(Harvest Natural Resources, Inc., 7.Aug.2015) – Harvest Natural Resources, Inc. announced second quarter 2015 earnings and provided an operational update.
Harvest reported a 2Q:15 net loss of approximately $25.4 mln, or $0.60/share diluted, compared with a net loss of $1.7 mln, or $0.04/share diluted for the 2Q:14. The 2Q:15 results included a non-cash loss on issuance of debt, which is related to the CT Energy transaction, of $20.4 mln, or $0.48/share diluted. Adjusted for loss on issuance of debt, Harvest would have posted a 2Q:15 net loss of approximately $5 mln, or $0.12/share diluted, before any adjustment for income taxes.
The loss on issuance of debt is the result of the difference between (i) the issuance-date value of the CT Energia warrants of $40 mln, plus the net value applied to embedded derivatives related to the nonconvertible note and the convertible note issued to CT Energy of $10.95 mln, plus transaction costs of $1.65 mln less (ii) the loan proceeds received of $32.2 mln.
The sum is recognized as a non-cash pre-tax loss of $20.4 mln during the 2Q:15.
Petrodelta generated $173.3 mln in revenue during the 2Q:15 before deductions for royalties, compared to $365.2 mln for the 2Q:14. The average price of crude oil sold by Petrodelta during the 2Q:15 was $49.71/bbl, compared to $88.77/bbl for the 2Q:14. Petrodelta reported a 2Q:15 operating loss before taxes and non-operating items of $98.6 mln, compared to operating income before taxes and nonoperating items of $35 mln for the 2Q:14. Petrodelta posted a net loss of $74.8 mln during the 2Q:15, compared to net income of $42.3 milln for the 2Q:14. The Petrodelta financial results are prepared and presented under IFRS.
Highlights for the 2Q:15 include:
Venezuela
— During the 2Q:15, Petrodelta drilled and completed 6 development wells and sold approximately 3.45 MMbbls for an average of approximately 37,929 b/d), a decrease of 16% over the 2Q:14.
— Petrodelta’s current production rate is approximately 37,761 b/d and the 2015 expected average production rate is 38,921 b/d, with capital expenditures projected at $392 mln. — Harvest has entered into a term sheet with PDVSA, Harvest’s partner in Petrodelta, for the repositioning and growth of Petrodelta’s business.
Corporate
— On 19.Jun.2015, the company entered into a strategic relationship with CT Energy and CT Energia designed to maximize the long-term success and value of Harvest’s Venezuelan operations and its 20.4% investment in Petrodelta.
— The company sold CT Energy a $25.2 mln, 5year, 15% non-convertible senior secured promissory note and a $7 mln, five year, 9% convertible senior secured note.
— Harvest also issued CT Energy a warrant to purchase up to 34,070,820 shares of Harvest’s common stock at an initial exercise price of $1.25/share. The warrant becomes exercisable only after the 30-day volume weighted average price of Harvest’s common stock equals or exceeds $2.50/share.
— At our upcoming annual shareholder meeting on 9.Sep.2015, Harvest stockholders will be asked to approve certain proposals relating to the transaction.
— If stockholder approval is not obtained, CT Energy has the right to accelerate full repayment of the non-convertible and convertible notes upon 60days’ notice.
Venezuela
During the 2Q:15, Petrodelta sold approximately 3.45 MMbbls for an average of 37,929 b/d, a decrease of 16% over the 2Q:14, and 6% lower than the 1Q:15. Petrodelta sold 1.10 Bcf of natural gas for an average of 12.1 MMcf/d in the 2Q:15, increasing 62% over the 2Q:14 and 13% over the 1Q:15. Petrodelta’s current production rate is approximately 37,761 b/d.
During the 2Q:15, Petrodelta drilled and completed 6 development wells, 5 in the El Salto field and 1 in the Temblador field. Currently, Petrodelta is operating 6 drilling rigs and 1 workover rig and continues with infrastructure enhancement projects in the El Salto and Temblador fields.
Petrodelta’s production target for 2015 is projected to be approximately 38,921 b/d. The 2015 Petrodelta capital expenditures are expected to be approximately $392 mln. Petrodelta expects to drill 21 oil wells during 2015.
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