Harvest Natural Resources Inc. (HNR, Financial) filed Quarterly Report for the period ended 2009-06-30.
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 $219.1 million; its shares were traded at around $6.64 with a P/E ratio of 166 and P/S ratio of 19.5.
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 $53.39 and $47.48 per barrel for the three and six months ended June 30, 2009, respectively. Market prices for crude oil of the type produced in the fields operated by Petrodelta averaged approximately $83.12 and $81.09 per barrel net of the impact of the Law of Special Contribution to Extraordinary Prices at the Hydrocarbon International Market (Windfall Profits Tax) implemented by the Venezuelan government, for the three and six months ended June 30, 2008, respectively. The price for natural gas is $1.54 per thousand cubic feet. The decrease in gas production is due to reservoir management.
At June 30, 2009, we had current assets of $82.6 million and current liabilities of $17.4 million, resulting in working capital of $65.2 million and a current ratio of 4.8:1. This compares with a working capital of $77.0 million and a current ratio of 3.0:1 at December 31, 2008. The decrease in working capital of $11.8 million was primarily due to a reduction in cash and cash equivalents, primarily for capital expenditures.
Cash Flow from Investing Activities. During the six months ended June 30, 2009, we had cash capital expenditures of approximately $11.3 million. Of the 2009 expenditures, $7.6 million was attributable to activity on the Antelope project, $2.2 million to Block 64 EPSA, $0.1 million to the Dussafu PSC and $1.4 million to other projects. During the six months ended June 30, 2008, we had cash capital expenditures of approximately $11.2 million. Of the 2008 expenditures, $3.2 million was attributable to activity on the West Bay project, $4.8 million to the Dussafu PSC, $1.4 million to the Antelope project and $1.8 million was attributable to other projects.
During the three months ended March 31, 2009, we deposited with a U.S. bank $1.7 million as collateral for two standby letters of credit issued in support of bank guarantees required as part of a project bidding process. During the three months ended June 30, 2009, both standby letters of credit were cancelled and the collateral returned to us. During the six months ended June 30, 2008, we had $3.2 million of restricted cash returned to us. During the six months ended June 30, 2009 and 2008, we incurred $0.3 million and $1.2 million, respectively, of investigatory costs related to various international and domestic exploration studies.
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. As of December 31, 2008, 1.2 million shares of stock had been purchased at an average cost of $10.17 per share for a total cost of $12.2 million of the $20 million authorization. During the six months ended June 3, 2009, no stock was purchased under the program.
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 $219.1 million; its shares were traded at around $6.64 with a P/E ratio of 166 and P/S ratio of 19.5.
Highlight of Business Operations:
In 2005, Venezuela modified the Science and Technology Law (referred to as LOCTI in Venezuela) to require companies doing business in Venezuela to invest, contribute, or spend a percentage of their gross revenue on projects to promote inventions or investigate technology in areas deemed critical to Venezuela. LOCTI requires major corporations engaged in activities covered by the Hydrocarbon and Gaseous Hydrocarbon Law (OHL) to contribute two percent of their gross revenue generated in Venezuela from activities specified in the OHL. The contribution is based on the previous years gross revenue and is due the following year. LOCTI requires that each company file a separate declaration stating how much has been contributed; however, waivers have been granted in the past to allow Petroleos de Venezuela, S.A. (PDVSA) to file a declaration on a consolidated basis covering all of its and its consolidating entities liabilities. PDVSA was granted a waiver to file its 2008 declaration on a consolidated basis, and based on this waiver, Petrodelta reversed $12.4 million, $6.2 million net of tax ($2.0 million net to our 32 percent interest) for contributions to LOCTI in the fourth quarter 2008. The waiver to file the declaration on a consolidated basis has to be requested each year and granted each year. For the six months ended June 30, 2009, Petrodeltas potential share for LOCTI contributions is $4.8 million, $2.4 million net of tax ($0.8 million net to our 32 percent interest). Although the OHL requires the recording of LOCTI contributions, in the second quarter 2009, Harvest management reversed the accrual, of which $2.4 million, $1.2 million net of tax ($0.4 million net to our 32 percent interest), related to the first quarter of 2009, as Harvest management expects that PDVSA will continue requesting and receiving waivers.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 $53.39 and $47.48 per barrel for the three and six months ended June 30, 2009, respectively. Market prices for crude oil of the type produced in the fields operated by Petrodelta averaged approximately $83.12 and $81.09 per barrel net of the impact of the Law of Special Contribution to Extraordinary Prices at the Hydrocarbon International Market (Windfall Profits Tax) implemented by the Venezuelan government, for the three and six months ended June 30, 2008, respectively. The price for natural gas is $1.54 per thousand cubic feet. The decrease in gas production is due to reservoir management.
At June 30, 2009, we had current assets of $82.6 million and current liabilities of $17.4 million, resulting in working capital of $65.2 million and a current ratio of 4.8:1. This compares with a working capital of $77.0 million and a current ratio of 3.0:1 at December 31, 2008. The decrease in working capital of $11.8 million was primarily due to a reduction in cash and cash equivalents, primarily for capital expenditures.
Cash Flow from Investing Activities. During the six months ended June 30, 2009, we had cash capital expenditures of approximately $11.3 million. Of the 2009 expenditures, $7.6 million was attributable to activity on the Antelope project, $2.2 million to Block 64 EPSA, $0.1 million to the Dussafu PSC and $1.4 million to other projects. During the six months ended June 30, 2008, we had cash capital expenditures of approximately $11.2 million. Of the 2008 expenditures, $3.2 million was attributable to activity on the West Bay project, $4.8 million to the Dussafu PSC, $1.4 million to the Antelope project and $1.8 million was attributable to other projects.
During the three months ended March 31, 2009, we deposited with a U.S. bank $1.7 million as collateral for two standby letters of credit issued in support of bank guarantees required as part of a project bidding process. During the three months ended June 30, 2009, both standby letters of credit were cancelled and the collateral returned to us. During the six months ended June 30, 2008, we had $3.2 million of restricted cash returned to us. During the six months ended June 30, 2009 and 2008, we incurred $0.3 million and $1.2 million, respectively, of investigatory costs related to various international and domestic exploration studies.
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. As of December 31, 2008, 1.2 million shares of stock had been purchased at an average cost of $10.17 per share for a total cost of $12.2 million of the $20 million authorization. During the six months ended June 3, 2009, no stock was purchased under the program.
Read the The complete ReportHNR is in the portfolios of Mohnish Pabrai of Pabrai Mohnish.
