Harvest Natural Resources Inc. (HNR, Financial) filed Amended Quarterly Report for the period ended 2008-03-31.
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.
In February 2008, Indonesias oil and gas regulatory authority, BP Migas, approved the assignment to us of a 47 percent interest in the Budong-Budong production sharing contract (Budong PSC). Final government approval from the Ministry of Energy and Mineral Resources, Migas, was received in April 2008. The Budong PSC is located onshore West Sulawesi, Indonesia. We acquired our 47 percent interest in the Budong PSC by committing to fund the first phase of the exploration program including the acquisition of 2-D seismic and drilling of the first two exploration wells. This commitment is capped at $17.2 million. Prior to drilling the first exploration well, subject to the estimated cost of that well, our partner will have a one-time option to increase the level of the carried interest to $20.0 million, and as compensation for the increase, we will increase our participation to a maximum of 54.65 percent. The Budong PSC includes a ten-year exploration period and a 20-year development phase. For the initial three-year exploration phase, which began January 2007, we are in the process of acquiring, processing and interpreting approximately 500 kilometers of 2-D seismic and plan to drill two exploration wells. Our partner will be the operator through the exploration phase as required by the terms of the Budong PSC. We will have control of major decisions and financing for the project with an option to operate in the development and production phase if approved by BP Migas. Our 2008 commitment is approximately $10.0 million.
At March 31, 2008, we had current assets of $138.5 million and current liabilities of $35.6 million, resulting in working capital of $102.9 million and a current ratio of 3.9:1. This compares with a working capital of $111.5 million and a current ratio of 3.6:1 at December 31, 2007. The decrease in working capital of $8.6 million was primarily due to the payment of advances by PDVSA offset by payments of accounts payable trade and accrued expenses.
Cash Flow from Operating Activities. During the three months ended March 31, 2008, net cash provided by operating activities was approximately $0.3 million. During the three months ended March 31, 2007, net cash used in operating activities was approximately $10.7 million. The $11.0 million increase was primarily due to the payment of advances by PDVSA offset by payments of accounts payable trade and accrued expenses.
Cash Flow from Investing Activities. During the three months ended March 31, 2008, we had capital expenditures of approximately $3.3 million related to lease acquisition for our domestic exploration program. During the three months ended March 31, 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. Restricted cash of $13.1 million was released and returned to us during the three months ended March 31, 2007. We incurred $0.4 million of investigatory costs related to various international and domestic exploration studies.
We reported net income of $1.2 million, or $0.03 diluted earnings per share, for the three months ended March 31, 2008 compared with a net loss of $6.5 million, or $0.17 diluted earnings per share, for the three months ended March 31, 2007. Net income for the three months ended March 31, 2008 includes our 40 percent share of Petrodeltas net earnings for the same period. Petrodelta was formed in October 2007, and we recorded our share of the earnings of Petrodelta from April 1, 2006 to December 31, 2007 in the three months ended December 31, 2007 consolidated statement of operations. The three months ended March 31, 2008 is the first period that we have reported the earnings of Petrodelta on a current basis.
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 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 $79.02 and $44.43 a barrel for the three months ended March 31, 2008 and 2007, respectively. 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 is $1.54 per thousand cubic feet.In February 2008, Indonesias oil and gas regulatory authority, BP Migas, approved the assignment to us of a 47 percent interest in the Budong-Budong production sharing contract (Budong PSC). Final government approval from the Ministry of Energy and Mineral Resources, Migas, was received in April 2008. The Budong PSC is located onshore West Sulawesi, Indonesia. We acquired our 47 percent interest in the Budong PSC by committing to fund the first phase of the exploration program including the acquisition of 2-D seismic and drilling of the first two exploration wells. This commitment is capped at $17.2 million. Prior to drilling the first exploration well, subject to the estimated cost of that well, our partner will have a one-time option to increase the level of the carried interest to $20.0 million, and as compensation for the increase, we will increase our participation to a maximum of 54.65 percent. The Budong PSC includes a ten-year exploration period and a 20-year development phase. For the initial three-year exploration phase, which began January 2007, we are in the process of acquiring, processing and interpreting approximately 500 kilometers of 2-D seismic and plan to drill two exploration wells. Our partner will be the operator through the exploration phase as required by the terms of the Budong PSC. We will have control of major decisions and financing for the project with an option to operate in the development and production phase if approved by BP Migas. Our 2008 commitment is approximately $10.0 million.
At March 31, 2008, we had current assets of $138.5 million and current liabilities of $35.6 million, resulting in working capital of $102.9 million and a current ratio of 3.9:1. This compares with a working capital of $111.5 million and a current ratio of 3.6:1 at December 31, 2007. The decrease in working capital of $8.6 million was primarily due to the payment of advances by PDVSA offset by payments of accounts payable trade and accrued expenses.
Cash Flow from Operating Activities. During the three months ended March 31, 2008, net cash provided by operating activities was approximately $0.3 million. During the three months ended March 31, 2007, net cash used in operating activities was approximately $10.7 million. The $11.0 million increase was primarily due to the payment of advances by PDVSA offset by payments of accounts payable trade and accrued expenses.
Cash Flow from Investing Activities. During the three months ended March 31, 2008, we had capital expenditures of approximately $3.3 million related to lease acquisition for our domestic exploration program. During the three months ended March 31, 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. Restricted cash of $13.1 million was released and returned to us during the three months ended March 31, 2007. We incurred $0.4 million of investigatory costs related to various international and domestic exploration studies.
We reported net income of $1.2 million, or $0.03 diluted earnings per share, for the three months ended March 31, 2008 compared with a net loss of $6.5 million, or $0.17 diluted earnings per share, for the three months ended March 31, 2007. Net income for the three months ended March 31, 2008 includes our 40 percent share of Petrodeltas net earnings for the same period. Petrodelta was formed in October 2007, and we recorded our share of the earnings of Petrodelta from April 1, 2006 to December 31, 2007 in the three months ended December 31, 2007 consolidated statement of operations. The three months ended March 31, 2008 is the first period that we have reported the earnings of Petrodelta on a current basis.
Read the The complete ReportHNR is in the portfolios of Mohnish Pabrai of Pabrai Mohnish.
