Harvest Natural Resources Inc. Reports Operating Results (10-K/A)
Harvest Nat Res Inc has a market cap of $514 million; its shares were traded at around $15.19 with a P/E ratio of 36.2 and P/S ratio of 2839.8.
Highlight of Business Operations: On April 23, 2009, Petrodeltas board of directors declared a dividend of $51.9 million, $20.8 million net to HNR Finance ($16.6 million net to our 32 percent interest), which represents Petrodeltas net income as reported under International Financial Reporting Standards (IFRS) for the six months ended June 30, 2008. HNR Finance received the cash related to this dividend in the form of an advance dividend in October 2008.
On February 17, 2010, we closed a debt offering of $32 million in aggregate principal amount of our 8.25 percent senior convertible notes due 2013, which resulted in net proceeds to us, after deducting underwriting discounts, commissions and estimated offering expenses, of approximately $30 million.
As of December 31, 2009, we had total assets of $348.8 million, unrestricted cash of $32.3 million and no long-term debt. For the year ended December 31, 2009, we had revenues of $0.2 million and net cash used in operating activities of $34.9 million. Subsequent to December 31, 2009, we offered and issued $32.0 million in aggregate principal amount of our 8.25 percent senior convertible notes due 2013. As of December 31, 2008, we had total assets of $362.3 million, unrestricted cash of $97.2 million and no long-term debt. For the year ended December 31, 2008, we had no revenues and net cash provided by operating activities of $50.4 million.
On April 15, 2008, the Venezuelan government published in the Official Gazette the Law of Special Contribution to Extraordinary Prices at the Hydrocarbons International Market (the original Windfall Profits Tax). The original Windfall Profits Tax was based on prices for Brent crude. On July 10, 2008, the Venezuelan government published the amended Windfall Profits Tax to be calculated on the Venezuelan Export Basket (VEB) of prices as published by MENPET. The amended Windfall Profits Tax was made retroactive to April 15, 2008, the date of the original Windfall Profits Tax. As instructed by CVP, Petrodelta has applied the amended Windfall Profits Tax to gross oil production delivered to Petroleos de Venezuela S.A. (PDVSA) since April 15, 2008 when the tax was enacted. The amended Windfall Profits Tax established a special 50 percent tax to the Venezuelan government when the average price of the VEB exceeds $70 per barrel. In a similar manner, the percentage is increased from 50 percent to 60 percent when the average price of the VEB exceeds $100 per barrel. The amended Windfall Profits Tax is reported as expense on the income statement and is deductible for Venezuelan tax purposes. Petrodelta recorded $0.9 million and $56.4 million for the years ended December 31, 2009 and 2008, respectively, for the amended Windfall Profits Tax.
During the second quarter of 2009, PDVSA completed an actuarial study for their pension and retirement plan. This pension and retirement plan covers all PDVSA employees and mixed companies employees. Petrodelta is not required to reimburse the pension costs to PDVSA until PDVSA pays the pension benefits to employees. In May 2009, upon completion of the review of this actuarial study, PDVSA sent a statement to Petrodelta for its respective costs associated with the pension and retirement plan. Petrodelta recorded additional pension expense of $15.6 million ($5.0 million net to our 32 percent interest) in the three month period ended June 30, 2009 based on the statement received. The pension adjustment resulted from the completion of the first full actuary study by PDVSA related to its employees that provide services to the mixed companies and a refinement of managements assumptions related to credit for past service costs covering the period from January 2008, when the Harvest Vinccler employees were migrated to PDVSA payroll, through May 2009. At this time PDVSA did not have specific benefit information related to each individual mixed company and thus allocated the pension obligation to each mixed company assuming that the employees serving each of the mixed companies had the same characteristics. The pension adjustment was a change in Petrodelta managements estimate based on the new information provided by PDVSA.
During the fourth quarter of 2009, PDVSA completed an updated actuarial study as of December 31, 2009. This study was based on a further refinement of assumptions for each of the mixed companies, including Petrodelta and a new allocation methodology as PDVSA gathered during 2009 all relevant information for each of the mixed companies. The revised pension obligation allocated to Petrodelta resulted in a decrease of $8.4 million ($2.7 million net to our 32 percent interest) to the pension and retirement plan costs as compared to those previously recorded to Petrodelta in May 2009. This change in managements estimate related to the pension and retirement plan costs was recorded in December 2009. Pension costs at December 31, 2009 reasonably reflect Petrodeltas employee demographic and plan conditions. The additional pension cost is not tax deductible until future periods when the pension is settled in cash. The provision for the pension plan is subject to future revisions, both upwards
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