Harvest Terminates Venezuelan Deal

Instant Max AI

(Harvest Natural Resources, 2.Jan.2015) – Harvest Natural Resources, Inc. announced that the Share Purchase Agreement (SPA) between Petroandina Resources Corporation N.V. (Petroandina), Pluspetrol Resources Corporation B.V. (Pluspetrol), Harvest and HNR Energia B.V., a wholly-owned subsidiary of Harvest, for the purchase of Harvest’s remaining interests in Venezuela for a purchase price of $275 million in cash has been terminated as a result of the failure to obtain approval of the transaction from the Government of the Bolivarian Republic of Venezuela by December 31, 2014.

Representatives of the Venezuelan Government and Corporacion Venezolana del Petroleo S.A. (CVP), a PDVSA affiliate who along with another PDVSA affiliate owns a 60% interest in Petrodelta, informed Harvest and Petroandina that any approval of the contemplated transaction would be conditioned on Petroandina guaranteeing (i) an unspecified bonus payment for access to Petrodelta’s reserves and (ii) $1.52 billion of financing for Petrodelta. Neither of these conditions exists as contractual obligations related to ownership in Petrodelta and ultimately Petroandina and the Venezuelan Government could not reach an agreement on those matters.

Harvest and Petroandina signed the SPA on December 16, 2013, and closing of the transaction had been subject to, among other things, approval by the Company’s stockholders and the Government of the Bolivarian Republic of Venezuela. On May 7, 2014, the Company’s stockholders approved the sale of the Company’s remaining interests in Venezuela to Petroandina.

As a result of the termination of the SPA, Harvest will retain its 20.4% interest in Petrodelta and Petroandina will retain its 11.6% interest in Petrodelta, which it had purchased from Harvest for $125 million in cash on December 16, 2013.

James A. Edmiston, President and CEO of Harvest, said: “After three years of our best efforts, we are both disappointed and frustrated that the sale of our interests in Petrodelta has once again been effectively denied by the Government of Venezuela and CVP. As a result of this development, in the near term, Harvest will focus on strengthening its balance sheet and exploring alternatives with regard to our interests in Petrodelta and Gabon. These actions may include efforts to monetize our Dussafu asset.”

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