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HOUSTON, Nov 05, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- Harvest Natural Resources, Inc. (NYSE: HNR) today announced 2009 third quarter earnings and provided an operational update.
Harvest reported 2009 third quarter earnings of $0.8 million, or $0.02 per share, compared with a loss of $5.2 million, or $0.16 per share, for the same period last year. The third quarter results include exploration charges of $0.9 million, or $0.03 per share. Petrodelta, S.A. (Petrodelta), Harvest's Venezuelan affiliate, reported third quarter earnings of $42.8 million, $13.7 million net to Harvest's 32 percent equity 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 $8.4 million.
HIGHLIGHTS
-- For the quarter, oil production from Petrodelta averaged 21,069 barrels
of oil per day (BOPD), a 29 percent increase over the third quarter of
2008 and a 4 percent decrease from the second quarter of 2009. Cash
from Operations at Petrodelta for the third quarter was $33.7 million.
Petrodelta's current production is approximately 25,000 BOPD;
-- The El Salto 31 appraisal well was placed on production through
temporary facilities on July 18th. The well is currently producing
2,500 BOPD and has produced 243,000 barrels of oil cumulatively through
the end of October.
-- Harvest released the results of its latest reserve report performed by
Ryder Scott, effective as of August 31, 2009. According to the report:
-- Petrodelta's proved reserves volumes net to Harvest increased
approximately 10 percent to 47.6 MMBOE at August 31, 2009 from 43.3
MMBOE at December 31, 2008. Proved oil reserves increased 12 percent
and proved gas reserves increased by 3 percent.
-- Petrodelta's combined proved, probable and possible reserves net to
Harvest increased by approximately 59 percent to 211.1 MMBOE at
August 31, 2009 from 132.4 MMBOE at December 31, 2008. By category
and net to Harvest, proved, probable and possible reserves increased
by approximately 10 percent, 35 percent and 104 percent,
respectively.
-- Drilling on the Bar F # 1-20-3-2 (Bar F) in Utah was completed at a
total depth of 17,566 feet on October 8, 2009. The well has been logged
and production liner was run and cemented in the well. Production
testing of the deeper Mesaverde gas potential is expected to commence in
November 2009. After the Mesaverde testing is completed, additional
testing of uphole Green River-Wasatch oil potential is planned with the
expectation that the entire testing program will be completed in early
2010.
Harvest President and Chief Executive Officer, James A. Edmiston, said: "In spite of roughly flat production, quarter on quarter, from Petrodelta, the third quarter provided some important milestones for Harvest. The drilling of the two appraisal wells at El Salto and the resulting increases in oil reserves for Petrodelta set the stage for what we believe will be a much larger development, especially in the El Salto field, in the years to come. The large increase in the unproved reserve categories on the basis of this early appraisal work is very encouraging."
Edmiston continued, "Our team continues to build and mature our global portfolio of exploration prospects. We are now moving into the production testing phase in our Antelope Project in Utah where we expect to test both the deep gas potential from the Mesaverde formation as well as the oil and gas potential in the Green River -Wasatch formations. The well results so far have provided no major surprises versus our pre-drill expectations; however, substantial completion testing and further appraisal will be required in order to determine commerciality. In Indonesia, our partner is proceeding with preparations to spud two wells on our Budong-Budong block towards year-end. Further, we intend to wrap up the technical work on our Dussafu Block in Gabon in the fourth quarter and, with our partner, reach a decision on 2010 drilling. In total, the next six to nine months will provide Harvest and its shareholders with the opportunity for substantial growth through our exploration program."
EXPLORATION AND PRODUCTION PROGRAMS
Venezuela
Petrodelta delivered 1.94 million barrels of oil or an average of 21,069 BOPD, and 0.9 billion cubic feet of natural gas (BCF) to PDVSA Petroleo, S.A. (PDVSA) for the three months ending September 30, 2009, as compared to 1.5 million barrels of oil or an average of 16,272 BOPD, and 2.8 BCF of natural gas for the same period in 2008. Petrodelta's third quarter oil production increased 29 percent over the same quarter for 2008, but decreased 4 percent compared to the second quarter of 2009 production average of 22,057 BOPD. Production decreased during the third quarter due to appraisal drilling activities, temporary reduction to one drilling rig and the lack of a workover rig to replace several submersible pumps which failed during the quarter and normal field declines. Nevertheless, oil production resumed its increase with the start of two new wells in September, reaching 25,000 BOPD by the end of the quarter.
During the third quarter of 2009, the world market price for the quality of oil produced by Petrodelta averaged approximately $63.33 per barrel, or 92 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 And Other Activities
On October 21, 2009, Harvest announced an increase in reserves attributed to Petrodelta, Harvest's 32-percent owned Venezuelan affiliate. Proved reserves net to Harvest increased to 47.6 million barrels of oil equivalent (MMBOE) at August 31, 2009, as compared to 43.3 MMBOE at year-end 2008. Proved, probable and possible reserves net to Harvest increased 59 percent to 211.1 MMBOE. The increase in reserves was driven primarily by the drilling of two appraisal wells in the largely undeveloped El Salto field, which encountered significantly higher oil sand quantities than previous estimates. With modern well logs on these two wells, it has been possible to recalibrate the 14 older wells in the field and substantiate the increase in net pay in the entire field. The reserves estimate was prepared by the independent petroleum consulting firm of Ryder Scott Company, L.P. (Ryder Scott) for Harvest. The interim reserve report was commissioned to re-assess the growth potential of the El Salto field and to provide input into Petrodelta's capital budget process for the rest of 2009 and into 2010. Harvest estimates there may be approximately 980 drilling locations in El Salto alone, providing many years of growth potential.
As used in this press release, references to oil and gas reserves that are "net to Harvest" refer to Harvest's net 32 percent indirect equity interest in Petrodelta, after royalties and do not refer to any working interest or other ownership interest held directly by Harvest.
Petrodelta has been operating one drilling rig since May and has continued its self funded drilling campaign to drill and complete two wells in the Temblador field in the third quarter, and completed a third well which began production in early October. Average initial production rate per well completed in the quarter was 2,400 BOPD. Since Petrodelta started development drilling in the Temblador field in late 2008, oil production has increased from 1,200 BOPD to an average rate of 9,600 BOPD during the second half of September 2009. Twelve successful wells have been completed through the third quarter with another well completed in early October. Petrodelta is currently drilling the fourteenth well, and plans to drill three more wells by the end of 2009. Petrodelta's management is reviewing options to hire an additional drilling rig and a workover rig for early 2010.
During 2009 PDVSA has failed to pay on a timely basis certain amounts owed to Petrodelta and contractors. This situation has had an adverse effect on Petrodelta's business, by hindering its ability to hire and retain contractors providing services in operations and capital projects. Recently, PDVSA has made progress in paying overdue amounts owed to contractors.
Western United States - Antelope
Harvest spud the Bar F well on June 15, 2009. The well is a deep natural gas exploration test drilled as a tight hole. Harvest has a 60 percent working interest in the well and the accompanying 61,232 gross acre land position, 36,729 acres net to Harvest. Drilling was completed at a total depth of 17,566 feet on October 8, 2009. The well has been logged and production liner was run and cemented in the well. Production testing of the well is expected to commence in November 2009 with the expectation that the testing program will be completed in early 2010.
Log results from the well generally confirm pre-drill expectations on stratigraphy, quality, and quantity of potential low permeability reservoirs in the wellbore. Determination of the commerciality of the potential reservoirs in the well will, however, be dependent on the results of the upcoming testing program which is anticipated to include multiple stages of hydraulic fracturing.
Separate from the Bar F well, Harvest is also commencing a multiple well appraisal and development drilling program on the Antelope project in Duchesne County, Utah. This program is designed to access anticipated oil and gas reserves in the Green River formation in the southern portion of Harvest's Antelope project land position. The drilling program will be operated by Newfield Production Company (Newfield) on behalf of Harvest, Newfield and a private industry partner. The cost of the eight shallow oil wells will be borne by the parties participating in the drilling project proportionately to their working interest. Harvest has an approximate 43 percent working interest in the project. We expect to commence drilling of the first two of the eight shallow oil wells in the fourth quarter of 2009, with the remaining six wells expected to be drilled in late 2009 or early 2010.
During the nine months ended September 30, 2009, we invested $17.6 million for drilling, lease acquisition, seismic program planning, surveying, well permitting and site preparation. The expected remaining 2009 budget for the Antelope project is $7.0 million.
Indonesia - Budong-Budong
The processing of seismic data acquired in 2008 was completed in second quarter 2009 and interpretation of that data was completed in the third quarter of 2009. It is expected that the first of two exploration wells will spud late in the fourth quarter of 2009. In accordance with the farm-in agreement, we expect to fund 100 percent of the well expenditures to earn our 47 percent working interest up to a cap of $10.7 million; thereafter, we will pay in proportion to our working interest. During the nine months ended September 30, 2009, we incurred costs of $1.3 million for the 2-D seismic processing and interpretation and well planning.
Gabon - Dussafu Project
The processing of 650 kilometers of 2D seismic and the reprocessing of 680 kilometers of vintage 2D seismic was completed in the third quarter 2009. Current activities include the interpretation of the 2D seismic to define the synrift potential analogous to the Lucina and M'Bya fields. The pre-stack depth reprocessing of 1,076 square kilometers of existing 3D seismic was completed this month. The processing is to define the sub-salt structure which should unlock the potential of the Gamba play that is producing in the Etame field to the north. We expect the seismic to mature the prospect inventory in order to make a decision this year for a well in 2010. During the nine months ended September 30, 2009, we incurred $0.9 million for seismic processing and reprocessing. The projected remaining 2009 project expenditures (net to our working interest) for exploration activities are $1.4 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, Block 64. Harvest has a 100 percent working interest in the EPSA during the exploration phase. Oman Oil Company has the option to back-in for up to a 20 percent interest in the block after the discovery of commercial quantities of natural gas.
The 3,867 square kilometer (955,600 gross acres) block is located in the gas and condensate rich Ghaba Salt Basin in close proximity to the Barik, Saih Rawl and Saih Nihayda gas and condensate fields. Harvest has an obligation to drill two wells over a three-year period with a funding commitment of $22.0 million. During the nine months ended September 30, 2009, we incurred $2.4 million for costs associated with signing the license, including signature bonus and data compilation and $0.1 million for seismic processing and reprocessing.
Non-GAAP Financial Measures
In this press release, Petrodelta's EBITDA disclosure is not presented in accordance with accounting principals generally accepted in the United States (GAAP) and Petrodelta's financials are not intended to be used in lieu of GAAP presentations of net income or cash flows from operating activities. EBITDA is presented because we believe it provides additional information with respect to both the performance of our fundamental business activities as well as our ability to meet our future capital expenditures and working capital requirements. We also believe that financial analysts commonly use EBITDA to analyze Petrodelta's performance. Although we present selected items that we consider in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, exchange rates and numerous other factors. These types of variations are not separately identified in this release, but will be discussed, as applicable, in management's discussion and analysis of operating results in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.
A reconciliation of EBITDA to net income and cash flows from operating activities for the periods presented is included in the tables attached to this release.
Conference call
Harvest will hold an earnings conference call at 10:00 a.m. Central Standard Time on Thursday, November 5, 2009, during which management will discuss Harvest's results for the three and nine months ended September 30, 2009. To access the conference call, dial 312-376-8843 or 866-550-6338, five to ten minutes prior to the start time. At that time you will be asked to provide the conference number, which is 2423632. A recording of the conference call will also be available for replay at 719-457-0820, passcode 2423632, until November 15, 2009. The conference call will also be transmitted over the internet through the Harvest website at http://www.harvestnr.com.
Reserves Disclosure
The Securities and Exchange Commission (SEC) permits oil and gas companies, in filings made 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. Harvest is strictly prohibited by the SEC from including estimates of unproved reserves (i.e., possible reserves and probable reserves) in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves. All estimates of unproved reserves in this press release have been prepared by an independent petroleum engineering firm. Harvest discloses unproved reserves because management believes that this is valuable information to its investors.
The proved reserves included in this press release conform to the definition as set forth in the Securities and Exchange Commission's (SEC) Regulation S-X Part 210.4(a) as clarified by subsequent Commission Staff Bulletins. The probable reserves and possible reserves included in this press release conform to definitions of probable and possible reserves sponsored and approved by the Society of Petroleum Engineers (SPE), the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE) as set forth in the 2007 SPE/WPC/AAPG/SPEE Petroleum Resources Management System (SPE-PRMS) using the deterministic methodology.
Probable reserves are those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than proved reserves but more certain to be recovered than possible reserves. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated proved plus probable reserves (2P). In this context, when probabilistic methods are used, there should be at least a 50 percent probability that the actual quantities recovered will equal or exceed the 2P estimate. Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain. The interpreted reservoir continuity may not meet the reasonable certainty criteria. Probable estimates also include incremental recoveries associated with project recovery efficiencies beyond that assumed for proved.
Possible reserves are those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recoverable than probable reserves. The total quantities ultimately recovered from the project have a low probability to exceed the sum of proved plus probable plus possible (3P), which is equivalent to the high estimate scenario. When probabilistic methods are used, there should be at least a 10 percent probability that the actual quantities recovered will equal or exceed the 3P estimate. Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this may be in areas where geoscience and engineering data are unable to clearly define the area and vertical reservoir limits of commercial production from the reservoir by a defined project. Possible estimates also include incremental quantities associated with project recovery efficiencies beyond that assumed for probable.
In calculating the reserves in this press release, initial production rates are based on the current producing rates for those wells now on production. Test data and other related information were used to estimate the anticipated initial production rates for those wells or locations that are not currently producing. If no production decline trend has been established, future production rates were held constant, or adjusted for the effects of curtailment where appropriate, until a decline in ability to produce was anticipated. An estimated rate of decline was then applied to depletion of the reserves. If a decline trend has been established, this trend was used as the basis for estimating future production rates. For reserves not yet on production, sales were estimated to commence at an anticipated date furnished by Harvest to Ryder Scott.
About Harvest Natural Resources
Harvest Natural Resources, Inc., headquartered in Houston, Texas, is an independent energy company with principal operations in Venezuela, exploration assets in the United States, Indonesia, West Africa, Oman and China and business development offices in Singapore and the United Kingdom. For more information visit Harvest's website at www.harvestnr.com.
CONTACT:
Stephen C. Haynes
Vice President, Chief Financial Officer
+1-281-899-5716
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 2008 Annual Report on Form 10-K and other public filings.
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
September 30, December 31,
2009 2008
---- ----
ASSETS:
-------
CURRENT ASSETS:
Cash and cash equivalents $48,989 $97,165
Accounts and notes receivable, net 11,573 11,570
Advances to equity affiliate 4,405 3,732
Prepaid expenses and other 2,766 3,964
----- -----
Total current assets 67,733 116,431
OTHER ASSETS 3,512 3,316
INVESTMENT IN EQUITY AFFILIATES 220,008 218,982
PROPERTY AND EQUIPMENT, net 49,867 23,537
------ ------
TOTAL ASSETS $341,120 $362,266
======== ========
LIABILITIES AND EQUITY:
-----------------------
CURRENT LIABILITIES:
Accounts payable, trade and other $909 $1,662
Accrued expenses 12,133 12,241
Advance from equity affiliate - 20,750
Accrued Interest 4,691 4,691
Income taxes payable 1,076 77
----- --
Total current liabilities 18,809 39,421
EQUITY:
STOCKHOLDERS' EQUITY:
Common stock and paid-in capital 212,586 209,259
Retained earnings 121,169 129,351
Treasury stock (65,383) (65,368)
------- -------
Total Harvest stockholders' equity 268,372 273,242
------- -------
Noncontrolling Interest 53,939 49,603
------ ------
Total Equity 322,311 322,845
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $341,120 $362,266
======== ========
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts, unaudited)
Three months Nine months
Ended Ended
September 30, September 30,
-------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
EXPENSES:
Depreciation $125 $49 $282 $141
Exploration expense 887 4,837 5,315 9,052
General and administrative 6,066 6,700 18,965 19,334
Taxes other than on income 208 (965) 766 (507)
--- ---- --- ----
7,286 10,621 25,328 28,020
----- ------ ------ ------
LOSS FROM OPERATIONS (7,286) (10,621) (25,328) (28,020)
------ ------- ------- -------
OTHER NON-OPERATING INCOME (EXPENSE)
Gain on financing transactions - - - 3,421
Investment earnings and other 224 1,122 851 3,004
Interest expense - (22) - (1,741)
--- --- --- ------
224 1,100 851 4,684
----------------------------- --- ----- --- -----
NET LOSS BEFORE INCOME TAXES (7,062) (9,521) (24,477) (23,336)
Income tax expense 109 (20) 1,145 81
-------------------- --- --- ----- --
NET LOSS FROM CONSOLIDATED COMPANIES (7,171) (9,501) (25,622) (23,417)
Net income from unconsolidated
equity affiliates 9,890 5,309 21,776 23,527
------------------------------ ----- ----- ------ ------
NET INCOME (LOSS) 2,719 (4,192) (3,846) 110
Less: Net Income Noncontrolling
Interest 1,936 1,045 4,336 4,775
--------------------------------
NET INCOME (LOSS) ATTRIBUTABLE TO
HARVEST NATURAL RESOURCES, INC. $783 $(5,237) $(8,182) $(4,665)
--------------------------------- ==== ======= ======= =======
NET INCOME (LOSS) PER COMMON SHARE:
Basic $0.02 $(0.16) ($0.25) ($0.14)
Diluted $0.02 $(0.16) ($0.25) ($0.14)
--------- ----- ------ ------ ------
Weighted average shares outstanding:
Basic 33.2 33.6 33.0 34.5
Diluted 33.5 33.6 33.0 34.5
--------- ---- ---- ---- ----
HARVEST NATURAL RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Three months Nine months
Ended Ended
September 30, September 30,
-------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Cash Flows From Operating Activities:
Net Income (loss) $2,719 $(4,192) $(3,846) $110
Adjustments to reconcile net
income (loss) to net cash
provided by (used in) operating
activities:
Depletion, depreciation
and amortization 125 49 282 141
Gain on financing
transactions - - - (3,421)
Net income from
unconsolidated equity
affiliate (9,890) (5,309) (21,776) (23,527)
Non-cash compensation
related charges 985 1,483 3,105 4,061
Dividends received from
unconsolidated equity affiliate - - - 72,530
Changes in operating assets
and liabilities: -
Accounts and notes receivable (545) 1,399 (4) 1,121
Advances to equity affiliate (198) (659) (673) 13,116
Prepaid expenses and other 174 194 (1,606) (2,979)
Accounts payable 220 (475) (753) (4,354)
Accounts payable, related party - (10,278) - (10,093)
Accrued expenses 2,459 (1,486) 496 (1,364)
Accrued Interest - (367) - (420)
Income taxes payable 22 (68) 999 (326)
-------------------- -- --- --- ----
Net Cash Provided By (Used In)
Operating Activities (3,929) (19,709) (23,776) 44,595
-------------------- ------ ------- ------- ------
Cash Flows From Investing
Activities:
Additions of property and
equipment (11,355) (6,022) (22,696) (17,239)
Decrease in restricted cash - 3,525 - 6,769
Investment costs (62) 12 (372) (1,141)
---------------- --- -- ---- ------
Net Cash Used In Investing
Activities (11,417) (2,485) (23,068) (11,611)
---------- ------- ------ ------- -------
Cash Flows From Financing
Activities:
Net proceeds from issuances
of common stock 21 35 222 1,345
Purchase of treasury stock - (11,186) - (28,393)
Payments on notes payable - (4,651) - (7,211)
Financing costs (77) (923) (1,554) (923)
Dividends paid to
noncontrolling interest - - - (358)
------------------------ -- -- -- ----
Net Cash Used In Financing
Activities (56) (16,725) (1,332) (35,540)
--------------------- --- ------- ------ -------
Net Increase (Decrease)
in Cash (15,402) (38,919) (48,176) (2,556)
Cash and Cash Equivalents at
Beginning of Period 64,391 157,204 97,165 120,841
------ ------- ------ -------
Cash and Cash Equivalents at
End of Period $48,989 $118,285 $48,989 $118,285
---------------------------- ======= ======== ======= ========
PETRODELTA, S. A.
STATEMENTS OF OPERATIONS
(in thousands except per BOE and per share amounts, unaudited)
Three months Ended September 30,
--------------------------------
2009 2008
------------------- -------------------
Barrels of oil sold 1,938 1,496
MCF of gas sold 913 2,843
Total BOE 2,090 1,970
Total BOE - Net of
33.33% Royalty 1,394 1,313
Average price/barrel $63.33 $85.21
Average price/mcf $1.54 $1.54
$/BOE $/BOE
$ - net (1) $ - net (1)
--- --------- --- ---------
REVENUES:
Oil sales $122,731 $127,489
Gas sales 1,409 4,378
Royalties (41,510) (55,765)
------- -------
82,630 59.27 76,102 57.96
------ ----- ------ -----
EXPENSES:
Operating expenses 9,054 6.49 20,076 15.29
Depletion,
depreciation,
amortization 7,002 5.03 5,423 4.13
General and
administrative 2,347 1.68 2,693 2.05
Taxes other than
on income 1,254 0.90 3,541 2.70
----- ---- ----- ----
19,657 14.10 31,733 24.17
------ ----- ------ -----
INCOME FROM OPERATIONS 62,973 45.17 44,369 33.79
------ ----- ------ -----
Investment Earnings and
Other - 7,397 5.64
--- ----- ----
Income before income tax 62,973 45.17 51,766 39.43
Current income tax
expense 36,251 26.01 29,600 22.54
Deferred income tax
(benefit) (16,153) (11.60) (10,495) (7.99)
------- ------ ------- -----
NET INCOME 42,875 30.76 32,661 24.88
Adjustment to reconcile
to reported Net Income
from Unconsolidated
Equity Affiliate:
Deferred income tax
benefit 16,011 8,561
------ -----
Net income equity
affiliate 26,864 24,100
Equity interest in
unconsolidated equity
affiliate 40% 40%
-- --
Income before
amortization of
excess basis in
equity affiliate 10,746 9,640
Amortization of excess
basis in equity
affiliate (330) (313)
Conform depletion
expense to GAAP 28 (1,516)
Reserve for interest
receivable (net of
tax) - (2,428)
--- ------
Net income from
unconsolidated equity
affiliate $10,444 $5,383
------- ------
Non-GAAP Financial
Measures:
Reconcile NET INCOME
as reported under IFRS
to adjusted EBITDA:
NET INCOME $42,875 30.76 $32,661 24.88
Add back non-cash:
Depletion,
depreciation and
amortization 7,002 5.03 5,423 4.13
Pension Liability - - - -
Deferred income
tax (benefit) (16,153) (11.60) (10,495) (7.99)
------- ------ ------- -----
CASH FROM OPERATIONS 33,724 24.19 27,589 21.02
Investment earnings
and other - - (7,397) (5.64)
Current income tax
expense 36,251 26.01 29,600 22.54
------ ----- ------ -----
Adjusted EBITDA
(IFRS) $69,975 50.20 $49,792 37.92
======= ===== ======= =====
Nine months Ended September 30,
-------------------------------
2009 2008
------------------- -------------------
Barrels of oil sold 5,670 3,943
MCF of gas sold 3,633 9,064
Total BOE 6,276 5,454
Total BOE - Net of
33.33% Royalty 4,184 3,636
Average price/barrel $52.89 $82.66
Average price/mcf $1.54 $1.54
$/BOE $/BOE
$ - net (1) $ - net (1)
--- --------- --- ---------
REVENUES:
Oil sales $299,914 $325,921
Gas sales 5,608 13,992
Royalties (102,422) (132,888)
-------- --------
203,100 48.54 207,025 56.94
------- ----- ------- -----
EXPENSES:
Operating expenses 41,579 9.94 53,270 14.65
Depletion,
depreciation,
amortization 23,715 5.67 17,475 4.81
General and
administrative 11,561 2.76 6,427 1.77
Taxes other than
on income 2,789 0.67 10,629 2.92
----- ---- ------ ----
79,644 19.04 87,801 24.15
------ ----- ------ -----
INCOME FROM OPERATIONS 123,456 29.50 119,224 32.79
------- ----- ------- -----
Investment Earnings
and Other 3 - 12,405 3.41
--- --- ------ ----
Income before
income tax 123,459 29.50 131,629 36.20
Current income tax
expense 68,451 16.36 60,211 16.56
Deferred income tax
(benefit) (39,520) (9.45) (25,471) (7.01)
------- ----- ------- -----
NET INCOME 94,528 22.59 96,889 26.65
Adjustment to reconcile
to reported Net Income
From Unconsolidated
Equity Affiliate:
Deferred income tax
benefit 32,098 24,991
------ ------
Net income equity
affiliate 62,430 71,898
Equity interest in
unconsolidated equity
affiliate 40% 40%
-- --
Income before
amortization of excess
basis in equity
affiliate 24,972 28,759
Amortization of
excess basis in
equity affiliate (993) (865)
Conform depletion
expense to GAAP 468 (1,774)
Reserve for interest
receivable (net of
tax) (2,428)
------
Net income from
unconsolidated equity
affiliate $24,447 $23,692
------- -------
Non-GAAP Financial
Measures:
Reconcile NET INCOME
as reported under
IFRS to adjusted
EBITDA:
NET INCOME $94,528 22.59 $96,889 26.65
Add back non-cash:
Depletion,
depreciation
and amortization 23,715 5.67 17,475 4.81
Pension Liability 15,555 3.72 - -
Deferred income
tax (benefit) (39,520) (9.45) (25,471) (7.01)
------- ----- ------- -----
CASH FROM OPERATIONS 94,278 22.53 88,893 24.45
Investment earnings
and other (3) - (12,405) (3.41)
Current income tax
expense 68,451 16.36 60,211 16.56
------ ----- ------ -----
Adjusted EBITDA
(IFRS) $162,726 38.89 $136,699 37.60
======== ===== ======== =====
(1) $/BOE costs are now calculated on a net 33.33% royalty basis.
SOURCE Harvest Natural Resources, Inc.
http://www.harvestnr.com
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