Harvest Natural Resources Inc. (HNR, Financial) filed Amended Quarterly Report for the period ended 2008-09-30.
Harvest Natural Resources Inc. is an independent oil and gas exploration and development company with principal operations in Venezuela and Russia. Harvest Natural Resources Inc. has a market cap of $107 million; its shares were traded at around $3.25 with a P/E ratio of 16.3.
Working Capital. Our capital resources and liquidity are affected by the ability of Petrodelta to pay dividends. In May 2008, Petrodelta declared and paid a dividend of $181 million, $72.5 million net to HNR Finance ($58 million net to our 32 percent interest), which represents Petrodeltas net income as reported under International Financial Reporting Standards (IFRS) for the period of April 1, 2006 through December 31, 2007. In October 2008, Petrodelta paid an advance 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 IFRS for the six months ended June 30, 2008. We expect to receive future advances of dividends from Petrodelta; however, we expect the amount of any future advance dividends to be much lower over the next several years as Petrodelta reinvests more of its earnings into the company in support of its drilling and exploration activities. See Item 1 Business, Item 1A Risk Factors and Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2007 for a complete description of the situation in Venezuela and other matters.
At September 30, 2008, we had current assets of $133.8 million and current liabilities of $15.8 million, resulting in working capital of $118.0 million and a current ratio of 8.5:1. This compares with a working capital of $111.5 million and a current ratio of 3.6:1 at December 31, 2007. The increase in working capital of $6.5 million was due to the receipt of a $72.5 million dividend net to HNR Finance ($58 million net to our 32 percent interest) from our unconsolidated equity affiliate and payment of advances by PDVSA offset by payments of accounts payable trade, accrued expenses and accounts payable related party.
used in operating activities was approximately $14.3 million. The $58.9 million increase was primarily due to the receipt of a $72.5 million dividend net to HNR Finance ($58.0 million net to our 32 percent interest) from our unconsolidated equity affiliate and payment of advances by PDVSA offset by payments of accounts payable trade, accounts payable related party and accrued expenses.
Cash Flow from Investing Activities. During the nine months ended September 30, 2008, we had capital expenditures of approximately $17.2 million related to lease acquisition for our domestic exploration program and drilling of an exploratory well. During the nine months ended September 30, 2007, we had limited production-related expenditures due to the pending formation of Petrodelta. In January 2007, we purchased a 45 percent interest in Fusion for $4.6 million. During the nine months ended September 30, 2008 and 2007, we had $6.8 million and $33.1 million of restricted cash returned to us. We incurred $1.1 million of investigatory costs related to various international and domestic exploration studies during the nine months ended September 30, 2008.
In July 2008, our Board of Directors authorized the purchase of up to $20 million of our common stock from time to time through open market transactions. We continue to believe that Harvest stock remains undervalued and that the investment in the shares of our Company represents an attractive alternative to holding cash in excess of our near-term needs. Given our cash balances and our expectation that Petrodelta will internally fund its activities, we believe we have sufficient cash to undertake this buyback program as well as to fund an active development and exploration program in other countries. As of September 30, 2008, 1.1 million shares of stock have been purchased at an average cost of $10.60 per share for a total cost of $11.2 million of the $20 million authorization.
Read the The complete ReportHNR is in the portfolios of Mohnish Pabrai of Pabrai Mohnish.
Harvest Natural Resources Inc. is an independent oil and gas exploration and development company with principal operations in Venezuela and Russia. Harvest Natural Resources Inc. has a market cap of $107 million; its shares were traded at around $3.25 with a P/E ratio of 16.3.
Highlight of Business Operations:
Crude oil delivered from the Petrodelta fields to Petroleos de Venezuela, S.A. (PDVSA) is priced with reference to Merey 16 published prices, weighted for different markets and adjusted for variations in gravity and sulphur content, commercialization costs and distortions that may occur given the reference price and prevailing market conditions. Market prices for crude oil of the type produced in the fields operated by Petrodelta averaged approximately $107.92 and $96.88 a barrel, $85.21 and $82.66 net of the impact of the Law of Special Contribution to Extraordinary Prices at the Hydrocarbons International Market (original Windfall Profits Tax) implemented by the Venezuelan government, for the three and nine months ended September 30, 2008. Market prices averaged approximately $61.74 and $53.11 a barrel for the three and nine months ended September 30, 2007. The activity from April 1, 2006 to December 31, 2007 was recorded in the three months ended December 31, 2007. The price for natural gas per the sales contract is $1.54 per thousand cubic feet.Working Capital. Our capital resources and liquidity are affected by the ability of Petrodelta to pay dividends. In May 2008, Petrodelta declared and paid a dividend of $181 million, $72.5 million net to HNR Finance ($58 million net to our 32 percent interest), which represents Petrodeltas net income as reported under International Financial Reporting Standards (IFRS) for the period of April 1, 2006 through December 31, 2007. In October 2008, Petrodelta paid an advance 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 IFRS for the six months ended June 30, 2008. We expect to receive future advances of dividends from Petrodelta; however, we expect the amount of any future advance dividends to be much lower over the next several years as Petrodelta reinvests more of its earnings into the company in support of its drilling and exploration activities. See Item 1 Business, Item 1A Risk Factors and Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2007 for a complete description of the situation in Venezuela and other matters.
At September 30, 2008, we had current assets of $133.8 million and current liabilities of $15.8 million, resulting in working capital of $118.0 million and a current ratio of 8.5:1. This compares with a working capital of $111.5 million and a current ratio of 3.6:1 at December 31, 2007. The increase in working capital of $6.5 million was due to the receipt of a $72.5 million dividend net to HNR Finance ($58 million net to our 32 percent interest) from our unconsolidated equity affiliate and payment of advances by PDVSA offset by payments of accounts payable trade, accrued expenses and accounts payable related party.
used in operating activities was approximately $14.3 million. The $58.9 million increase was primarily due to the receipt of a $72.5 million dividend net to HNR Finance ($58.0 million net to our 32 percent interest) from our unconsolidated equity affiliate and payment of advances by PDVSA offset by payments of accounts payable trade, accounts payable related party and accrued expenses.
Cash Flow from Investing Activities. During the nine months ended September 30, 2008, we had capital expenditures of approximately $17.2 million related to lease acquisition for our domestic exploration program and drilling of an exploratory well. During the nine months ended September 30, 2007, we had limited production-related expenditures due to the pending formation of Petrodelta. In January 2007, we purchased a 45 percent interest in Fusion for $4.6 million. During the nine months ended September 30, 2008 and 2007, we had $6.8 million and $33.1 million of restricted cash returned to us. We incurred $1.1 million of investigatory costs related to various international and domestic exploration studies during the nine months ended September 30, 2008.
In July 2008, our Board of Directors authorized the purchase of up to $20 million of our common stock from time to time through open market transactions. We continue to believe that Harvest stock remains undervalued and that the investment in the shares of our Company represents an attractive alternative to holding cash in excess of our near-term needs. Given our cash balances and our expectation that Petrodelta will internally fund its activities, we believe we have sufficient cash to undertake this buyback program as well as to fund an active development and exploration program in other countries. As of September 30, 2008, 1.1 million shares of stock have been purchased at an average cost of $10.60 per share for a total cost of $11.2 million of the $20 million authorization.
Read the The complete ReportHNR is in the portfolios of Mohnish Pabrai of Pabrai Mohnish.
