to substantially greater risk
of being actually realized by the Company. Investors are urged to consider
closely the disclosure in our 2006 Annual Report on Form 10-K and other
public filings."
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
($ thousands, unaudited)
December 31, December 31,
2006 2005
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $148,079 $163,019
Restricted cash 15,888 ---
Accounts receivable, net 9,811 71,650
Advances to provisional equity affiliate 19,146 ---
Deferred income taxes 5,608 3,052
Prepaid expenses and other 1,246 2,149
Total current assets 199,778 239,870
RESTRICTED CASH 73,001 ---
OTHER ASSETS 176 1,600
INVESTMENT IN PROVISIONAL EQUITY AFFILIATE 146,436 ---
PROPERTY AND EQUIPMENT, net 3,320 159,328
TOTAL ASSETS $422,711 $400,798
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable, trade and other $3,827 $408
Accounts payable, related party 9,637 9,203
Accrued expenses 12,975 18,444
Accrued interest 6,850 2,637
Deferred revenue 11,217 6,728
Income taxes payable 34 18,909
Current portion of long-term debt 37,674 5,467
Total current liabilities 82,214 61,796
LONG TERM DEBT 66,977 ---
COMMITMENTS AND CONTINGENCIES --- ---
ASSET RETIREMENT LIABILITY --- 2,129
MINORITY INTEREST 28,634 39,361
STOCKHOLDERS' EQUITY:
Common stock and paid-in capital 194,556 188,620
Retained earnings 54,174 112,736
Accumulated other comprehensive loss --- ---
Treasury stock (3,844) (3,844)
Total stockholders' equity 244,886 297,512
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $422,711 $400,798
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)
THREE MONTHS ENDED: December 31, 2006 December 31, 2005
Barrels of oil sold 2,035
MMCF of gas sold 5,566
Total BOE 2,963
Average price/barrel $25.83
Average price/mcf $1.03
$/BOE $/BOE
REVENUES:
Oil sales $52,559
Gas sales 5,733
58,292 19.67
EXPENSES:
Operating expenses 12,839 4.33
Depletion and amortization 11,088 3.74
Depreciation 72 778 0.26
General and administrative 6,260 5,234 1.77
Contribution for Science and
Technology Fund 3,887 --- ---
Taxes other than on income 195 1,726 0.58
10,414 31,665 10.68
INCOME (LOSS) FROM OPERATIONS (10,414) 26,627 8.99
OTHER NON-OPERATING INCOME (EXPENSE)
Investment earnings and other 2,590 2,223 0.75
Interest expense (2,232) (155) (0.05)
Net loss on exchange rates (100) (3) ---
258 2,065 0.70
INCOME (LOSS) BEFORE INCOME TAXES AND
MINORITY INTERESTS (10,156) 28,692 9.69
Income tax expense 7 15,201 5.13
INCOME (LOSS) BEFORE MINORITY
INTERESTS (10,163) 13,491 4.56
Minority interest in consolidated
subsidiary companies (1,613) 2,981 1.01
NET INCOME (LOSS) ($8,550) $10,510 $3.55
NET INCOME (LOSS) PER COMMON SHARE:
Basic ($0.23) $0.28
Diluted ($0.23) $0.27
Weighted average shares outstanding:
Basic 37.3 million 37.1 million
Diluted 37.3 million 38.4 million
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)
YEAR ENDED: December 31, 2006 December 31, 2005
Barrels of oil sold 1,894 8,763
MMCF of gas sold 4,506 25,677
Total BOE 2,645 13,042
Average price/barrel $28.96 $24.02
Average price/mcf $1.03 $1.03
$/BOE $/BOE
REVENUES:
Oil sales $54,858 $210,493
Gas sales 4,648 26,448
59,506 236,941 18.17
EXPENSES:
Operating expenses 9,241 39,723 3.05
Depletion and amortization 9,904 41,237 3.16
Depreciation 606 2,731 0.21
General and administrative 26,421 22,819 1.75
Contribution for Science and
Technology Fund 3,887 --- ---
Account receivable write-off on
retroactive oil price adjustment --- 4,548 0.35
Taxes other than on income 3,948 6,358 0.49
54,007 117,416 9.01
INCOME FROM OPERATIONS 5,499 119,525 9.16
OTHER NON-OPERATING INCOME (EXPENSE)
Investment earnings and other 9,406 4,205 0.32
Interest expense (23,156) (3,388) (0.26)
Net gain (loss) on exchange rates (121) 2,752 0.21
(13,871) 3,569 0.27
INCOME (LOSS) BEFORE INCOME TAXES AND
MINORITY INTERESTS (8,372) 123,094 9.43
Income tax expense 60,917 57,025 4.37
INCOME (LOSS) BEFORE MINORITY INTERESTS (69,289) 66,069 5.06
Minority interest in consolidated
subsidiary companies (10,727) 15,230 1.17
NET INCOME (LOSS) ($58,562) $50,839 $3.89
NET INCOME (LOSS) PER COMMON SHARE:
Basic ($1.57) $1.38
Diluted ($1.57) $1.32
Weighted average shares outstanding:
Basic 37.2 million 36.9 million
Diluted 37.2 million 38.4 million
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Three Months Ended Year Ended
December 31, December 31,
2006 2005 2006 2005
Cash Flows From Operating Activities:
Net income (loss) ($8,550) $10,510 ($58,562) $50,839
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depletion, depreciation
and amortization 72 11,866 10,510 43,968
Account receivable write-off
on retroactive oil price
adjustment --- --- --- 4,548
Deferred compensation expense --- (210) --- (745)
Non-cash compensation
related charges 1,240 (303) 5,056 2,230
Minority interest in consolidated
subsidiary companies (1,613) 2,982 (10,727) 15,230
Deferred income taxes 2,982 (2,556) 2,982
Changes in operating assets
and liabilities:
Accounts and notes receivable 3,622 3,760 61,839 (4,481)
Advances to provisional
equity affiliate (1,912) --- (19,146) ---
Prepaid expenses and other (393) (1,126) 903 (723)
Commodity hedging contract --- 3,767 --- 14,947
Accounts payable 385 (7,771) 3,419 (8,020)
Accounts payable, related party 116 92 434 (1,860)
Accrued expenses 5,464 (122) (5,469) (10,165)
Accrued interest (16,384) 44 4,213 2,565
Deferred revenue --- 6,728 4,489 6,728
Provision for asset
retirement liability --- 113 24 188
Income taxes payable (22,203) 2,781 (18,875) (3,566)
Net Cash Provided By (Used In)
Operating Activities (40,156) 36,093 (24,448) 114,665
Cash Flows From Investing
Activities:
Additions of property
and equipment (103) (380) (1,657) (16,147)
Investment in provisional
equity affiliate (437) --- (513) ---
Decrease (increase) in
restricted cash (43,329) 16 (88,889) 28
Investment costs (30) 579 503 472
Net Cash Provided By (Used In)
Investing Activities (43,899) 215 (90,556) (15,647)
Cash Flows From Financing
Activities:
Net proceeds from issuances of
common stock 6 6 880 767
Proceeds from issuance of
notes payable 65,116 --- 118,953 ---
Payments on long-term debt (14,302) (300) (19,769) (6,366)
Dividends paid to minority
interest --- (15,000) --- (15,000)
Net Cash Provided By (Used In)
Financing Activities 50,820 (15,294) 100,064 (20,599)
Net Increase (Decrease)
in Cash (33,235) 21,014 (14,940) 78,419
Cash and Cash Equivalents at
Beginning of Period 181,314 142,005 163,019 84,600
Cash and Cash Equivalents at
End of Period $148,079 $163,019 $148,079 $163,019
 |
.gif){kind=spacer}
