8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 28, 2010

HARVEST NATURAL RESOURCES, INC.

(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of incorporation) 1-10762
(Commission File Number) 77-0196707
(I.R.S. Employer Identification No.)

1177 Enclave Parkway, Suite 300
Houston, Texas 77077
(Address of principal executive offices) (Zip Code)

(281) 899-5700
(Registrant’s telephone number, including area code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

     On October 28, 2010, Harvest Natural Resources, Inc. (the “Company”) entered into a Credit Agreement (the “Credit Agreement”) with MSD Energy Investments Private II, LLC (the “Lender”), an affiliate of MSD Capital, L.P., as the sole Lender under the facility. The Credit Agreement provides for a $60.0 million term loan facility that will mature on October 28, 2012. The Company will pay interest on a monthly basis under the term loan facility at an initial rate of 10%, which increases to 15% on July 28, 2011 (the “Bridge Date”). The Company will have the option to extend the Bridge Date for three months by paying a fee to the Lender in the amount of 5% of the initial principal amount of the loan. The net proceeds of the term loan facility to the Company are approximately $59.5 million, after deducting fees related to the transaction. The Company intends to use the net proceeds of the term loan facility to fund capital expenditures and for working capital needs and general corporate purposes.

     The term loan will be a general unsecured obligation, ranking equally with all of the Company’s other unsecured senior indebtedness and senior in right of payment to its subordinated indebtedness, if any. The Company’s obligations under the Credit Agreement will be guaranteed by certain of the Company’s domestic subsidiaries.

     Additionally, at closing, the Lender received the following (collectively, the “Warrants”):

• 1,200,000 warrants to purchase shares of the Company’s common stock exercisable at any time on or after October 28, 2010 (the “Closing Date”) for a period of five years from the Closing Date on a cashless exercise basis at $15 per share until the Bridge Date, at which time the exercise price per share will equal the lower of $15.00 or 120% of the average closing bid price of the Company’s common stock for the 20 trading days immediately preceding the Bridge Date;

• 400,000 warrants to purchase shares of the Company’s common stock exercisable at any time on or after the Closing Date for a period of five years from the Closing Date on a cashless exercise basis at $20 per share until the Bridge Date, at which time the exercise price per share will equal the lower of $15.00 or 120% of the average closing bid price of the Company’s common stock for the 20 trading days immediately preceding the Bridge Date; and

• 4,400,000 warrants to purchase shares of the Company’s common stock exercisable at any time on or after the Bridge Date for a period of five years from the Bridge Date on a cashless exercise basis at the lower of $15 per share or 120% of the average closing bid price of the Company’s common stock for the 20 trading days immediately preceding the Bridge Date. These warrants may be redeemed by the Company for $0.01 per share at any time prior to the Bridge Date in conjunction with the Company’s repayment of the loan prior to the Bridge Date.

The Lender paid no additional consideration for the Warrants and will have certain registration rights with respect to the shares of common stock issuable upon exercise of the Warrants.

     MSD Energy Investments, L.P., an affiliate of MSD Capital, L.P., is currently a shareholder of the Company and holds a portion of the Company’s 8.25% Senior Convertible Notes.

     The foregoing description of the material terms of the Credit Agreement is qualified in its entirety by reference to the Credit Agreement, a copy of which is included as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated herein by reference. The foregoing description of the material terms of the subsidiary guarantee is qualified in its entirety by reference to the Guaranty, a copy of which is included as Exhibit 10.2 to this Current Report on Form 8-K, and is incorporated herein by reference. The foregoing description of the material terms of the Warrants is qualified in its entirety by reference to the Warrant Purchase Agreement and Common Stock Purchase Warrants Nos. W-1, W-2 and W-3, copies of which are included as Exhibits 4.2, 4.3, 4.4 and 4.5, respectively, to this Current Report on Form 8-K, and are incorporated herein by reference.

     Additionally, on October 29, 2010, the Company issued a press release announcing the closing of the Credit Agreement. The press release is attached hereto as Exhibit 99.1.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

     The response to Item 1.01 is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

     The response to Item 1.01 with respect to the Warrants is incorporated herein by reference. The Company relied on an exemption from registration of the Warrants provided by Section 4(2) of the Securities Act of 1933, as amended, as a transaction by an issuer not involving any public offering.

Item 3.03 Material Modification to Rights of Security Holders.

     In connection with the issuance of the Warrants, the Company entered into an amendment (the “Amendment”) to its Third Amended and Restated Rights Agreement, dated as of August 23, 2007 (as so amended and restated, the “Rights Agreement”), between Harvest Natural Resources, Inc. and Wells Fargo Bank, N.A. The Amendment amended the Rights Agreement in certain respects such that the issuance of the Warrants to the Lender does not cause the Lender, together with its affiliates and associates, to become an “Acquiring Person”, as such term is defined in the Rights Agreement.

     The foregoing description of the material terms of the Amendment is qualified in its entirety by reference to the Amendment, a copy of which is included as Exhibit 4.1 to this Current Report on Form 8-K, and is incorporated herein by reference.

Item 9.01 Exhibits.

     (d) Exhibits.

The following exhibits are filed as exhibits to this Current Report on Form 8-K:

Exhibit No.	Description
4.1	Amendment to Third Amended and Restated Rights Agreement, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and Wells Fargo Bank, N.A.
4.2	Warrant Purchase Agreement, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and MSD Energy Investments Private II, LLC.
4.3	Common Stock Purchase Warrant No. W-1, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and MSD Energy Investments Private II, LLC.
4.4	Common Stock Purchase Warrant No. W-2, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and MSD Energy Investments Private II, LLC.
4.5	Common Stock Purchase Warrant No. W-3, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and MSD Energy Investments Private II, LLC.
10.1	Credit Agreement, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and MSD Energy Investments Private II, LLC.
10.2	Guaranty, dated as of October 28, 2010, by Harvest (US) Holdings, Inc., Harvest Natural Resources, Inc. (UK) and Harvest Offshore China Company in favor of MSD Energy Investments Private II, LLC.
10.3	Term Note, dated as of October 28, 2010, of Harvest Natural Resources, Inc. in favor of MSD Energy Investments Private II, LLC.
99.1	Press Release dated October 29, 2010.

Forward-Looking Statements

This report may contain projections and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. They include statements that relate to estimates and timing of expected oil and gas production, oil and gas reserve projections of future oil pricing, future expenses, planned capital expenditures, anticipated cash flow and our business strategy. All statements other than statements of historical facts may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Actual results may differ materially from the Company’s expectations as a result of factors discussed in the Company’s 2009 Annual Report on Form 10-K and other public filings.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HARVEST NATURAL RESOURCES, INC.
Dated: October 29, 2010	By:	/s/ Keith L. Head
		Keith L. Head
		Vice President and General Counsel

EXHIBIT INDEX

Exhibit No.	Description
4.1	Amendment to Third Amended and Restated Rights Agreement, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and Wells Fargo Bank, N.A.
4.2	Warrant Purchase Agreement, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and MSD Energy Investments Private II, LLC.
4.3	Common Stock Purchase Warrant No. W-1, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and MSD Energy Investments Private II, LLC.
4.4	Common Stock Purchase Warrant No. W-2, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and MSD Energy Investments Private II, LLC.
4.5	Common Stock Purchase Warrant No. W-3, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and MSD Energy Investments Private II, LLC.
10.1	Credit Agreement, dated as of October 28, 2010, between Harvest Natural Resources, Inc. and MSD Energy Investments Private II, LLC.
10.2	Guaranty, dated as of October 28, 2010, by Harvest (US) Holdings, Inc., Harvest Natural Resources, Inc. (UK) and Harvest Offshore China Company in favor of MSD Energy Investments Private II, LLC.
10.3	Term Note, dated as of October 28, 2010, of Harvest Natural Resources, Inc. in favor of MSD Energy Investments Private II, LLC.
99.1	Press Release dated October 29, 2010.

EX-4.1

Exhibit 4.1

AMENDMENT TO THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT

     This Amendment to Third Amended and Restated Rights Agreement (the “Amendment”) by and between Harvest Natural Resources, Inc., a Delaware corporation (the “Company”), and Wells Fargo Bank, N.A., a California corporation (the “Rights Agent”), is made and entered into as of October 28, 2010.

RECITALS

     WHEREAS, the Company and the Rights Agent are parties to the Third Amended and Restated Rights Agreement, dated as of August 23, 2007 (as so amended and restated, the “Rights Agreement”);

     WHEREAS, in connection with the Credit Agreement, dated as of October 28, 2010, between the Company and MSD Capital, L.P. or its affiliate (“MSD”), the Company is issuing to MSD warrants to purchase up to 6,000,000 shares of the Company’s common stock, par value $.01 per share, on a cashless exercise basis (the “Warrants”); and

     WHEREAS, the Company wishes to amend the Rights Agreement in certain respects such that the issuance of the Warrants to MSD does not cause MSD to become an “Acquiring Person”, as such term is defined in the Rights Agreement.

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the parties hereto hereby agree as follows:

     1. Section 1(a) of the Rights Agreement.

     (a) Section 1(a) of the Rights Agreement is hereby amended and restated to provide in its entirety as follows:

     “(a) A Person shall be deemed an “Acquiring Person” as set forth in subsections (i), (ii), (iii) and (iv) below:

          (i) Except as otherwise provided in subsection 1(a)(ii), (iii) or (iv) below, “Acquiring Person” shall mean any Person (as such term is hereinafter defined) who or which, together with all Affiliates and Associates (as such terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as such term is hereinafter defined) of 15% or more of the Common Shares then outstanding, but shall not include the Company, any Subsidiary (as such term is hereinafter defined) of the Company, any employee benefit plan of the Company or any Subsidiary of the Company, or any entity holding Common Shares for or pursuant to the terms of any such plan.

          (ii) Notwithstanding the foregoing, except as set forth in subsections 1(a)(iii) and (iv) below, no Person shall be deemed to be an Acquiring Person either (A) as the result of an acquisition of Common Shares by the Company which, by reducing the number of Common Shares outstanding, increases the proportionate number of Common Shares owned by such

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          Person to 15% or more of the Common Shares of the Company then outstanding; provided, however, that if a Person shall become the Beneficial Owner of 15% or more of the Common Shares then outstanding by reason of share purchases by the Company and shall, after such share purchases by the Company, become the Beneficial Owner of any additional Common Shares of the Company, then such Person shall be deemed to be an Acquiring Person, (B) if within five Business Days (as such term is hereinafter defined) after such Person would otherwise have become an Acquiring Person (but for the operation of this clause (B)), such Person notifies the Board of Directors of the Company that such Person did so and within two Business Days after such notification such Person is the Beneficial Owner of less than 15% of the outstanding Common Shares of the Company, or (C) if within ten Business Days (as such term is hereinafter defined) after the Company learns that such Person would otherwise have become an Acquiring Person (but for the operation of this clause (C)), the Company’s Board of Directors determines, by duly adopted resolution, that such Person should not be deemed an Acquiring Person and adopts and approves a supplement to this Agreement pursuant to Section 27 exempting such Person from being deemed an Acquiring Person, with such conditions, if any, that the Board of Directors deems appropriate.

          (iii) Notwithstanding the foregoing subsections 1(a)(i) and (ii), Mohnish Pabrai, together with his Affiliates and Associates (as such terms are hereinafter defined), shall not be deemed to be an Acquiring Person as long as he, together with his Affiliates and Associates, shall be the Beneficial Owner of less than the Pabrai Special Applicable Percentage of the Common Shares outstanding; provided, however, that he, together with his Affiliates and Associates, shall not be deemed to be an Acquiring Person as the result of any acquisition of Common Shares by the Company which, by reducing the number of Common Shares outstanding, increases the proportionate number of Common Shares owned by him, together with his Affiliates and Associates, to more than the then applicable Pabrai Special Applicable Percentage, but if thereafter he, together with his Affiliates and Associates, shall become the Beneficial Owner of any additional Common Shares, then he shall be deemed to be an Acquiring Person. At such time that Mohnish Pabrai, together with his Affiliates and Associates, becomes the Beneficial Owner of less than 15% of the Common Shares then outstanding, the exception and other provisions contained in this subsection 1(a)(iii) shall no longer apply, and subsections 1(a)(i) and (ii) shall apply to him, together with his Affiliates and Associates for purposes of determining whether he is an Acquiring Person. For purposes of this subsection 1(a)(iii), the “Pabrai Special Applicable Percentage” shall mean, initially, the percentage of Common Shares outstanding (but not more than 16.5%) on August 23, 2007, owned by Mohnish Pabrai, and shall be reduced (but never increased) from time to time as Mohnish Pabrai, together with his Affiliates, own less than the previously applicable Pabrai Special Applicable Percentage (whether as a result of the sale or other disposition of Common Shares or as a result of the Company’s issuance of additional Common Shares), until such time (if any) that Mohnish Pabrai, together with his Affiliates and Associates, owns less than 15% of the Common Shares then outstanding.

          (iv) Notwithstanding the foregoing subsections 1(a)(i) and (ii), MSD Capital, L.P. (“MSD”), together with its Affiliates and Associates (as such terms are hereinafter defined), shall not be deemed to be an Acquiring Person as long as MSD, together with its Affiliates and Associates, shall be the Beneficial Owner of less than the MSD Special Applicable Percentage of the Common Shares outstanding; provided, however, that MSD, together with its Affiliates and

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Associates, shall not be deemed to be an Acquiring Person as the result of (A) any acquisition of Common Shares by the Company which, by reducing the number of Common Shares outstanding, increases the proportionate number of Common Shares owned by MSD, together with its Affiliates and Associates, to more than the then applicable MSD Special Applicable Percentage, (B) any anti-dilution or other adjustments to any convertible securities (including convertible notes and warrants) held by MSD which increase the proportionate number of Common Shares owned by MSD, together with its Affiliates and Associates, to more than the then applicable MSD Special Applicable Percentage and (C) MSD inadvertently becoming an Acquiring Person as the result of the acquisition of additional Common Shares and so notifies the Board of Directors of the Company within five business days and within two business days after such notice divests itself of such additional Common Shares. For purposes of this subsection 1(a)(iv), the “MSD Special Applicable Percentage” shall mean, initially, 22.2% (calculated based on the Common Shares outstanding on October 28, 2010, and the Common Shares Beneficially Owned by MSD, together with its Affiliates and Associates, on such date), and shall be reduced from time to time by any Common Shares which are no longer Beneficially Owned by MSD, together with its Affiliates and Associates.”

     2. Other Terms of the Rights Agreement. Except as otherwise provided in this Amendment, all other terms of the Rights Agreement shall remain in full force and effect. All references in the Rights Agreement to “this Agreement” shall be read as references to the Rights Agreement, as amended by this Amendment, but references to the date of the Rights Agreement shall remain references to August 23, 2007.

     3. Counterparts. This Amendment may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto.

     4 Choice of Law. The parties intend that the laws of the State of Delaware shall govern the validity of this Amendment, the construction of its terms and the interpretation of the rights and duties of the parties hereto, without regard to conflict of laws provisions.

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     IN WITNESS WHEREOF, the parties have executed this Amendment as of October 28, 2010.

				Harvest Natural Resources, Inc.
	Attest:
By:	/s/ Keith L. Head		By:	/s/ James A. Edmiston
	Name:	Keith L. Head		Name:	James A. Edmiston
	Title:	Vice President, General Counsel and Corporate Secretary		Title:	President and Chief Executive Officer
				Wells Fargo Bank, N.A.
	Attest:
By:	/s/ Steven J. Hoffman		By:	/s/ Martin J. Knapp
	Name:	Steven J. Hoffman		Name:	Martin J. Knapp
	Title:	Vice President		Title:	Assistant Vice President

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EX-4.2

Exhibit 4.2

EXECUTION VERSION

WARRANT PURCHASE AGREEMENT

between

HARVEST NATURAL RESOURCES, INC.

and

THE PURCHASER NAMED HEREIN

Dated as of October 28, 2010

TABLE OF CONTENTS

	Page
ARTICLE I CERTAIN DEFINED TERMS		1
ARTICLE II SALE AND PURCHASE OF WARRANTS		3
§2.1 Sale and Purchase of Warrants		3
§2.2 Acknowledgments of the Company and the Purchaser		4
§2.3 Closing Conditions		4
ARTICLE III THE CLOSING		5
ARTICLE IV REPRESENTATIONS OF THE COMPANY		5
ARTICLE V REPRESENTATIONS OF THE PURCHASER		7
ARTICLE VI COVENANTS OF THE COMPANY		8
§6.1 General		8
§6.2 Governmental and Other Approvals		8
§6.3 Reporting Status		8
§6.4 Listing Requirements		8
§6.5 Amendment to Rights Agreement		8
ARTICLE VII REGISTRATION RIGHTS		8
§7.1 Registration		8
§7.2 Expenses		9
§7.3 Registration Procedures		9
§7.4 Indemnification		11
§7.5 Certain Obligations of Holders		12
§7.6 Rule 144		13
ARTICLE VIII REDEMPTION OF C WARRANTS		14
§8.1 Right to Redeem C Warrants		14
§8.2 Redemption Closing		14
ARTICLE IX REGISTRATION AND TRANSFER OF WARRANTS		14
§9.1 Registration, Transfer and Exchange of Warrants		14
§9.2 Replacement of Warrants		15
§9.3 Transfer of Warrants		15

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TABLE OF CONTENTS

(continued)

	Page
ARTICLE X SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION		15
§10.1 Survival of Representations		15
§10.2 Indemnification for Misrepresentations		15
§10.3 Expenses		15
ARTICLE XI MISCELLANEOUS		16
§11.1 Notices		16
§11.2 Governing Law, Jurisdiction, Etc		16
§11.3 Waiver of Jury Trial		17
§11.4 Amendments and Waivers		17
§11.5 Integration		18
§11.6 Rights and Obligations Several		18
§11.7 No Waiver; Cumulative Remedies		18
§11.8 Entire Agreement		18
§11.9 Severability		18
§11.10 Binding Effect		18
§11.11 Counterparts		18

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Schedules

Schedule 1 — Purchaser

Exhibits

Exhibit A-1 - Form of A Warrant

Exhibit A-2 - Form of B Warrant

Exhibit A-3 - Form of C Warrant

Exhibit B - Form of Legal Opinion

WARRANT PURCHASE AGREEMENT

     THIS WARRANT PURCHASE AGREEMENT (this “Agreement”), dated as of October 28, 2010, is entered into by and between HARVEST NATURAL RESOURCES, INC., a Delaware corporation (the “Company”), and the PURCHASER listed on Schedule 1 hereto (the “Purchaser”).

     Whereas, this Agreement is being entered into in connection with the financings contemplated by that certain Credit Agreement, dated of even date herewith (as amended, modified or supplemented from time to time, the “Credit Agreement”) between the Company, as borrower, and the Purchaser; and

     Whereas, in connection with, and as a condition of the Company and the Purchaser entering into, the Credit Agreement, the Company and Purchaser have agreed to enter into this Agreement pursuant to which the Company shall issue and sell to Purchaser certain warrants for the purchase of shares of the Company’s Common Stock, subject to the terms and conditions set forth herein.

     Now, Therefore, in consideration of the foregoing premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

CERTAIN DEFINED TERMS

     Terms used herein and not otherwise defined shall have the respective meaning given to such term in the Credit Agreement. As used herein, the following terms shall have the respective meanings assigned to them in this Article I:

     “Agreement” shall have the meaning ascribed to that term in the preamble hereto.

     “business day” means a day Monday through Friday on which banks are generally open for business in New York.

     “Closing” shall have the meaning ascribed to that term in Article III hereof.

     “Closing Date” means the date of the Closing.

     “Common Stock” means the Common Stock of the Company, par value $.01 per share.

     “Company” shall have the meaning ascribed to that term in the preamble hereto.

     “Credit Agreement” shall have the meaning ascribed to that term in the preamble hereto.

     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

     “Filing Date” shall have the meaning ascribed to that term in §7.1 hereof.

     “Final Prospectus” shall have the meaning ascribed to that term in §7.4(a) hereof.

     “Financial Statements” shall mean the (i) audited, consolidated, balance sheet, statement of income and statement of cash flows of the Company as of the end of the most recently completed fiscal

year which is included in the Annual Report on Form 10-K most recently filed by the Company with the SEC prior to such date, and for the twelve (12)-month period ended on the last day of such fiscal year, and (ii) unaudited, consolidated balance sheet (the “Balance Sheet”), statement of income and statement of cash flows, as of the end of the most recently completed fiscal quarter (the “Balance Sheet Date”) which is included in the Quarterly Report on Form 10-Q most recently filed by the Company with the SEC prior to such date, and for the portion of the current fiscal year ended on the last day of such fiscal quarter.

     “Holder” means, as to any Security, the holder thereof, unless such holder shall have presented such Security to the Company for transfer and the transferee shall have been entered in the Company’s stock register (in the case of Warrant Shares) or in the register referred to in §9.1(a) hereof (in the case of a Warrant), as a subsequent holder, in which case “Holder” shall mean such subsequent holder.

     “Holder Consent” means, at any particular date, the consent, approval or vote of the Holder.

     “Indemnified Party” shall have the meaning ascribed to that term in §7.4(c) hereof.

     “Indemnifying Party” shall have the meaning ascribed to that term in §7.4(c) hereof.

     “Ninety Day Period” shall have the meaning ascribed to that term in §7.5(b) hereof.

     “Purchaser” shall have the meaning ascribed to that term in the preamble hereto.

     “Redemption Closing” shall have the meaning ascribed to that term in §8.2 hereof.

     “Redemption Closing Date” shall have the meaning ascribed to that term in §8.2 hereof.

     “Redemption Notice” shall have the meaning ascribed to that term in §8.1 hereof.

     “Redemption Price” means, with respect to each C Warrant, the product of $.01 multiplied by the number of Warrant Shares then purchasable under such C Warrant.

     “register, registered and registration” refers to a registration effected by preparing and filing a Registration Statement in compliance with the Securities Act and the declaration or ordering by the SEC of effectiveness of such Registration Statement.

     “Registrable Securities” means the Warrant Shares and any other shares of Common Stock held by a Holder; provided, however, that securities shall only be treated as Registrable Securities if and only for so long as they (A) have not been disposed of pursuant to a registration statement declared effective by the SEC, (B) have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale and (C) are held by a Holder. Notwithstanding the foregoing, Registrable Securities shall not be deemed Registrable Securities at any time during which such Registrable Securities may be sold under Rule 144 during any 90 day period without any limitations as to volume or holding period.

     “Registration Expenses” means all expenses incurred by the Company in complying with Article VII hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and expenses of counsel for the Company, blue sky fees and expenses, all fees and expenses of legal counsel for any Holder, and the expense of any special audits incident to or required by any such registration (but excluding all Selling Expenses).

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     “Registration Period” shall have the meaning ascribed to that term in §7.3(a) hereof.

     “Registration Statement” shall have the meaning ascribed to that term in §7.1 hereof.

     “Rule 144” means Rule 144 issued by the SEC under the Securities Act, or any subsequent rule pertaining to the disposition of securities without registration.

     “SEC” shall mean the Securities and Exchange Commission.

     “SEC Filings” shall mean all reports, schedules, forms, statements and other documents required to be filed by the Company with the SEC since January 1, 2009 pursuant to the requirements of the Exchange Act, including material filed pursuant to Section 13(a) or 15(c) of the Exchange Act, in each case, together with all exhibits, supplements, amendments and schedules thereto, and all documents incorporated by reference therein.

     “Securities” means the Warrants and the Warrant Shares.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

     “Selling Expenses” means all selling commissions applicable to the sale of Registrable Securities.

     “Warrants” means the A Warrants, the B Warrants and the C Warrants of the Company issued to the Purchaser pursuant to §2.1 hereof and any other Warrants transferred to any other permitted holders pursuant to Article 9 hereof.

     “Warrant Shares” means collectively, (a) the shares of Common Stock of the Company issuable upon exercise of the Warrants in accordance with their terms, (b) any capital stock or other securities into which or for which such securities shall have been converted or exchanged pursuant to any recapitalization, reorganization or merger of the Company, and (c) any capital stock or other securities issued with respect to the foregoing pursuant to an equity split or other distribution.

ARTICLE II

SALE AND PURCHASE OF WARRANTS

     §2.1 Sale and Purchase of Warrants. At the Closing referred to in Article III and subject to the terms and conditions hereof and in reliance on the representations and warranties of the Purchaser set forth herein, the Company hereby agrees to issue and sell to the Purchaser and, subject to all of the terms hereof and in reliance on the representations and warranties of the Company set forth herein, the Purchaser hereby agrees to purchase from the Company, for an aggregate purchase price of $3.00, the following Warrants:

     (a) a Warrant (“A Warrant”) to purchase 1,200,000 shares of Common Stock, such A Warrant to be in the form of Exhibit A-1 attached hereto;

     (b) a Warrant (“B Warrant”) to purchase 400,000 shares of Common Stock, such B Warrant to be in the form of Exhibit A-2 attached hereto; and

     (c) a Warrant (“C Warrant”) to purchase 4,400,000, such C Warrant to be in the form of Exhibit A-3 attached hereto.

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     §2.2 Acknowledgments of the Company and the Purchaser. The Company and the Purchaser understand, acknowledge and agree that the aggregate fair market value on the date hereof of the Warrants is as set forth on Schedule 1, and will be reported as such by the Company and the Purchaser for federal, state and local tax purposes.

     §2.3 Closing Conditions. The obligation of the Purchaser to purchase the Warrants shall be subject to the satisfaction of the following conditions precedent:

     (a) The Warrants shall have been duly authorized and issued to the Purchaser, shall be in full force and effect and shall be in form and substance satisfactory to the Purchaser.

     (b) The Loan Documents shall have been duly executed and delivered by the respective parties thereto, all conditions precedent to the effectiveness of the Loan Documents shall have been duly satisfied or waived, the Loan Documents shall be in full force and effect and each of such agreements or instruments shall be in form and substance satisfactory to the Purchaser.

     (c) The Purchaser shall have received from Fulbright & Jaworski L.L.P., counsel for the Company, a legal opinion dated the Closing Date in the form of Exhibit B attached hereto.

     (d) The Board of Directors of the Company shall have taken all such action as is necessary such that the Purchaser would not be deemed an “Acquiring Person” for purposes of the Third Amended and Restated Rights Agreement dated August 23, 2007 between the Company and Wells Fargo Bank, NA (the “Rights Agreement”), including adopting an amendment to such Rights Agreement exempting the Purchaser from being deemed an Acquiring Person for purposes of such Rights Agreement.

     (e) The Company will have delivered to the Purchaser the following:

     (i) a certificate of the Secretary of the Company, dated as of the Closing Date, certifying as to (A) the Certificate of Incorporation and Bylaws of the Company, as in effect on the Closing Date, (B) the resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby, including the issuance of the Warrants, and (C) the incumbency and specimen signature of each officer of the Company executing this Agreement and any other document delivered by it in connection herewith; and

     (ii) a certificate of the Secretary of State of the State of Delaware, dated as of a recent date, to the effect that the Company is in good standing in the State of Delaware.

     (f) The Company shall have obtained all consents and waivers necessary for the Company to execute and deliver this Agreement and all related documents and agreements and to issue and deliver the Warrants, and all such consents and waivers will be in full force and effect.

     (g) All proceedings to be consummated at or prior to the Closing, and all documents to be delivered pursuant to this Agreement shall be reasonably satisfactory to the Purchaser and its counsel, and the Purchaser and its counsel shall have received copies of all documents and information which they may have reasonably requested in connection with the transactions contemplated hereby and of all corporate proceedings in connection therewith, in form and substance reasonably satisfactory to Purchaser and its counsel.

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ARTICLE III

THE CLOSING

     The closing of the purchase of the Warrants under this Agreement (the “Closing”) will take place at 10:00 a.m. local time, on the closing date under the Credit Agreement or at such time and on such other date as may be mutually agreed upon in writing by the Purchaser and the Company. At the Closing, the Company will (among other things) deliver to the Purchaser the Warrants purchased by the Purchaser hereunder, and the Purchaser will deliver to the Company the total consideration payable by the Purchaser for such Warrants.

ARTICLE IV

REPRESENTATIONS OF THE COMPANY

     The Company hereby represents and warrants to the Purchaser that:

          (a) Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business. The Company is duly qualified to transact business as a corporation and is in good standing in each jurisdiction in which the failure so to qualify would have a material adverse effect upon the Company’s ability to perform its obligations under this Agreement or the validity or enforceability of, or Purchaser’s rights and remedies under, this Agreement.

          (b) Authorization; Due Execution. The Company has the requisite corporate power and authority to enter into this Agreement and to perform its obligations under the terms of this Agreement. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement has been taken. This Agreement has been duly authorized, executed and delivered by the Company and, upon due execution and delivery by Purchaser of this Agreement, this Agreement will be a valid and binding agreement of the Company, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or by equitable principles.

          (c) Capitalization. As of the date hereof, the authorized capital stock of the Company consists of 80,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par value $.01 per share, of which 500,000 shares have been designated as Series B Preferred Stock. As of June 30, 2010, (i) 33,803,025 shares of Common Stock were issued and outstanding, (ii) no shares of Series B Preferred Stock were issued and outstanding, (iii) there were outstanding options for the purchase of 3,705,500 shares of Common Stock, and (iv) 4,875,348 shares of Common Stock were reserved for issuance upon exercise of outstanding options issued or options that may be issued under the Company’s 2001 Long Term Stock Incentive Plan, the Harvest Natural Resources 2004 Long Term Incentive Plan, the Harvest Natural Resources 2006 Long Term Incentive Plan and the Harvest Natural Resources 2010 Long-Term Incentive Plan.

          (d) Valid Issuance of Warrants and Warrant Shares. The Warrants, when issued, sold and delivered in accordance with the terms of Article II hereof for the consideration and on the terms and conditions set forth herein, will be duly and validly authorized and issued, fully paid and nonassessable and, based in part upon the representations of Purchaser in this Agreement, will be issued in compliance with all applicable federal and state securities laws, and will not be subject to any

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preemptive rights or other similar rights of shareholders of the Company that are provided for in the Company’s Certificate of Incorporation, its Bylaws or in any agreement to which the Company is a party. Sufficient shares of authorized but unissued Common Stock have been reserved by appropriate corporate action of the Company in connection with the prospective exercise of the Warrants. The issuance of the Warrant Shares (i) does not require any further corporate action by the stockholders of the Company or the Board of Directors, (ii) is not subject to the pre-emptive rights or rights of first refusal of any present or future stockholders of the Company and (iii) does not conflict with any provision of any agreement to which the Company is a party or by which it is bound. All Warrant Shares, when issued upon exercise of the Warrants in accordance with their terms, against payment of the exercise price therefor, will be duly authorized, validly issued, fully paid and non-assessable.

          (e) No Defaults. There exists no default under the provisions of any instrument or agreement evidencing, governing or otherwise relating to any material indebtedness of the Company, or with respect to any other agreement, a default under which could affect the Company’s ability to perform its obligations under this Agreement or the validity or enforceability of, or Purchaser’s rights and remedies under, this Agreement.

          (f) SEC Filings. The Company has timely filed with the SEC all SEC Filings. The SEC Filings were prepared in accordance with and, as of the date on which each such SEC Filing was filed with the SEC, complied in all material respects with the applicable requirements of the Exchange Act. None of such SEC Filings, including, without limitation, any financial statements, exhibits and schedules included therein and documents incorporated therein by reference, at the time filed, declared effective or mailed, as the case may be, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except to the extent information contained in any of the SEC Filings has been revised, corrected or superseded by a later SEC Filing, none of the SEC Filings currently contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

          (g) Governmental Consents. (i) No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, local or provincial governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, except for such notices required or permitted to be filed with certain state and federal securities commissions after the date of this Agreement, which notices will be filed on a timely basis. (2) The Company does not own, operate, or control facilities for the generation or transmission or distribution of electricity, except for electricity consumed by the Company and/or a subsidiary or affiliate of the Company. The Company does not directly or indirectly, or through any affiliate, sell electricity for resale. (3) The Company is not (x) a “public utility” or a “transmitting utility” under the Federal Power Act, as amended (“FPA”), including the regulations of the Federal Energy Regulatory Commission (“FERC”) thereunder, and is not (y) a “public-utility company” under the Public Utility Holding Company Act of 2005 (“PUHCA”), including the regulations of the FERC thereunder; and is not (z) a direct or indirect “holding company” (as the term is defined under PUHCA or under the FPA) of any such “public utility” or “transmitting utility”, nor of any “public-utility company.”

          (h) Financial Statements. The Financial Statements are true and correct in all material respects, are in accordance with the books and records of the Company in all material respects and have been prepared in accordance with generally accepted accounting principles consistently applied with the past practices of the Company (except as may be indicated in the notes thereto), and fairly and accurately present in all material respects the financial position of the Company and the results of its operations for the periods then ended. The Company has no material liabilities, debts or obligations,

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whether accrued, absolute or contingent that under generally accepted accounting principles would be required to be reflected in a consolidated balance sheet of the Company prepared as of the date of this Agreement except for: (i) liabilities identified as such in the “liabilities” column of the Balance Sheet; (ii) accounts payable or accrued salaries that have been incurred by the Company since the Balance Sheet Date in the ordinary course of business; (iii) liabilities which have arisen since the Balance Sheet Date and, individually or in the aggregate, are not material to the Company and its subsidiaries taken as a whole and that were incurred in the ordinary course of business; and (iv) liabilities arising under the Credit Agreement.

          (i) No Conflict. The Company’s execution, delivery and performance of this Agreement does not violate any provision of the Company’s Certificate of Incorporation or Bylaws, each as amended as of the date hereof (copies of which have been filed with, or are incorporated by reference in, the Company’s SEC Filings), any provision of any order, writ, judgment, injunction, decree, determination or award to which the Company is a party or by which it is bound, or, to the Company’s knowledge, any law, rule or regulation currently in effect having applicability to the Company.

          (j) No Default or Violation. The Company is not (i) in default under or in violation of any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound or (ii) in violation of any order of any court, arbitrator or governmental body.

          (k) Credit Agreement. All of the representations and warranties set forth in Article V of the Credit Agreement are true and correct on and as of the Closing Date.

ARTICLE V

REPRESENTATIONS OF THE PURCHASER

     The Purchaser represents and warrants to the Company that:

     (a) The Purchaser is purchasing the Warrants from the Company in accordance with the terms hereof for the Purchaser’s own account without a view to any distribution thereof in violation of the Securities Act, but, subject, nevertheless, to any requirement of law that the disposition of the Purchaser’s property shall at all times be within the Purchaser’s control. The Purchaser has been informed and understands that the Securities have not been registered pursuant to the provisions of Section 5 of the Securities Act and must be held indefinitely unless such Securities are subsequently registered under the provisions of the Securities Act or an exemption from such registration is available.

     (b) The Purchaser represents that it is an “accredited investor” within the meaning of Rule 501(a) promulgated under the Securities Act.

     (c) Each instrument (if any) representing or evidencing any Securities shall bear a legend in or substantially in the following form:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT DOES NOT APPLY.”

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ARTICLE VI

COVENANTS OF THE COMPANY

     The Company hereby covenants with the Holders that the Company will comply with the following:

     §6.1 General. The Company will comply in all material respects with the provisions of Sections 6.01 and 6.02 of the Credit Agreement, which articles (and any applicable corresponding definitions) are each hereby incorporated herein by reference as if fully set forth herein and shall survive any termination of the Credit Agreement.

     §6.2 Governmental and Other Approvals. The Company shall apply for, obtain and maintain in effect, as applicable, all material authorizations, consents, approvals, licenses, qualifications, exemptions, filings, declarations and registrations (whether with any court, governmental agency, regulatory authority, securities exchange or otherwise) which are necessary in connection with the execution, delivery and performance by such party of this Agreement, or any other documents or instruments to be executed or delivered by such party in connection herewith and the transactions consummated or to be consummated hereunder; provided, that the Company shall not be or become a “public utility” or a “holding company” thereof under the FPA, nor a “public-utility company” nor a “holding company” thereof, as those terms are defined under PUHCA, absent the express, prior, written consent of Holders, such consent subject to Holders’ discretion.

     §6.3 Reporting Status. So long as the Company is subject to the reporting requirements of the Exchange Act, the Company will file timely all reports required to be filed with the SEC pursuant to the Exchange Act.

     §6.4 Listing Requirements. So long as the Company shall continue the listing and trading of its Common Stock on the New York Stock Exchange, the Company will comply in all material respects with the Company’s reporting, filing and other obligations under the rules of the New York Stock Exchange.

     §6.5 Amendment to Rights Agreement. The Company shall not agree to any amendment after the date hereof to the Rights Agreement, as amended by the Amendment dated as of the date hereof, which would amend or otherwise modify the provision in Section 1(a)(iv) thereof.

ARTICLE VII
REGISTRATION RIGHTS

     §7.1 Registration.

     (a) At the written request of the Purchaser, the Company will, as soon as reasonably practicable, but in no event later than thirty (30) days following such request (the “Filing Date”), file a registration statement covering the resale of the Registrable Securities on a Form S-3 Registration Statement (the “Registration Statement”) with the SEC and the Company shall use its commercially reasonable efforts to effect the registration, qualifications or compliances (including, without limitation, the execution of any required undertaking to file post-effective amendments, appropriate qualifications or exemptions under applicable blue sky or other state securities laws and appropriate compliance with applicable securities laws, requirements or regulations) as promptly as practicable after the filing

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thereof. The Company shall not be obligated to enter into any underwriting agreement for the sale of any of the Registrable Securities.

     (b) Notwithstanding the foregoing, if at the time of any request to register Registrable Securities pursuant to Section 7.1(a) or after the filing of any Registration Statement but before the effectiveness thereof, the Board of Directors of the Company determines in its good faith reasonable judgment that the Company should not file or seek effectiveness of such Registration Statement otherwise required to be filed pursuant to such Section 7.1(a) because (i) the filing of the Registration Statement or continuation of the registration process would adversely affect a pending or proposed material financing or a material acquisition, merger, recapitalization, consolidation, reorganization or similar transaction, or negotiations, discussions or pending proposals with respect thereto or (ii) the Registration Statement and any prospectus contains or would contain a material misstatement of fact or omission as a result of an event that has occurred or is continuing, the Company shall be entitled to postpone for the shortest reasonable period of time (but not exceeding 180 days from the date of such determination of the Board of Directors of the Company), the filing or effectiveness of such Registration Statement and shall promptly give the Holders written notice of such determination, and, upon request of the Holders, a general statement of the reasons for such postponement and an approximation of the anticipated delay. If the Company shall so postpone the filing or effectiveness of the Registration Statement, the Holders shall have the right to withdraw the request for registration by giving written notice to the Company within 30 days after receipt of the notice of postponement. Such right to delay a request for registration pursuant to this Section 7.1(b) may not be exercised more than once in any 12 month period.

     §7.2 Expenses. All Registration Expenses incurred in connection with any registration, qualification, exemption or compliance pursuant to §7.1 shall be borne by the Company. All Selling Expenses relating to the sale of securities registered by or on behalf of Holders shall be borne by such Holders pro rata on the basis of the number of securities so registered.

     §7.3 Registration Procedures. In the case of the registration, qualification, exemption or compliance effected by the Company pursuant to this Agreement, the Company shall, upon reasonable written request, inform each Holder as to the status of such registration, qualification, exemption and compliance. At its expense the Company shall:

     (a) subject to §7.5, use its commercially reasonable efforts to keep such registration, and any qualification, exemption or compliance under state securities laws which the Company determines to obtain, continuously effective until the earlier of the following: (i) such time as all of the Registrable Securities are sold, or (ii) such time as all Warrant Shares and any other shares of Common Stock held by the Holders cease to be Registrable Securities. The period of time during which the Company is required hereunder to keep the Registration Statement effective is referred to herein as the “Registration Period.”

     (b) advise the Holders within five business days:

               (i) when the Registration Statement or any amendment thereto has been filed with the SEC and when the Registration Statement or any post-effective amendment thereto has become effective;

               (ii) of any request by the SEC for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;

               (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for such purpose;

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               (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

               (v) of the occurrence of any event that requires the making of any changes in the Registration Statement or the prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in the light of the circumstances under which they were made) not misleading;

     (c) use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement at the earliest possible time;

     (d) promptly furnish to each Holder, without charge, at least one copy of such Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits in the form filed with the SEC;

     (e) during the Registration Period, promptly deliver to each Holder, without charge, as many copies of the prospectus included in such Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Company consents to the use, consistent with the provisions hereof and thereof, of the prospectus or any amendment or supplement thereto by each of the selling Holders of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by the prospectus or any amendment or supplement thereto;

     (f) during the Registration Period, promptly deliver to each Holder, without charge, (i) as soon as practicable one copy of the following documents, other than those documents available via EDGAR: (A) its annual report to its stockholders, if any; (B) if not included in substance in its annual report to stockholders, its annual report on Form 10-K (or similar form); and (C) each of its quarterly reports to its stockholders, and, if not included in substance in its quarterly reports to stockholders, its quarterly report on Form 10-Q (or similar form) (the foregoing, in each case, excluding exhibits); and (ii) upon reasonable request, all exhibits excluded by the parenthetical to the immediately preceding clause (C);

     (g) prior to any public offering of Registrable Securities pursuant to any Registration Statement, promptly take such actions as may be necessary to register or qualify or obtain an exemption for offer and sale under the securities or blue sky laws of such jurisdictions as any such Holders reasonably request in writing, provided that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified, to consent to general service of process in any such jurisdiction or to become subject to taxation in any jurisdiction in which it is not then already subject to taxation, and do any and all other acts or things reasonably necessary or advisable to enable the offer and sale in such jurisdictions of the Registrable Securities covered by such Registration Statement;

     (h) upon the occurrence of any event contemplated by §7.3(b)(v) above, the Company shall use its commercially reasonable efforts to promptly prepare a post-effective amendment to the Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

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     (i) otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC which could affect the sale of the Registrable Securities;

     (j) use its commercially reasonable efforts to cause all Registrable Securities to be listed on each securities exchange or market, if any, on which equity securities issued by the Company have been listed; and

     (k) use its commercially reasonable efforts to take all other steps necessary to effect the registration of the Registrable Securities contemplated hereby and to enable the Holders to sell Registrable Securities under Rule 144.

     §7.4 Indemnification.

     (a) To the extent permitted by law, the Company shall indemnify each Holder and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which any registration that has been effected pursuant to this Agreement, against all claims, losses, damages and liabilities (or action in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened (subject to §7.4(c) below), arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, any amendment or supplement thereof or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in light of the circumstances in which they were made, or any violation by the Company of any rule or regulation promulgated by the Securities Act applicable to the Company and relating to any action or inaction required of the Company in connection with any such registration and will reimburse each Holder and each person controlling such Holder for reasonable legal and other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action as incurred; provided, however, that the Company will not be liable in any such case to the extent that any untrue statement or omission or allegation thereof is made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder and stated to be specifically for use in preparation of such Registration Statement, prospectus, or any amendment or supplement thereof; provided further, however, that the Company will not be liable in any such case where the claim, loss, damage or liability arises out of or is related to the failure of the Holder to comply with the covenants and agreements contained in this Agreement respecting sales of Registrable Securities, and except that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement or alleged untrue statement or omission or alleged omission made in the preliminary prospectus but eliminated or remedied in the amended prospectus on file with the SEC at the time the Registration Statement becomes effective or in the amended prospectus filed with the SEC pursuant to Rule 424(b) or in the prospectus subject to completion under Rule 434 of the Securities Act, which together meet the requirements of Section 10(a) of the Securities Act (the “Final Prospectus”), such indemnity shall not inure to the benefit of any such Holder or any such controlling person, if a copy of the Final Prospectus furnished by the Company to the Holder for delivery was not furnished to the person or entity asserting the loss, liability, claim or damage at or prior to the time such furnishing is required by the Securities Act and the Final Prospectus would have cured the defect giving rise to such loss, liability, claim or damage.

     (b) Each Holder will severally, if Registrable Securities held by such Holder are included in the securities as to which such registration is being effected, indemnify the Company, each of its directors and officers and each person who controls the Company within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened (subject to §7.4(c) below), arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, or any amendment or supplement thereof, or based

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on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in light of the circumstances in which they were made, and will reimburse the Company, such directors and officers and each person controlling the Company for reasonable legal and any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action as incurred, in each case to the extent, but only to the extent, that such untrue statement or omission or allegation thereof is made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Holder and stated to be specifically for use in preparation of the Registration Statement, prospectus, any amendment or supplement thereof; provided that the indemnity shall not apply to the extent that such claim, loss, damage or liability results from the fact that the Final Prospectus was not made available to the person or entity asserting the loss, liability, claim or damage at or prior to the time such furnishing is required by the Securities Act and the Final Prospectus would have cured the defect giving rise to such loss, claim, damage or liability. Notwithstanding the foregoing, a Holder’s aggregate liability pursuant to this subsection (b) and subsection (d) shall be limited to the net amount received by the Holder from the sale of the Registrable Securities.

     (c) Each party entitled to indemnification under this §7.4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party (at its expense) to assume the defense of any such claim or any litigation resulting therefrom, provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense provided that all legal and other expenses incurred by the Indemnified Party in connection therewith shall be at such Indemnified Party’s expense, and, provided further, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement, unless such failure is materially prejudicial to the Indemnifying Party in defending such claim or litigation. An Indemnifying Party shall not be liable for any settlement of an action or claim effected without its written consent (which consent will not be unreasonably withheld). No Indemnifying Party, in its defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.

     (d) If the indemnification provided for in this §7.4 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

     §7.5 Certain Obligations of Holders.

     (a) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event requiring the preparation of a supplement or amendment to a prospectus relating to

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Registrable Securities so that, as thereafter delivered to the Holders, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, each Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement and prospectus contemplated by §7.1 until its receipt of copies of the supplemented or amended prospectus from the Company and, if so directed by the Company, each Holder shall deliver to the Company all copies, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.

     (b) Each Holder shall suspend, upon request of the Company, any disposition of Registrable Securities pursuant to the Registration Statement and prospectus contemplated by §7.1 during (i) any period not to exceed one 90-day period within any one 12-month period (the “Ninety Day Period”) the Company requires in connection with a primary underwritten offering of equity securities so long as the Holders are permitted to participate in such primary underwritten offering on a pro rata basis based on the number of Shares they hold at such time relative to the Company’s total number of outstanding shares of Common Stock at such time (provided, however, that, to the extent the underwriters for such offering advise the Holders that marketing factors require a limitation of the number of Shares that may be included in such underwritten offering, the right of the Holders to participate in such offering on a pro rata basis as described above shall be reduced or eliminated and such Holder shall nonetheless remain obligated to suspend its disposition of Registrable Securities pursuant to the Registration Statement and prospectus contemplated by §7.1 for up to the entirety of the Ninety Day Period), and (ii) any period, not to exceed one 90-day period per twelve (12) month period, when the Company determines in good faith that offers and sales pursuant thereto should not be made by reason of the presence of material undisclosed circumstances or developments with respect to which the disclosure that would be required in such a prospectus is premature or would have a material adverse effect on the Company.

     (c) As a condition to the inclusion of its Registrable Securities, each Holder shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may request in writing, including completing a Registration Statement Questionnaire substantially in the form provided by the Company, or as shall be required in connection with any registration referred to in this Agreement.

     (d) Each Holder acknowledges and agrees that the Registrable Securities sold pursuant to the Registration Statement are not transferable on the books of the Company unless the stock certificate submitted to the transfer agent evidencing such Registrable Securities is accompanied by a certificate reasonably satisfactory to the Company to the effect that (i) the Registrable Securities have been sold in accordance with such Registration Statement and (ii) the requirement of delivering a current prospectus has been satisfied.

     (e) Each Holder agrees not to take any action with respect to any distribution deemed to be made pursuant to such Registration Statement which would constitute a violation of Regulation M under the Exchange Act or any other applicable rule, regulation or law.

     (f) At the end of the Registration Period the Holders shall discontinue sales of shares pursuant to such Registration Statement upon receipt of notice from the Company of its intention to remove from registration the shares covered by such Registration Statement which remain unsold, and such Holders shall notify the Company of the number of shares registered which remain unsold immediately upon receipt of such notice from the Company.

     §7.6 Rule 144. With a view to making available to the Holders the benefits of certain rules and regulations of the SEC which at any time permit the sale of the Registrable Securities to the public

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without registration, so long as the Holders still own Registrable Securities, the Company shall use its commercially reasonable efforts to:

     (a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times;

     (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; and

     (c) furnish to such Holder, upon any reasonable request, a written statement by the Company as to its compliance with Rule 144 under the Securities Act, and of the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as such Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing a Holder to sell any such securities without registration.

ARTICLE VIII

REDEMPTION OF C WARRANTS

     §8.1 Right to Redeem C Warrants. In the event that all obligations of the Company outstanding under the Credit Agreement have been repaid in full in cash and all commitments to lend have been terminated thereunder prior to the Bridge Date, the Company may, by written notice to the Holders of C Warrants (the “Redemption Notice”) which shall be delivered within 10 days following such repayment and termination of the Credit Agreement, elect to purchase from the Holders of the C Warrants (and such Holders hereby agree to sell to the Company), at the Redemption Price for such C Warrants, all but not less than all of the C Warrants as are then outstanding on a date specified in such notice not more than 90 days after the date of the Redemption Notice.

     §8.2 Redemption Closing. The closing of the transactions contemplated by the Redemption Notice (the “Redemption Closing”) shall take place at the offices of the Company at 10:00 a.m. local time on the date so specified, or at such other time and place as the Company and the Holders may agree upon in writing (the “Redemption Closing Date”). At the Redemption Closing, each Holder will deliver to the Company instruments of transfer representing the C Warrants held by such Holder (properly endorsed or accompanied by assignments) against payment of the Redemption Price to such Holder in cash.

ARTICLE IX

REGISTRATION AND TRANSFER OF WARRANTS

     §9.1 Registration, Transfer and Exchange of Warrants. (a) The Company shall keep a register in which shall be entered the names and addresses of the Holders of Warrants issued by it and particulars of the respective Warrants held by them and of all transfers of such Warrants. The ownership of any of the Warrants shall be proven by such register and the Company may conclusively rely upon such register.

     (b) The Holder of any of the Warrants may at any time and from time to time prior to exercise or redemption thereof surrender any Warrant held by it for exchange or transfer at said office of the Company. On surrender for exchange of the Warrants, properly endorsed, to the Company, the

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Company at its expense will issue and deliver to or on the order of the Holder thereof a new Warrant or Warrants of like tenor, in the name of such Holder or, upon payment by such Holder of any applicable transfer taxes, as such Holder may direct, calling in the aggregate on the face or faces thereof for the number of Warrant Shares called for on the face or faces of the Warrants so surrendered. The Company will pay shipping and insurance charges, from and to the Holder’s principal office, involved in the exchange or transfer of any Warrant.

     (c) Each Warrant issued hereunder, whether originally or in substitution for, or upon transfer or exchange of, any Warrant shall be registered on the date of execution thereof by the Company. The registered Holder of a Warrant shall be deemed to be the owner of such Warrant for all purposes of this Agreement. All notices given hereunder to such Holder shall be deemed validly given if given in the manner specified in §11.1 hereof.

     §9.2 Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Warrant and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement from such Holder reasonably satisfactory to the Company, or, in the case of any such mutilation, upon the surrender of such Warrant for cancellation to the Company at its principal office, the Company, at its own expense, will execute and deliver, in lieu thereof, a new Warrant of like tenor. Any Warrant in lieu of which any such new Warrant has been so executed and delivered by the Company shall not be deemed to be outstanding for any purpose of this Agreement.

     §9.3 Transfer of Warrants. The Warrants shall be freely transferable, subject to applicable federal and state securities laws and regulations.

ARTICLE X

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

     §10.1 Survival of Representations. The representations and warranties of the Company and of the Purchaser contained in this Agreement, or any agreement, instrument or document delivered pursuant to any of the provisions of this Agreement, shall survive the execution and delivery of this Agreement, any examination or investigation conducted by or on behalf of the Company or the Purchaser, and each Closing hereunder.

     §10.2 Indemnification for Misrepresentations. The Company agrees to indemnify and hold the Purchaser harmless from and against, and to pay to the Purchaser, on demand by the Purchaser from time to time, the full amount of any loss, claim, damage, liability, cost or expense (including reasonable attorneys’ fees) resulting to the Purchaser from any false, incorrect or misleading representation or warranty of the Company contained in this Agreement, or any agreement, instrument or document delivered by the Company to the Purchaser pursuant to any of the provisions of this Agreement.

     §10.3 Expenses. Whether or not all or any of the arrangements or transactions contemplated by this Agreement or by any of the Warrants shall be consummated, the Company agrees to pay to the Purchaser, on demand by the Purchaser at any time and as often as the occasion therefor may require: (a) all of the reasonable legal fees, plus all reasonable out-of-pocket expenses and disbursements, of Bingham McCutchen LLP, special counsel for the Purchaser, which have been or shall be incurred or sustained at any time in connection with the preparation, negotiation, execution or delivery of this Agreement, any of the Warrants, or any other agreements, instruments or documents relating thereto; and (b) all reasonable out-of-pocket costs and expenses which shall be incurred or sustained by the Purchaser at any time in connection with any modifications or amendments to or consents, approvals or

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waivers under this Agreement or any of the Warrants (other than any such modifications or amendments entered into at the request of the Purchaser), or in connection with any litigation, proceeding or dispute arising out of or relating to this Agreement or any of the Warrants in connection with any action or proceeding taken by the Purchaser to protect or preserve all or any of the rights, remedies, powers or privileges of the Purchaser under any of such documents or to enforce any of the covenants, agreements or obligations of the Company under any of such documents (including, without limitation, all of the reasonable fees and disbursements of legal counsel for the Purchaser).

ARTICLE XI

MISCELLANEOUS

     §11.1 Notices.

     (a) All notices and other communications pursuant to this Agreement shall be in writing, either delivered in hand, mailed by United States registered or certified first-class mail, postage prepaid, sent by overnight courier, or sent by telegraph, telecopy, facsimile or telex and confirmed by delivery via courier or postal service, addressed as follows:

     (i) if to the Company, at 1177 Enclave Parkway, Suite 300, Houston, Texas 77077, attention: General Counsel, or at such other address as shall have been furnished to each of the Holders in writing by the Company;

     (ii) if to the Purchaser, at the address set forth on Schedule 1 attached hereto, and if to any other Holder, at such address as shall have been furnished to the Company in writing by such Holder.

     (b) Any notice or other communication pursuant to this Agreement shall be deemed to have been duly given or made and to have become effective (i) if delivered by hand, overnight courier or facsimile to a responsible officer of the party to which it is directed, at the time of receipt thereof by such officer or the sending of such facsimile or (ii) if sent by registered or certified first-class mail, postage prepaid, on the third business day following the mailing thereof.

     §11.2 Governing Law, Jurisdiction, Etc.

     (a) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

     (b) SUBMISSION TO JURISDICTION. THE COMPANY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE WARRANTS, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER

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MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN THE WARRANTS SHALL AFFECT ANY RIGHT THAT THE HOLDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE WARRANTS AGAINST THE COMPANY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

     (c) WAIVER OF VENUE. THE COMPANY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE WARRANTS IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

     (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN §11.1. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

     §11.3 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE WARRANTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE WARRANTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     §11.4 Amendments and Waivers.

     (a) Except as otherwise provided by paragraph (b) of this §11.4, and except as otherwise expressly required by any other provisions of this Agreement, none of the terms or provisions contained in this Agreement, and none of the agreements, obligations or covenants of the Company contained in this Agreement, may be amended, modified, supplemented, waived or terminated unless (i) the Company shall execute an instrument in writing agreeing or consenting to such amendment, modification, supplement, waiver or termination, and (ii) the Company shall receive a prior written Holder Consent therefor from Holders of a majority of the Registrable Securities then outstanding.

     (b) Each of the terms and provisions contained in this §11.4 or in the definitions of Holder Consent contained in Article I hereof may be amended, modified, supplemented, waived or terminated only by a written instrument or consent signed by the Company and by each of the Holders holding of record any Securities at the effective date thereof.

     (c) In connection with any action taken or to be taken pursuant to paragraph (a) of this §11.4, there shall be no obligation or requirement on the part of the Company, any of the Holders or any other persons (i) to solicit or to attempt to solicit from all of the Holders the consent or approval of all of the

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Holders for such action, or (ii) to submit any notices of any kind to all of the Holders in advance of any action proposed to be taken pursuant to paragraph (a) of this §11.4. However, copies of all written consents or approvals given by Holders in connection with any action taken or to be taken pursuant to and in compliance with paragraph (a) of this §11.4 shall be sent by the Company, promptly after the receipt thereof by the Company, to each Holder who shall have failed or refused to give a written consent or approval for such action.

     (d) Any action taken pursuant to and in compliance with paragraph (a) of this §11.4 shall be binding upon the Company and upon all of the Holders, including all of the Holders who shall have failed or refused to give a written consent or approval for such action.

     §11.5 Integration. Annexed to this Agreement are Schedule 1, Exhibit A-1, Exhibit A-2, Exhibit A-3, and Exhibit B. Such Schedules and Exhibits are an integral part of this Agreement and are hereby incorporated by reference.

     §11.6 Rights and Obligations Several. The rights and obligations of each of the parties hereto shall be several (and not joint), except as otherwise expressly provided by this Agreement.

     §11.7 No Waiver; Cumulative Remedies. No failure or delay on the part of any Holder in exercising any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

     §11.8 Entire Agreement. This Agreement, including the Schedules and Exhibits hereto, and the Credit Agreement (to the extent incorporated herein by reference) constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede any prior understandings or agreements concerning the subject matter hereof.

     §11.9 Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

     §11.10 Binding Effect. All of the covenants and agreements of the Company contained in, and all of the rights granted by the Company pursuant to, this Agreement, shall inure to the benefit of each Holder.

     §11.11 Counterparts. This Agreement may be executed simultaneously in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. In making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart signed by each of the parties hereto.

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     In Witness Whereof, the parties hereto have duly executed this Agreement as of the date first written above.

HARVEST NATURAL RESOURCES, INC.
By:	/s/ James A. Edmiston
	Name:	James A. Edmiston
	Title:	President and Chief Executive Officer
PURCHASER: MSD ENERGY INVESTMENTS PRIVATE II, LLC
By:	/s/ Marcello Liguori
	Name:	Marcello Liguori
	Title:	Vice President

Schedule 1

		Purchase Price for
Purchaser	Warrants Purchased	Warrants	Value of Warrants
MSD Energy	A Warrant for 1,200,000 shares	$1.00 for A Warrant	$	6,552,000
Investments Private II, LLC	B Warrant for 400,000 shares	$1.00 for B Warrant	$	1,840,000
645 Fifth Avenue
21st Floor
New York, NY 10022	C Warrant for 4,400,000 shares	$1.00 for C Warrant	$	2,730,000

EX-4.3

Exhibit 4.3

     This Warrant and any shares acquired upon the exercise of this Warrant have not been registered under the Securities Act of 1933, as amended, and may not be sold or transferred in the absence of such registration or an exemption therefrom under such Act and any applicable state securities laws.

     This Warrant is issued pursuant to the Warrant Purchase Agreement dated as of October 28, 2010 and if any provision of this Warrant is found to conflict with such Warrant Purchase Agreement, the provisions of such Warrant Purchase Agreement shall prevail.

No. W-1

HARVEST NATURAL RESOURCES, INC.

COMMON STOCK PURCHASE WARRANT

     Harvest Natural Resources, Inc., a Delaware corporation (together with any corporation which shall succeed to or assume the obligations of Harvest Natural Resources, Inc. hereunder, the “Company”), hereby certifies that, for value received, MSD Energy Investments Private II, LLC (the “Investor”), or its assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time during the Exercise Period (as defined in Section 12 hereof) up to 1,200,000 fully paid and non-assessable shares of Common Stock (as defined in Section 12 hereof), at a purchase price per share equal to the Exercise Price (as defined in Section 12 hereof). The number of shares of Common Stock for which this Warrant is exercisable and the Exercise Price are subject to adjustment as provided herein.

     This Warrant is issued pursuant to the Warrant Purchase Agreement (as amended and in effect from time to time, the “Warrant Purchase Agreement”), dated as of October 28, 2010, between the Company and the initial purchaser named therein, a copy of which is on file at the principal office of the Company. The holder of this Warrant shall be entitled to all of the benefits and shall be subject to all of the obligations of the Warrant Purchase Agreement.

1. DEFINITIONS. Terms defined in the Warrant Purchase Agreement and not otherwise defined herein are used herein with the meanings so defined. Certain terms are used in this Warrant as specifically defined in Section 12 hereof.

2. EXERCISE OF WARRANT.

     2.1. Exercise. This Warrant may be exercised prior to its expiration pursuant to Section 2.5 hereof by the holder hereof at any time or from time to time during the Exercise Period, by surrender of this Warrant, with the form of subscription attached hereto duly executed by such holder, to the Company at its principal office, indicating such holder’s election to exercise this Warrant as to a specified number of shares pursuant to the net exercise provisions of Section 2.2. This Warrant shall be deemed exercised for all purposes as of the close of business on the day on which the holder has delivered this Warrant and the subscription form to the Company, regardless of when the Company issues the certificates evidencing the shares issuable upon such exercise. In the event the Warrant is not exercised in full, the Company, at its expense, will forthwith issue and deliver to or

upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of such shares (without giving effect to any adjustment therein) for which this Warrant shall have been exercised.

     2.2. Net Exercise. The holder may elect to exercise this Warrant at any time or from time to time, by receiving shares of Common Stock equal to the number of shares determined pursuant to the following formula:

X = Y (A - B)
           A

where,
X =	the number of shares of Common Stock to be issued to Holder;
Y =	the number of shares of Common Stock as to which this Warrant is to be exercised (as indicated on the subscription form);
A =	the closing price on the Principal Market of the Common Stock calculated as of the Trading Day immediately preceding the date of exercise; and
B =	the Exercise Price.

     2.3. Antitrust Notification. If the holder of this Warrant determines, in its sole judgment upon the advice of counsel, that an exercise of this Warrant pursuant to the terms hereof would be subject to the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the Company shall, within seven (7) business days after receiving notice from such holder of the applicability of the HSR Act, file with the United States Federal Trade Commission (the “FTC”) and the United States Department of Justice (the “DOJ”) the notification and report form and any supplemental information required to be filed by it pursuant to the HSR Act in connection with the exercise of this Warrant. Any such notification and report form and supplemental information will be in full compliance with the requirements of the HSR Act. The Company will furnish to such holder promptly (but in no event more than five (5) business days) such information and assistance as such holder may reasonably request in connection with the preparation of any filing or submission required to be filed by such holder under the HSR Act. The Company shall respond promptly after receiving any inquiries or requests for additional information from the FTC or the DOJ (and in no event more than three (3) business days after receipt of such inquiry or request). The Company shall keep such holder apprised periodically and at such holder’s request of the status of any communications with, and any inquiries or requests for additional information from, the FTC or the DOJ. The Company shall bear all filing or other fees required to be paid by the Company and such holder (or the “ultimate parent entity” of such holder, if any) under the HSR Act or any other applicable law in connection with such filings and all costs and expenses (including, without limitation, attorneys’ fees and expenses) incurred by the Company and such holder in connection with the preparation of such filings and responses to inquiries or requests. In the event that this Section 2.3 is applicable to any exercise of this Warrant, the purchase by such holder of the Exercise Shares subject to such exercise, and the payment by such holder of the Exercise Price therefor, shall be subject to the expiration or earlier termination of the waiting period under the HSR Act (with the exercise date of this Warrant being deemed to be the date immediately following the date of such expiration or early termination).

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     2.4. Termination. This Warrant shall terminate upon the earlier to occur of (i) exercise in full or (ii) the expiration of the Exercise Period.

3. REGISTRATION RIGHTS. The holder of this Warrant has certain rights to require the Company to register the Warrant Shares under the Securities Act and any blue sky or securities laws of any jurisdictions within the United States at the time and in the manner specified in the Warrant Purchase Agreement.

4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable after any exercise of this Warrant and in any event within three (3) Trading Days thereafter, the Company shall, at its expense (including the payment by it of any applicable issue or stamp taxes), cause to be issued in the name of and delivered to the holder, or as the holder may direct, a certificate or certificates evidencing the number of fully paid and nonassessable shares of Common Stock (or Other Securities, as applicable) (which number shall be rounded up to the nearest whole share in the event any fractional share may otherwise be issuable upon such exercise) to which the holder shall be entitled on such exercise, in such denominations as may be requested by the holder, which certificate or certificates shall be free of restrictive and trading legends (except for any such legends as may be required under the Securities Act). In lieu of delivering physical certificates for the shares of Common Stock (or Other Securities) issuable upon any exercise of this Warrant, provided the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program or a similar program, upon request of the holder, the Company shall use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares of Common Stock (or Other Securities) issuable upon exercise of this Warrant to the holder (or its designee), by crediting the account of the holder’s (or such designee’s) broker with DTC through its Deposit Withdrawal Agent Commission system (provided that the same time periods herein as for stock certificates shall apply) as instructed by the holder (or its designee).

5. ADJUSTMENT FOR DIVIDENDS, DISTRIBUTIONS AND RECLASSIFICATIONS.

     5.1. Distribution of Assets; Spin-Off. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a Spin-Off, dividend, reclassification, corporate rearrangement or other similar transaction, but excluding cash dividends adjustments in respect of which are provided for in Section 5.2 hereof and excluding stock dividends or stock splits adjustments in respect of which are provided for in Section 7 hereof) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:

          (a) (i) the Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction of which:

          (A) the numerator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date minus the Fair Market Value of the Distribution applicable to one share of Common Stock, and

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          (B) the denominator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date;

and (ii) the number of Exercise Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i) of this Section 5.1(a); and

          (b) Notwithstanding the provisions of the foregoing clause (a), in the event of a Spin-Off in which the Distribution is of common stock of a subsidiary of the Company, then (i) the Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction of which:

          (A) the numerator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date minus the Fair Market Value of the Distribution applicable to one share of Common Stock, and

          (B) the denominator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date;

and (ii) the number of Exercise Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i) of this Section 5.1(b); and (iii) the holder of this Warrant shall receive an additional warrant to purchase common stock of such company, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of common stock of such company that would have been issuable or distributed to the holder of this Warrant pursuant to the Distribution had the holder exercised this Warrant for cash for the full number of shares of Common Stock on the face of this Warrant (notwithstanding the requirement that this Warrant be exercised pursuant to the net exercise provisions of Section 2.2) immediately prior to such record date and with an exercise price equal to the amount by which the Exercise Price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the preceding clause (i) of this Section 5.1(b).

     5.2. Cash Dividends. In case at any time or from time to time, the holders of Common Stock shall have received, or (on or after the record date fixed for the determination of shareholders eligible to receive) shall have become entitled to receive, any cash dividend or distribution, then (a) the Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such cash dividend or distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction of which:

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          (i) the numerator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date minus the amount of the cash dividend or distribution applicable to one share of Common Stock, and

          (ii) the denominator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date;

and (b) the number of Exercise Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such cash dividend or distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (a) of this Section 5.2.

     5.3. Other Events. If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features, or any stock repurchase or buyback), then the Company’s Board of Directors, acting in good faith and consistent with their fiduciary duties, shall make an appropriate adjustment in the Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Warrant.

6. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.

     6.1. Certain Adjustments. In case at any time or from time to time, the Company shall (i) effect a capital reorganization, reclassification or recapitalization, (ii) consolidate with or merge into any other person, or (iii) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then in each such case, this Warrant shall thereafter be exercisable for the same kind and amounts of securities (including shares of stock) or other assets, or both, which were issuable or distributable to the holders of outstanding Common Stock upon such reorganization, reclassification, recapitalization, consolidation, merger or transfer, in respect of that number of shares of Common Stock for which this Warrant could have been exercised immediately prior to such reorganization, reclassification, recapitalization, consolidation, merger or transfer; and, in any such case, appropriate adjustments (as determined in good faith by the Board of Directors of the Company) shall be made to assure that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be practicable, in relation to any securities or other assets thereafter deliverable upon the exercise of this Warrant.

     6.2. Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this Section 6, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 8 hereof.

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7. ADJUSTMENTS FOR ISSUANCE OF COMMON STOCK AND AMOUNT OF OUTSTANDING COMMON STOCK.

     7.1. General. If at any time there shall occur any stock split, stock dividend, reverse stock split or other subdivision of the Company’s Common Stock (“Stock Event”), then the number of shares of Common Stock to be received by the holder of this Warrant shall be appropriately adjusted such that the proportion of the number of shares issuable hereunder to the total number of shares of the Company (on a fully diluted basis) prior to such Stock Event is equal to the proportion of the number of shares issuable hereunder after such Stock Event to the total number of shares of the Company (on a fully-diluted basis) after such Stock Event. The Exercise Price shall be proportionately decreased or increased upon the occurrence of any Stock Event; provided that in no event will the Exercise Price be less than the par value of the Common Stock.

     7.2. Other Securities. In case any Other Securities shall have been issued, or shall then be subject to issue upon the conversion or exchange of any stock (or Other Securities) of the Company (or any other issuer of Other Securities or any other entity referred to in Section 6 hereof) or to subscription, purchase or other acquisition pursuant to any rights or options granted by the Company (or such other issuer or entity), the holder hereof shall be entitled to receive upon exercise hereof such amount of Other Securities (in lieu of or in addition to Common Stock) as is determined in accordance with the terms hereof, treating all references to Common Stock herein as references to Other Securities to the extent applicable, and the computations, adjustments and readjustments provided for in this Section 7 with respect to the number of shares of Common Stock issuable upon exercise of this Warrant shall be made as nearly as possible in the manner so provided and applied to determine the amount of Other Securities from time to time receivable on the exercise of the Warrant, so as to provide the holder of the Warrant with the benefits intended by this Section 7 and the other provisions of this Warrant.

     7.3. Adjustments for Dilutive and Other Events.

     (a) Issuance of Additional Shares of Common Stock. If at any time on or after the Bridge Date, the Company shall issue any Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 7.3(b) below), at a price per share (the “Offering Price”) which is lower than the Reference Price on the date of such issuance, then the number of shares of Common Stock to be received by the holder of this Warrant upon the exercise hereof shall be adjusted to that number determined by multiplying (a) the number of shares of Common Stock purchasable hereunder immediately prior thereto by (b) a fraction (i) the numerator of which shall be the sum of (A) the number of shares of Common Stock Deemed Outstanding immediately prior to the issuance of such shares of Common Stock plus (B) the number of shares of Common Stock issued in the subject transaction and (ii) the denominator of which shall be an amount equal to the sum of (x) the number of shares of Common Stock Deemed Outstanding immediately prior to the issuance of such shares of Common Stock plus (y) the quotient of (1) the Offering Price multiplied by the number of shares of Common Stock so issued by the Company, divided by (2) the Reference Price in effect immediately prior to the issuance of such shares. The provisions of this Section 7.3 shall not apply to (i) any issuance of additional Common Stock for which an adjustment is provided under Section 7.1 hereof, (ii) any issuance of Additional Shares of Common Stock the proceeds of which are immediately used for the repayment of all obligations of the Company under the Credit Agreement, and (iii) (A) the issuance of Common Stock upon the exercise of options outstanding on the date hereof and (B) the issuance of options after the date hereof for the purchase of

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up to 1,169,848 shares (subject to adjustments for stock splits, reverse stock splits, combinations and similar events) of Common Stock, and the issuance of Common Stock upon the exercise of such options, pursuant to the Company’s 2001 Long Term Stock Incentive Plan, the Harvest Natural Resources 2004 Long Term Incentive Plan, the Harvest Natural Resources 2006 Long Term Incentive Plan and the Harvest Natural Resources 2010 Long-Term Incentive Plan (collectively, the “Excluded Options”). When any adjustment is required to be made to the number of shares hereunder pursuant to this Section 7.3(a), the Exercise Price shall be reduced to a price (calculated to the nearest cent) as is equal to the quotient obtained by dividing (x) the product of the Exercise Price multiplied by the number of shares of Common Stock issuable upon exercise of this Warrant, in each case as in effect immediately before such adjustment, by (y) the number of shares of Common Stock issuable upon exercise of this Warrant immediately after giving effect to such adjustment.

     (b) Issue of Options and Convertible Securities Deemed Issue of Additional Shares of Common Stock. If the Company at any time or from time to time on or after the Bridge Date shall issue any Options (other than Excluded Options) or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, or, in case a record date shall have been fixed for such issuance, as of the close of business on such record date, provided that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 7.3(c) below) of such Additional Shares of Common Stock would be less than the Reference Price in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued (i) no further adjustment in the number of shares of Common Stock for which this Warrant is exerciseable shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities, and (ii) upon the expiration or termination of any unexercised Option, the number of shares of Common Stock for which this Warrant is then exerciseable shall be readjusted, and the Additional Shares of Common Stock deemed issued as the result of the original issue of such Option shall not be deemed issued for the purpose of such readjustment; provided, however, that with respect to any Options or Convertible Securities issued by the Company for which there is a subsequent adjustment which increases the number of shares of Common Stock issuable upon conversion or exercise of such Options or Convertible Securities or an adjustment which decreases the exercise price or conversion price of such Options or Convertible Securities, then an adjustment to the number of shares of Common Stock for which this Warrant is exerciseable shall be made under this Section 7.3 upon any such adjustment to such Options or Convertible Securities as if such Options or Convertible Securities were deemed to have been cancelled and reissued.

     (c) Determination of Consideration. For purposes of this Section 7.3, the consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows:

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     (i) Cash and Property: Such consideration shall:

     (A) insofar as it consists of cash, be equal to the total cash received by the Company, excluding amounts paid or payable for accrued interest or accrued dividends;

     (B) insofar as it consists of property other than cash, be computed at the Fair Market Value thereof at the time of such issue determined as provided below; and

     (C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received that is allocated to such Additional Shares of Common Stock, computed as provided in or pursuant to clauses (A) and (B) above.

If the Company shall issue (or shall be deemed to issue) Additional Shares of Common Stock for no consideration, such Additional Shares of Common Stock shall be deemed to have been issued for consideration equal to $.01 per share.

     (ii) Options and Convertible Securities. The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section 7.3(b), relating to Options and Convertible Securities, shall be determined by dividing

     (A) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

     (B) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

8. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in taking all such action as may be necessary or appropriate in order to protect the rights of the holder of the Warrant against dilution. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of stock receivable on the exercise of the Warrant above the amount payable therefor on such exercise, (ii) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of stock on the exercise of the Warrant from time to time outstanding, and (iii) subject to Section 14, will not transfer all or substantially all of its

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properties and assets to any other entity (corporate or otherwise), or consolidate with or merge into any other entity or permit any such entity to consolidate with or merge with the Company (if the Company is not the surviving entity), unless such other entity shall expressly assume in writing and will be bound by all the terms of this Warrant and the Warrant Purchase Agreement.

9. CERTIFICATE AS TO ADJUSTMENTS. In each case of any event that may require any adjustment or readjustment in the shares of Common Stock issuable on the exercise of this Warrant, the Company at its expense will promptly prepare a certificate setting forth such adjustment or readjustment, or stating the reasons why no adjustment or readjustment is being made, and showing, in detail, the facts upon which any such adjustment or readjustment is based, including a statement of (i) the number of shares of Common Stock Deemed Outstanding, and (ii) the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted and readjusted (if required by Section 7) on account thereof. The Company will forthwith mail a copy of each such certificate to each holder of a Warrant, and will, on the written request at any time of any holder of a Warrant, furnish to such holder a like certificate setting forth the calculations used to determine such adjustment or readjustment.

10. NOTICES OF RECORD DATE. In the event of:

     (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right; or

     (b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or any consolidation or merger of the Company with or into any other Person or any other Fundamental Change; or

     (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company,

     (d) any proposed issue or grant by the Company of any shares of stock of any class or any other securities, or any right or option to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities (other than any issuance or grant to which Section 7.3 hereof does not apply);

then, and in each such event, the Company will mail or cause to be mailed to the holder of this Warrant a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is anticipated to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or Other Securities) shall be entitled to exchange their shares of Common Stock (or Other Securities) for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up and (iii) the amount and

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character of any such stock or other such securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be mailed at least thirty (30) days prior to the date specified in such notice on which any such action is to be taken.

11. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of this Warrant, a number of shares of Common Stock equal to the total number of shares of Common Stock from time to time issuable upon exercise of this Warrant, and, from time to time, will take all steps necessary to amend its Certificate of Incorporation to provide sufficient reserves of shares of Common Stock issuable upon exercise of this Warrant.

12. DEFINITIONS. As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

     Additional Shares of Common Stock means all shares of Common Stock issued (or, pursuant to Section 7.3(b) hereof, deemed to be issued) by the Company after the date hereof, including without limitation any treasury shares sold or otherwise transferred by the Company, but excluding shares of Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock for which an adjustment is made pursuant to Section 7.1 hereof, but excluding shares of Common Stock issued or issuable upon exercise of any Excluded Options.

     Appraisal Procedure means a procedure whereby two independent appraisers, one chosen by the Company and one by the holder (or if there is more than one holder, a majority in interest of holders), shall mutually agree upon the determinations then the subject of appraisal. Each party shall deliver a notice to the other appointing its appraiser within 15 days after the Appraisal Procedure is invoked. If within 30 days after appointment of the two appraisers they are unable to agree upon the amount in question, a third independent appraiser shall be chosen within 10 days thereafter by the mutual consent of such first two appraisers or, if such first two appraisers fail to agree upon the appointment of a third appraiser, such appointment shall be made by the American Arbitration Association, or any organization successor thereto, from a panel of arbitrators having experience in the appraisal of the subject matter to be appraised. The decision of the third appraiser so appointed and chosen shall be given within 30 days after the selection of such third appraiser. If three appraisers shall be appointed and the determination of one appraiser is disparate from the middle determination by more than twice the amount by which the other determination is disparate from the middle determination, then the determination of such appraiser shall be excluded, the remaining two determinations shall be averaged and such average shall be binding and conclusive on the Company and the holder; otherwise, the average of all three determinations shall be binding and conclusive on the Company and the holder. The costs of conducting any Appraisal Procedure shall be borne by the holder requesting such Appraisal Procedure, except (A) the fees and expenses of the appraiser appointed by the Company and any other costs incurred by the Company shall be borne by the Company and (B) if such Appraisal Procedure shall result in a determination that is disparate by 5% or more from the Company’s initial determination, all costs of conducting such Appraisal Procedure shall be borne by the Company.

     Bridge Date shall have the meaning assigned to such term in the Credit Agreement.

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     Common Stock means (i) the Company’s Common Stock, $.01 par value per share, (ii) any other capital stock of any class or classes (however designated) of the Company, the holders of which shall have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any shares entitled to preference, and (iii) any other securities into which or for which any of the securities described in clauses (i), or (ii) above have been converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

     Common Stock Deemed Outstanding means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock issuable at such time upon conversion of any Convertible Securities and Options (other than this Warrant and any other warrants issued under the Warrant Purchase Agreement) then outstanding to the extent such Convertible Security or Option is (i) convertible, exercisable or exchangeable at such time and (ii) convertible, exercisable or exchangeable at a price that is less than the Fair Market Value of a share of Common Stock issuable upon such conversion, exercise or exchange at such time.

     Convertible Securities means any evidences of Indebtedness, shares (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Common Stock.

     Exercise Period means the period commencing on the Closing Date under the Warrant Purchase Agreement and ending on the fifth anniversary of such date.

     Exercise Price means (i) until the Bridge Date, a purchase price per share of $15.00, as adjusted from time to time as provided herein, and (ii) as of and following the Bridge Date, a purchase price per share equal to the lower of $15.00 or 120% of the average closing bid price, as reported by Bloomberg Financial Markets, on the Principal Market of the Common Stock for the twenty (20) consecutive Trading Days immediately preceding the Bridge Date.

     Exercise Shares means the shares of Common Stock for which this Warrant is then being exercised.

     Fair Market Value means, with respect to any security or other property, the fair market value of such security or other property as determined by the Board of Directors, acting in good faith. If the holder does not accept the Board of Director’s calculation of fair market value and the holder and the Company are unable to agree on fair market value, the Appraisal Procedure shall be used to determine Fair Market Value.

     Fundamental Change means the occurrence of one of the following:

     (i) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect ultimate beneficial owner of common equity of the Company representing more than 50% of the voting power of the outstanding Common Stock;

     (ii) consummation of any consolidation or merger of the Company or similar transaction or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its subsidiaries, taken as a whole, to any person , in each case pursuant to which the Common Stock will be converted into cash, securities or other property, other than pursuant to a transaction in which the persons that beneficially owned, directly or

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indirectly, voting shares of the Company immediately prior to such transaction beneficially own, directly or indirectly, voting shares representing a majority of the total voting power of all outstanding classes of voting shares of the continuing or surviving Person immediately after the transaction; or

     (iii) the Company’s stockholders approve and adopt a plan of liquidation or dissolution of the Company or a sale of all or substantially all of the Company’s assets.

     Market Price means, with respect to the Common Stock, on any given day, the closing sale price or, if no closing sale price is reported, the last reported sale price of the shares of the Common Stock on the New York Stock Exchange on such date. If the Common Stock is not traded on the New York Stock Exchange on any date of determination, the Market Price of the Common Stock on such date of determination means the closing sale price as reported in the composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is so listed or quoted, or, if no closing sale price is reported, the last reported sale price on the principal U.S. national or regional securities exchange on which the Common Stock is so listed or quoted, or if the Common Stock is not so listed or quoted on a U.S. national or regional securities exchange, the last quoted bid price for the Common Stock in the over-the-counter market as reported by Pink Sheets LLC or similar organization, or, if that bid price is not available, the market price of the Common Stock on that date as determined by a nationally recognized independent investment banking firm retained by the Company for this purpose.

     Option means any rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

     Other Securities refers to any stock (other than Common Stock) and other securities of the Company or any other entity (corporate or otherwise) (i) which the holder of this Warrant at any time shall be entitled to receive, or shall have received, on the exercise of this Warrant, in lieu of or in addition to Common Stock, or (ii) which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities, in each case pursuant to Section 5 or 6 hereof.

     Preliminary Fundamental Change means, with respect to the Company, (A) the execution of a definitive agreement for a transaction or (B) the recommendation that stockholders tender in response to a tender or exchange offer, in the case of both (A) and (B), that would reasonably be expected to result in a Fundamental Change.

     Principal Market means, at any time, the securities exchange, quotation system or over-the-counter trading facility on which the Common Stock is then principally traded or quoted at such time.

     Reference Price means, on any date of determination, the greater of (i) the Market Price per share as of such date and (ii) the Exercise Price.

     Spin-Off means a transaction in which the Company spins off or otherwise divests itself of a part of its business or operations or disposes all or a part of its assets in a transaction in which the Company does not receive compensation for such business, operations or assets, but causes securities of a subsidiary of the Company or another entity to be distributed or otherwise issued to security holders of the Company,

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     Trading Day means, at any time, a day on which the Principal Market is open for the general trading or quotation of securities and the Common Stock is traded or quoted thereon without suspension or interruption.

13. LIMITATION ON BENEFICIAL OWNERSHIP. Notwithstanding the foregoing, the holder shall not be entitled to receive shares of Common Stock upon exercise of this Warrant to the extent (but only to the extent) that such receipt would cause the holder to become, directly or indirectly, a “beneficial owner” (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of a number of shares of Common Stock which exceeds the Maximum Percentage of the shares of Common Stock outstanding at such time. This limitation on beneficial ownership shall be terminated (i) upon 61 days’ notice to the Company by the holder or (ii) immediately on the date that is 30 days prior to the expiration of the Exercise Period. Any purported delivery of shares of Common Stock upon exercise of this Warrant shall be void and have no effect to the extent (but only to the extent) that such delivery would result in the holder becoming the beneficial owner of more than the Maximum Percentage of the shares of Common Stock outstanding at such time. If any delivery of shares of Common Stock owed to the holder upon exercise of this Warrant is not made, in whole or in part, as a result of this limitation, the Company’s obligation to make such delivery shall not be extinguished and the Company shall deliver such shares of Common Stock as promptly as practicable after the holder gives notice to the Company that such delivery would not result in such limitation being triggered. For purposes of this Section 13, (a) the term “Maximum Percentage” shall mean initially 5%; provided, that if at any time after the date hereof the Holder Group beneficially owns in excess of 5% of the outstanding shares of Common Stock (excluding any shares issuable under this Warrant and any other convertible security including a similar limitation), then the Maximum Percentage shall automatically increase to 10% so long as the Holder Group owns in excess of 5% of the outstanding shares of Common Stock (excluding any shares issuable under this Warrant and any other convertible security including a similar limitation), and (b) the term “Holder Group” shall mean the holder of this Warrant plus any other person with which such holder is considered to be part of a group under Section 13 of the Exchange Act or with which such holder otherwise files reports under Sections 13 and/or 16 of the Exchange Act. The limitations in this Section 13 shall not have an effect on any calculation or payment due to the Holder of this Warrant pursuant to Section 14 hereof.

14. FUNDAMENTAL CHANGE. Upon the occurrence of a Fundamental Change, the Company shall, upon the consummation of such Fundamental Change, repurchase all of this Warrant at the higher of (i) the Fair Market Value of the Warrant and (ii) a valuation based on a computation of the option value of the Warrant using Black-Scholes calculation methods and making the assumptions described in the Black-Scholes methodology described in Exhibit A. Payment of such purchase price by the Company to the holder of this Warrant shall be due in cash upon the occurrence of the Fundamental Change. The fact that this Warrant can only be exercised on a cashless net exercise basis as provided in Section 2.2 shall not have any effect on any calculation or payment due to the Holder of this Warrant pursuant to this Section 14. Any such calculation or payment shall assume that this Warrant may be exercised either for cash or on a cashless basis, at the Holder’s election. The Company agrees that it will not take any action resulting in a Preliminary Fundamental Change or a Fundamental Change in the absence of definitive documentation providing for such repurchase of the Warrant pursuant to this Section 14.

15. WARRANT AGENT. The Company may, by written notice to the holder of this Warrant, appoint an agent for the purpose of issuing Common Stock on the exercise of this Warrant pursuant to

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Section 2 hereof, and exchanging or replacing this Warrant pursuant to the Warrant Purchase Agreement, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

16. REMEDIES. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

17. NOTICES. All notices and other communications from the Company to the holder of this Warrant shall be mailed by first class registered or certified mail, postage prepaid, or sent by overnight courier (or sent in the form of a telex or telecopy) at such address as may have been furnished to the Company in writing by such holder or, until any such holder furnishes to the Company an address, then to, and at the address of, the last holder of this Warrant who has so furnished an address to the Company.

18. MISCELLANEOUS. In case any provision of this Warrant shall be invalid, illegal or unenforceable, or partially invalid, illegal or unenforceable, the provision shall be enforced to the extent, if any, that it may legally be enforced and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. This Warrant and any term hereof may be changed, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed in accordance with the domestic substantive laws (and not the conflict of law rules) of the State of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. Notwithstanding anything contained herein to the contrary, any calculation or analysis under this Warrant shall assume that this Warrant may be exercised either for cash or on a cashless net exercise basis, at the Holder’s election, notwithstanding that this Warrant may only be exercised on a cashless basis pursuant to the net exercise provisions set forth in Section 2.2.

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     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer.

Dated as of October 28, 2010

HARVEST NATURAL RESOURCES, INC.
By:	/s/ James A. Edmiston
	Name:	James A. Edmiston
	Title:	President and Chief Executive Officer

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FORM OF SUBSCRIPTION

(To be signed only on exercise
of Common Stock Purchase Warrant)

TO: Harvest Natural Resources, Inc.

     1. The undersigned Holder of the attached Warrant hereby elects to exercise its purchase right under such Warrant to purchase shares of Common Stock of Harvest Natural Resources, Inc., a Delaware corporation (the “Company”), with respect to ____________ shares of Common Stock pursuant to the net exercise provisions specified in Section 2.2 of the Warrant.

     2. Please issue a stock certificate or certificates representing the appropriate number of shares of Common Stock in the name of the undersigned or in such other name(s) as is specified below:

Name:

Address:

TIN:

	Dated:
(Signature must conform exactly to name of Holder as specified on the face of the Warrant)

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FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)

     For value received, the undersigned hereby sells, assigns, and transfers unto ____________ the right represented by the within Warrant to purchase              shares of Common Stock of Harvest Natural Resources, Inc., a Delaware corporation, to which the within Warrant relates, and appoints _______________ attorney to transfer such right on the books of Harvest Natural Resources, Inc., with full power of substitution in the premises.

	[insert name of Holder]
Dated:	By:
	Title:
	[insert address of Holder]
Signed in the presence of:

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EXHIBIT A

Black-Scholes Assumptions

For the purpose of this Exhibit A:

     “Acquiror” means (A) the third party that has entered into definitive document for a transaction, or (B) the offeror in the event of a tender or exchange offer, which could reasonably result in a Fundamental Change upon consummation.

Underlying Security Price:	•    In the event of a merger or acquisition, (A) in the event of an “all cash” deal, the cash per share offered to the Company’s stockholders by the Acquiror; (B) in the event of an “all stock” deal, (1) in the event of a fixed exchange ratio transaction, the product of (i) the average of the Market Price of the Acquiror’s common stock for the ten trading day period ending on the day preceding the date of the Preliminary Fundamental Change and (ii) the number of Acquiror’s shares being offered for one share of Common Stock and (2) in the event of a fixed value transaction, the value offered by the Acquiror for one share of Common Stock; (C) in the event of a transaction contemplating various forms of consideration for each share of Common Stock, the cash portion, if any, shall be valued as clause (A) above and the stock portion shall be valued as clause (B) above and any other forms of consideration shall be valued by the Board of Directors of the Company in good faith, without applying any discounts to such consideration.
	•    In the event of all other Fundamental Change events, the average of the Market Price of the Common Stock for the ten trading day period beginning on the date of the Preliminary Fundamental Change.
Exercise Price:	The Exercise Price as adjusted and then in effect for the Warrant.
Dividend Rate:	The Company’s annualized dividend yield as of the date of the Preliminary Fundamental Change in the event of a Fundamental Change (the “Reference Date”).
Interest Rate:	The applicable U.S. 5 year treasury note risk free rate as of the Reference Date.
Model Type:	Black-Scholes
Exercise Type:	American
Put or Call:	Call
Trade Date:	The Reference Date
Expiration Date:	The expiration of the Exercise Period
Settle Date:	The Reference Date plus one business day
Exercise Delay:	0
Volatility:	The average daily volatility over the previous six months for the Common Stock as listed by Bloomberg L.P., as of the Reference Date

Such valuation of the Warrant based on the Black-Scholes methodology shall not be discounted in any way. If the holder disputes such Black-Scholes valuation pursuant to this Exhibit A as calculated by the Company, the Company and the holder will choose a mutually-agreeable firm to compute the valuation of the Warrant using the guidelines above, and such valuation shall be final. The fees and expenses of such firm shall be borne equally by the Company and the holder. In the event that a new warrant is issued by a company in a Spin-Off from the Company pursuant to Section 5.1(b) of the Warrant, references in this Exhibit A to such spun-off company’s “Dividend Rate” and “Volatility” shall refer those of the Company unless at the time of such measurement, such spun-off company has been trading in the public markets for at least 6 months.

EX-4.4

Exhibit 4.4

     This Warrant and any shares acquired upon the exercise of this Warrant have not been registered under the Securities Act of 1933, as amended, and may not be sold or transferred in the absence of such registration or an exemption therefrom under such Act and any applicable state securities laws.

     This Warrant is issued pursuant to the Warrant Purchase Agreement dated as of October 28, 2010 and if any provision of this Warrant is found to conflict with such Warrant Purchase Agreement, the provisions of such Warrant Purchase Agreement shall prevail.

No. W-2

HARVEST NATURAL RESOURCES, INC.

COMMON STOCK PURCHASE WARRANT

     Harvest Natural Resources, Inc., a Delaware corporation (together with any corporation which shall succeed to or assume the obligations of Harvest Natural Resources, Inc. hereunder, the “Company”), hereby certifies that, for value received, MSD Energy Investments Private II, LLC (the “Investor”), or its assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time during the Exercise Period (as defined in Section 12 hereof) up to 400,000 fully paid and non-assessable shares of Common Stock (as defined in Section 12 hereof), at a purchase price per share equal to the Exercise Price (as defined in Section 12 hereof). The number of shares of Common Stock for which this Warrant is exercisable and the Exercise Price are subject to adjustment as provided herein.

     This Warrant is issued pursuant to the Warrant Purchase Agreement (as amended and in effect from time to time, the “Warrant Purchase Agreement”), dated as of October 28, 2010, between the Company and the initial purchaser named therein, a copy of which is on file at the principal office of the Company. The holder of this Warrant shall be entitled to all of the benefits and shall be subject to all of the obligations of the Warrant Purchase Agreement.

1. DEFINITIONS. Terms defined in the Warrant Purchase Agreement and not otherwise defined herein are used herein with the meanings so defined. Certain terms are used in this Warrant as specifically defined in Section 12 hereof.

2. EXERCISE OF WARRANT.

     2.1. Exercise. This Warrant may be exercised prior to its expiration pursuant to Section 2.5 hereof by the holder hereof at any time or from time to time during the Exercise Period, by surrender of this Warrant, with the form of subscription attached hereto duly executed by such holder, to the Company at its principal office, indicating such holder’s election to exercise this Warrant as to a specified number of shares pursuant to the net exercise provisions of Section 2.2. This Warrant shall be deemed exercised for all purposes as of the close of business on the day on which the holder has delivered this Warrant and the subscription form to the Company, regardless of when the Company issues the certificates evidencing the shares issuable upon such exercise. In the event the Warrant is not exercised in full, the Company, at its expense, will forthwith issue and deliver to or

upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of such shares (without giving effect to any adjustment therein) for which this Warrant shall have been exercised.

     2.2. Net Exercise. The holder may elect to exercise this Warrant at any time or from time to time, by receiving shares of Common Stock equal to the number of shares determined pursuant to the following formula:

X =	Y (A - B)
	A

     where,

X =	the number of shares of Common Stock to be issued to Holder;
Y =	the number of shares of Common Stock as to which this Warrant is to be exercised (as indicated on the subscription form);
A =	the closing price on the Principal Market of the Common Stock calculated as of the Trading Day immediately preceding the date of exercise; and
B =	the Exercise Price.

     2.3. Antitrust Notification. If the holder of this Warrant determines, in its sole judgment upon the advice of counsel, that an exercise of this Warrant pursuant to the terms hereof would be subject to the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the Company shall, within seven (7) business days after receiving notice from such holder of the applicability of the HSR Act, file with the United States Federal Trade Commission (the “FTC”) and the United States Department of Justice (the “DOJ”) the notification and report form and any supplemental information required to be filed by it pursuant to the HSR Act in connection with the exercise of this Warrant. Any such notification and report form and supplemental information will be in full compliance with the requirements of the HSR Act. The Company will furnish to such holder promptly (but in no event more than five (5) business days) such information and assistance as such holder may reasonably request in connection with the preparation of any filing or submission required to be filed by such holder under the HSR Act. The Company shall respond promptly after receiving any inquiries or requests for additional information from the FTC or the DOJ (and in no event more than three (3) business days after receipt of such inquiry or request). The Company shall keep such holder apprised periodically and at such holder’s request of the status of any communications with, and any inquiries or requests for additional information from, the FTC or the DOJ. The Company shall bear all filing or other fees required to be paid by the Company and such holder (or the “ultimate parent entity” of such holder, if any) under the HSR Act or any other applicable law in connection with such filings and all costs and expenses (including, without limitation, attorneys’ fees and expenses) incurred by the Company and such holder in connection with the preparation of such filings and responses to inquiries or requests. In the event that this Section 2.3 is applicable to any exercise of this Warrant, the purchase by such holder of the Exercise Shares subject to such exercise, and the payment by such holder of the Exercise Price therefor, shall be subject to the expiration or earlier termination of the waiting period under the HSR Act (with the exercise date of this Warrant being deemed to be the date immediately following the date of such expiration or early termination).

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     2.4. Termination. This Warrant shall terminate upon the earlier to occur of (i) exercise in full or (ii) the expiration of the Exercise Period.

3. REGISTRATION RIGHTS. The holder of this Warrant has certain rights to require the Company to register the Warrant Shares under the Securities Act and any blue sky or securities laws of any jurisdictions within the United States at the time and in the manner specified in the Warrant Purchase Agreement.

4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable after any exercise of this Warrant and in any event within three (3) Trading Days thereafter, the Company shall, at its expense (including the payment by it of any applicable issue or stamp taxes), cause to be issued in the name of and delivered to the holder, or as the holder may direct, a certificate or certificates evidencing the number of fully paid and nonassessable shares of Common Stock (or Other Securities, as applicable) (which number shall be rounded up to the nearest whole share in the event any fractional share may otherwise be issuable upon such exercise) to which the holder shall be entitled on such exercise, in such denominations as may be requested by the holder, which certificate or certificates shall be free of restrictive and trading legends (except for any such legends as may be required under the Securities Act). In lieu of delivering physical certificates for the shares of Common Stock (or Other Securities) issuable upon any exercise of this Warrant, provided the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program or a similar program, upon request of the holder, the Company shall use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares of Common Stock (or Other Securities) issuable upon exercise of this Warrant to the holder (or its designee), by crediting the account of the holder’s (or such designee’s) broker with DTC through its Deposit Withdrawal Agent Commission system (provided that the same time periods herein as for stock certificates shall apply) as instructed by the holder (or its designee).

5. ADJUSTMENT FOR DIVIDENDS, DISTRIBUTIONS AND RECLASSIFICATIONS.

     5.1. Distribution of Assets; Spin-Off. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a Spin-Off, dividend, reclassification, corporate rearrangement or other similar transaction, but excluding cash dividends adjustments in respect of which are provided for in Section 5.2 hereof and excluding stock dividends or stock splits adjustments in respect of which are provided for in Section 7 hereof) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:

          (a) (i) the Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction of which:

          (A) the numerator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date minus the Fair Market Value of the Distribution applicable to one share of Common Stock, and

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          (B) the denominator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date;

and (ii) the number of Exercise Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i) of this Section 5.1(a); and

          (b) Notwithstanding the provisions of the foregoing clause (a), in the event of a Spin-Off in which the Distribution is of common stock of a subsidiary of the Company, then (i) the Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction of which:

          (A) the numerator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date minus the Fair Market Value of the Distribution applicable to one share of Common Stock, and

          (B) the denominator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date;

and (ii) the number of Exercise Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i) of this Section 5.1(b); and (iii) the holder of this Warrant shall receive an additional warrant to purchase common stock of such company, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of common stock of such company that would have been issuable or distributed to the holder of this Warrant pursuant to the Distribution had the holder exercised this Warrant for cash for the full number of shares of Common Stock on the face of this Warrant (notwithstanding the requirement that this Warrant be exercised pursuant to the net exercise provisions of Section 2.2) immediately prior to such record date and with an exercise price equal to the amount by which the Exercise Price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the preceding clause (i) of this Section 5.1(b).

     5.2. Cash Dividends. In case at any time or from time to time, the holders of Common Stock shall have received, or (on or after the record date fixed for the determination of shareholders eligible to receive) shall have become entitled to receive, any cash dividend or distribution, then (a) the Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such cash dividend or distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction of which:

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          (i) the numerator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date minus the amount of the cash dividend or distribution applicable to one share of Common Stock, and

          (ii) the denominator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date;

and (b) the number of Exercise Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such cash dividend or distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (a) of this Section 5.2.

     5.3. Other Events. If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features, or any stock repurchase or buyback), then the Company’s Board of Directors, acting in good faith and consistent with their fiduciary duties, shall make an appropriate adjustment in the Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Warrant.

6. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.

     6.1. Certain Adjustments. In case at any time or from time to time, the Company shall (i) effect a capital reorganization, reclassification or recapitalization, (ii) consolidate with or merge into any other person, or (iii) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then in each such case, this Warrant shall thereafter be exercisable for the same kind and amounts of securities (including shares of stock) or other assets, or both, which were issuable or distributable to the holders of outstanding Common Stock upon such reorganization, reclassification, recapitalization, consolidation, merger or transfer, in respect of that number of shares of Common Stock for which this Warrant could have been exercised immediately prior to such reorganization, reclassification, recapitalization, consolidation, merger or transfer; and, in any such case, appropriate adjustments (as determined in good faith by the Board of Directors of the Company) shall be made to assure that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be practicable, in relation to any securities or other assets thereafter deliverable upon the exercise of this Warrant.

     6.2. Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this Section 6, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 8 hereof.

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7. ADJUSTMENTS FOR ISSUANCE OF COMMON STOCK AND AMOUNT OF OUTSTANDING COMMON STOCK.

     7.1. General. If at any time there shall occur any stock split, stock dividend, reverse stock split or other subdivision of the Company’s Common Stock (“Stock Event”), then the number of shares of Common Stock to be received by the holder of this Warrant shall be appropriately adjusted such that the proportion of the number of shares issuable hereunder to the total number of shares of the Company (on a fully diluted basis) prior to such Stock Event is equal to the proportion of the number of shares issuable hereunder after such Stock Event to the total number of shares of the Company (on a fully-diluted basis) after such Stock Event. The Exercise Price shall be proportionately decreased or increased upon the occurrence of any Stock Event; provided that in no event will the Exercise Price be less than the par value of the Common Stock.

     7.2. Other Securities. In case any Other Securities shall have been issued, or shall then be subject to issue upon the conversion or exchange of any stock (or Other Securities) of the Company (or any other issuer of Other Securities or any other entity referred to in Section 6 hereof) or to subscription, purchase or other acquisition pursuant to any rights or options granted by the Company (or such other issuer or entity), the holder hereof shall be entitled to receive upon exercise hereof such amount of Other Securities (in lieu of or in addition to Common Stock) as is determined in accordance with the terms hereof, treating all references to Common Stock herein as references to Other Securities to the extent applicable, and the computations, adjustments and readjustments provided for in this Section 7 with respect to the number of shares of Common Stock issuable upon exercise of this Warrant shall be made as nearly as possible in the manner so provided and applied to determine the amount of Other Securities from time to time receivable on the exercise of the Warrant, so as to provide the holder of the Warrant with the benefits intended by this Section 7 and the other provisions of this Warrant.

     7.3. Adjustments for Dilutive and Other Events.

     (a) Issuance of Additional Shares of Common Stock. If at any time on or after the Bridge Date, the Company shall issue any Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 7.3(b) below), at a price per share (the “Offering Price”) which is lower than the Reference Price on the date of such issuance, then the number of shares of Common Stock to be received by the holder of this Warrant upon the exercise hereof shall be adjusted to that number determined by multiplying (a) the number of shares of Common Stock purchasable hereunder immediately prior thereto by (b) a fraction (i) the numerator of which shall be the sum of (A) the number of shares of Common Stock Deemed Outstanding immediately prior to the issuance of such shares of Common Stock plus (B) the number of shares of Common Stock issued in the subject transaction and (ii) the denominator of which shall be an amount equal to the sum of (x) the number of shares of Common Stock Deemed Outstanding immediately prior to the issuance of such shares of Common Stock plus (y) the quotient of (1) the Offering Price multiplied by the number of shares of Common Stock so issued by the Company, divided by (2) the Reference Price in effect immediately prior to the issuance of such shares. The provisions of this Section 7.3 shall not apply to (i) any issuance of additional Common Stock for which an adjustment is provided under Section 7.1 hereof, (ii) any issuance of Additional Shares of Common Stock the proceeds of which are immediately used for the repayment of all obligations of the Company under the Credit Agreement, and (iii) (A) the issuance of Common Stock upon the exercise of options outstanding on the date hereof and (B) the issuance of options after the date hereof for the purchase of

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up to 1,169,848 shares (subject to adjustments for stock splits, reverse stock splits, combinations and similar events) of Common Stock, and the issuance of Common Stock upon the exercise of such options, pursuant to the Company’s 2001 Long Term Stock Incentive Plan, the Harvest Natural Resources 2004 Long Term Incentive Plan, the Harvest Natural Resources 2006 Long Term Incentive Plan and the Harvest Natural Resources 2010 Long-Term Incentive Plan (collectively, the “Excluded Options”). When any adjustment is required to be made to the number of shares hereunder pursuant to this Section 7.3(a), the Exercise Price shall be reduced to a price (calculated to the nearest cent) as is equal to the quotient obtained by dividing (x) the product of the Exercise Price multiplied by the number of shares of Common Stock issuable upon exercise of this Warrant, in each case as in effect immediately before such adjustment, by (y) the number of shares of Common Stock issuable upon exercise of this Warrant immediately after giving effect to such adjustment.

     (b) Issue of Options and Convertible Securities Deemed Issue of Additional Shares of Common Stock. If the Company at any time or from time to time on or after the Bridge Date shall issue any Options (other than Excluded Options) or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, or, in case a record date shall have been fixed for such issuance, as of the close of business on such record date, provided that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 7.3(c) below) of such Additional Shares of Common Stock would be less than the Reference Price in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued (i) no further adjustment in the number of shares of Common Stock for which this Warrant is exerciseable shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities, and (ii) upon the expiration or termination of any unexercised Option, the number of shares of Common Stock for which this Warrant is then exerciseable shall be readjusted, and the Additional Shares of Common Stock deemed issued as the result of the original issue of such Option shall not be deemed issued for the purpose of such readjustment; provided, however, that with respect to any Options or Convertible Securities issued by the Company for which there is a subsequent adjustment which increases the number of shares of Common Stock issuable upon conversion or exercise of such Options or Convertible Securities or an adjustment which decreases the exercise price or conversion price of such Options or Convertible Securities, then an adjustment to the number of shares of Common Stock for which this Warrant is exerciseable shall be made under this Section 7.3 upon any such adjustment to such Options or Convertible Securities as if such Options or Convertible Securities were deemed to have been cancelled and reissued.

     (c) Determination of Consideration. For purposes of this Section 7.3, the consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows:

     (i) Cash and Property: Such consideration shall:

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     (A) insofar as it consists of cash, be equal to the total cash received by the Company, excluding amounts paid or payable for accrued interest or accrued dividends;

     (B) insofar as it consists of property other than cash, be computed at the Fair Market Value thereof at the time of such issue determined as provided below; and

     (C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received that is allocated to such Additional Shares of Common Stock, computed as provided in or pursuant to clauses (A) and (B) above.

If the Company shall issue (or shall be deemed to issue) Additional Shares of Common Stock for no consideration, such Additional Shares of Common Stock shall be deemed to have been issued for consideration equal to $.01 per share.

     (ii) Options and Convertible Securities. The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section 7.3(b), relating to Options and Convertible Securities, shall be determined by dividing

     (A) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

     (B) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

8. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in taking all such action as may be necessary or appropriate in order to protect the rights of the holder of the Warrant against dilution. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of stock receivable on the exercise of the Warrant above the amount payable therefor on such exercise, (ii) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of stock on the exercise of the Warrant from time to time outstanding, and (iii) subject to Section 14, will not transfer all or substantially all of its

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properties and assets to any other entity (corporate or otherwise), or consolidate with or merge into any other entity or permit any such entity to consolidate with or merge with the Company (if the Company is not the surviving entity), unless such other entity shall expressly assume in writing and will be bound by all the terms of this Warrant and the Warrant Purchase Agreement.

9. CERTIFICATE AS TO ADJUSTMENTS. In each case of any event that may require any adjustment or readjustment in the shares of Common Stock issuable on the exercise of this Warrant, the Company at its expense will promptly prepare a certificate setting forth such adjustment or readjustment, or stating the reasons why no adjustment or readjustment is being made, and showing, in detail, the facts upon which any such adjustment or readjustment is based, including a statement of (i) the number of shares of Common Stock Deemed Outstanding, and (ii) the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted and readjusted (if required by Section 7) on account thereof. The Company will forthwith mail a copy of each such certificate to each holder of a Warrant, and will, on the written request at any time of any holder of a Warrant, furnish to such holder a like certificate setting forth the calculations used to determine such adjustment or readjustment.

10. NOTICES OF RECORD DATE. In the event of:

     (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right; or

     (b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or any consolidation or merger of the Company with or into any other Person or any other Fundamental Change; or

     (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company,

     (d) any proposed issue or grant by the Company of any shares of stock of any class or any other securities, or any right or option to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities (other than any issuance or grant to which Section 7.3 hereof does not apply);

then, and in each such event, the Company will mail or cause to be mailed to the holder of this Warrant a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is anticipated to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or Other Securities) shall be entitled to exchange their shares of Common Stock (or Other Securities) for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up and (iii) the amount and

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character of any such stock or other such securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be mailed at least thirty (30) days prior to the date specified in such notice on which any such action is to be taken.

11. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of this Warrant, a number of shares of Common Stock equal to the total number of shares of Common Stock from time to time issuable upon exercise of this Warrant, and, from time to time, will take all steps necessary to amend its Certificate of Incorporation to provide sufficient reserves of shares of Common Stock issuable upon exercise of this Warrant.

12. DEFINITIONS. As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

     Additional Shares of Common Stock means all shares of Common Stock issued (or, pursuant to Section 7.3(b) hereof, deemed to be issued) by the Company after the date hereof, including without limitation any treasury shares sold or otherwise transferred by the Company, but excluding shares of Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock for which an adjustment is made pursuant to Section 7.1 hereof, but excluding shares of Common Stock issued or issuable upon exercise of any Excluded Options.

     Appraisal Procedure means a procedure whereby two independent appraisers, one chosen by the Company and one by the holder (or if there is more than one holder, a majority in interest of holders), shall mutually agree upon the determinations then the subject of appraisal. Each party shall deliver a notice to the other appointing its appraiser within 15 days after the Appraisal Procedure is invoked. If within 30 days after appointment of the two appraisers they are unable to agree upon the amount in question, a third independent appraiser shall be chosen within 10 days thereafter by the mutual consent of such first two appraisers or, if such first two appraisers fail to agree upon the appointment of a third appraiser, such appointment shall be made by the American Arbitration Association, or any organization successor thereto, from a panel of arbitrators having experience in the appraisal of the subject matter to be appraised. The decision of the third appraiser so appointed and chosen shall be given within 30 days after the selection of such third appraiser. If three appraisers shall be appointed and the determination of one appraiser is disparate from the middle determination by more than twice the amount by which the other determination is disparate from the middle determination, then the determination of such appraiser shall be excluded, the remaining two determinations shall be averaged and such average shall be binding and conclusive on the Company and the holder; otherwise, the average of all three determinations shall be binding and conclusive on the Company and the holder. The costs of conducting any Appraisal Procedure shall be borne by the holder requesting such Appraisal Procedure, except (A) the fees and expenses of the appraiser appointed by the Company and any other costs incurred by the Company shall be borne by the Company and (B) if such Appraisal Procedure shall result in a determination that is disparate by 5% or more from the Company’s initial determination, all costs of conducting such Appraisal Procedure shall be borne by the Company.

     Bridge Date shall have the meaning assigned to such term in the Credit Agreement.

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     Common Stock means (i) the Company’s Common Stock, $.01 par value per share, (ii) any other capital stock of any class or classes (however designated) of the Company, the holders of which shall have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any shares entitled to preference, and (iii) any other securities into which or for which any of the securities described in clauses (i), or (ii) above have been converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

     Common Stock Deemed Outstanding means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock issuable at such time upon conversion of any Convertible Securities and Options (other than this Warrant and any other warrants issued under the Warrant Purchase Agreement) then outstanding to the extent such Convertible Security or Option is (i) convertible, exercisable or exchangeable at such time and (ii) convertible, exercisable or exchangeable at a price that is less than the Fair Market Value of a share of Common Stock issuable upon such conversion, exercise or exchange at such time.

     Convertible Securities means any evidences of Indebtedness, shares (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Common Stock.

     Exercise Period means the period commencing on the Closing Date under the Warrant Purchase Agreement and ending on the fifth anniversary of such date.

     Exercise Price means (i) until the Bridge Date, a purchase price per share of $20.00, as adjusted from time to time as provided herein, and (ii) as of and following the Bridge Date, a purchase price per share equal to the lower of $15.00 or 120% of the average closing bid price, as reported by Bloomberg Financial Markets, on the Principal Market of the Common Stock for the twenty (20) consecutive Trading Days immediately preceding the Bridge Date.

     Exercise Shares means the shares of Common Stock for which this Warrant is then being exercised.

     Fair Market Value means, with respect to any security or other property, the fair market value of such security or other property as determined by the Board of Directors, acting in good faith. If the holder does not accept the Board of Director’s calculation of fair market value and the holder and the Company are unable to agree on fair market value, the Appraisal Procedure shall be used to determine Fair Market Value.

     Fundamental Change means the occurrence of one of the following:

     (i) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect ultimate beneficial owner of common equity of the Company representing more than 50% of the voting power of the outstanding Common Stock;

     (ii) consummation of any consolidation or merger of the Company or similar transaction or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its subsidiaries, taken as a whole, to any person , in each case pursuant to which the Common Stock will be converted into cash, securities or other property, other than pursuant to a transaction in which the persons that beneficially owned, directly or

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indirectly, voting shares of the Company immediately prior to such transaction beneficially own, directly or indirectly, voting shares representing a majority of the total voting power of all outstanding classes of voting shares of the continuing or surviving Person immediately after the transaction; or

     (iii) the Company’s stockholders approve and adopt a plan of liquidation or dissolution of the Company or a sale of all or substantially all of the Company’s assets.

     Market Price means, with respect to the Common Stock, on any given day, the closing sale price or, if no closing sale price is reported, the last reported sale price of the shares of the Common Stock on the New York Stock Exchange on such date. If the Common Stock is not traded on the New York Stock Exchange on any date of determination, the Market Price of the Common Stock on such date of determination means the closing sale price as reported in the composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is so listed or quoted, or, if no closing sale price is reported, the last reported sale price on the principal U.S. national or regional securities exchange on which the Common Stock is so listed or quoted, or if the Common Stock is not so listed or quoted on a U.S. national or regional securities exchange, the last quoted bid price for the Common Stock in the over-the-counter market as reported by Pink Sheets LLC or similar organization, or, if that bid price is not available, the market price of the Common Stock on that date as determined by a nationally recognized independent investment banking firm retained by the Company for this purpose.

     Option means any rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

     Other Securities refers to any stock (other than Common Stock) and other securities of the Company or any other entity (corporate or otherwise) (i) which the holder of this Warrant at any time shall be entitled to receive, or shall have received, on the exercise of this Warrant, in lieu of or in addition to Common Stock, or (ii) which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities, in each case pursuant to Section 5 or 6 hereof.

     Preliminary Fundamental Change means, with respect to the Company, (A) the execution of a definitive agreement for a transaction or (B) the recommendation that stockholders tender in response to a tender or exchange offer, in the case of both (A) and (B), that would reasonably be expected to result in a Fundamental Change.

     Principal Market means, at any time, the securities exchange, quotation system or over-the-counter trading facility on which the Common Stock is then principally traded or quoted at such time.

     Reference Price means, on any date of determination, the greater of (i) the Market Price per share as of such date and (ii) the Exercise Price.

     Spin-Off means a transaction in which the Company spins off or otherwise divests itself of a part of its business or operations or disposes all or a part of its assets in a transaction in which the Company does not receive compensation for such business, operations or assets, but causes securities of a subsidiary of the Company or another entity to be distributed or otherwise issued to security holders of the Company,

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     Trading Day means, at any time, a day on which the Principal Market is open for the general trading or quotation of securities and the Common Stock is traded or quoted thereon without suspension or interruption.

13. LIMITATION ON BENEFICIAL OWNERSHIP. Notwithstanding the foregoing, the holder shall not be entitled to receive shares of Common Stock upon exercise of this Warrant to the extent (but only to the extent) that such receipt would cause the holder to become, directly or indirectly, a “beneficial owner” (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of a number of shares of Common Stock which exceeds the Maximum Percentage of the shares of Common Stock outstanding at such time. This limitation on beneficial ownership shall be terminated (i) upon 61 days’ notice to the Company by the holder or (ii) immediately on the date that is 30 days prior to the expiration of the Exercise Period. Any purported delivery of shares of Common Stock upon exercise of this Warrant shall be void and have no effect to the extent (but only to the extent) that such delivery would result in the holder becoming the beneficial owner of more than the Maximum Percentage of the shares of Common Stock outstanding at such time. If any delivery of shares of Common Stock owed to the holder upon exercise of this Warrant is not made, in whole or in part, as a result of this limitation, the Company’s obligation to make such delivery shall not be extinguished and the Company shall deliver such shares of Common Stock as promptly as practicable after the holder gives notice to the Company that such delivery would not result in such limitation being triggered. For purposes of this Section 13, (a) the term “Maximum Percentage” shall mean initially 5%; provided, that if at any time after the date hereof the Holder Group beneficially owns in excess of 5% of the outstanding shares of Common Stock (excluding any shares issuable under this Warrant and any other convertible security including a similar limitation), then the Maximum Percentage shall automatically increase to 10% so long as the Holder Group owns in excess of 5% of the outstanding shares of Common Stock (excluding any shares issuable under this Warrant and any other convertible security including a similar limitation), and (b) the term “Holder Group” shall mean the holder of this Warrant plus any other person with which such holder is considered to be part of a group under Section 13 of the Exchange Act or with which such holder otherwise files reports under Sections 13 and/or 16 of the Exchange Act. The limitations in this Section 13 shall not have an effect on any calculation or payment due to the Holder of this Warrant pursuant to Section 14 hereof.

14. FUNDAMENTAL CHANGE. Upon the occurrence of a Fundamental Change, the Company shall, upon the consummation of such Fundamental Change, repurchase all of this Warrant at the higher of (i) the Fair Market Value of the Warrant and (ii) a valuation based on a computation of the option value of the Warrant using Black-Scholes calculation methods and making the assumptions described in the Black-Scholes methodology described in Exhibit A. Payment of such purchase price by the Company to the holder of this Warrant shall be due in cash upon the occurrence of the Fundamental Change. The fact that this Warrant can only be exercised on a cashless net exercise basis as provided in Section 2.2 shall not have any effect on any calculation or payment due to the Holder of this Warrant pursuant to this Section 14. Any such calculation or payment shall assume that this Warrant may be exercised either for cash or on a cashless basis, at the Holder’s election. The Company agrees that it will not take any action resulting in a Preliminary Fundamental Change or a Fundamental Change in the absence of definitive documentation providing for such repurchase of the Warrant pursuant to this Section 14.

15. WARRANT AGENT. The Company may, by written notice to the holder of this Warrant, appoint an agent for the purpose of issuing Common Stock on the exercise of this Warrant pursuant to

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Section 2 hereof, and exchanging or replacing this Warrant pursuant to the Warrant Purchase Agreement, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

16. REMEDIES. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

17. NOTICES. All notices and other communications from the Company to the holder of this Warrant shall be mailed by first class registered or certified mail, postage prepaid, or sent by overnight courier (or sent in the form of a telex or telecopy) at such address as may have been furnished to the Company in writing by such holder or, until any such holder furnishes to the Company an address, then to, and at the address of, the last holder of this Warrant who has so furnished an address to the Company.

18. MISCELLANEOUS. In case any provision of this Warrant shall be invalid, illegal or unenforceable, or partially invalid, illegal or unenforceable, the provision shall be enforced to the extent, if any, that it may legally be enforced and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. This Warrant and any term hereof may be changed, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed in accordance with the domestic substantive laws (and not the conflict of law rules) of the State of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. Notwithstanding anything contained herein to the contrary, any calculation or analysis under this Warrant shall assume that this Warrant may be exercised either for cash or on a cashless net exercise basis, at the Holder’s election, notwithstanding that this Warrant may only be exercised on a cashless basis pursuant to the net exercise provisions set forth in Section 2.2.

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     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer.

Dated as of October 28, 2010

HARVEST NATURAL RESOURCES, INC.
By:	/s/ James A. Edmiston
	Name:	James A. Edmiston
	Title:	President and Chief Executive Officer

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FORM OF SUBSCRIPTION

(To be signed only on exercise
of Common Stock Purchase Warrant)

TO: Harvest Natural Resources, Inc.

     1. The undersigned Holder of the attached Warrant hereby elects to exercise its purchase right under such Warrant to purchase shares of Common Stock of Harvest Natural Resources, Inc., a Delaware corporation (the “Company”), with respect to ____________ shares of Common Stock pursuant to the net exercise provisions specified in Section 2.2 of the Warrant.

     2. Please issue a stock certificate or certificates representing the appropriate number of shares of Common Stock in the name of the undersigned or in such other name(s) as is specified below:

Name:

Address:

TIN:

	Dated:
(Signature must conform exactly to name of Holder as specified on the face of the Warrant)

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FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)

     For value received, the undersigned hereby sells, assigns, and transfers unto ____________ the right represented by the within Warrant to purchase              shares of Common Stock of Harvest Natural Resources, Inc., a Delaware corporation, to which the within Warrant relates, and appoints _______________ attorney to transfer such right on the books of Harvest Natural Resources, Inc., with full power of substitution in the premises.

	[insert name of Holder]
Dated:	By:
		Title:
		[insert address of Holder]

Signed in the presence of:

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EXHIBIT A

Black-Scholes Assumptions

For the purpose of this Exhibit A:

     “Acquiror” means (A) the third party that has entered into definitive document for a transaction, or (B) the offeror in the event of a tender or exchange offer, which could reasonably result in a Fundamental Change upon consummation.

Underlying Security Price:	•     In the event of a merger or acquisition, (A) in the event of an “all cash” deal, the cash per share offered to the Company’s stockholders by the Acquiror; (B) in the event of an “all stock” deal, (1) in the event of a fixed exchange ratio transaction, the product of (i) the average of the Market Price of the Acquiror’s common stock for the ten trading day period ending on the day preceding the date of the Preliminary Fundamental Change and (ii) the number of Acquiror’s shares being offered for one share of Common Stock and (2) in the event of a fixed value transaction, the value offered by the Acquiror for one share of Common Stock; (C) in the event of a transaction contemplating various forms of consideration for each share of Common Stock, the cash portion, if any, shall be valued as clause (A) above and the stock portion shall be valued as clause (B) above and any other forms of consideration shall be valued by the Board of Directors of the Company in good faith, without applying any discounts to such consideration.
	•     In the event of all other Fundamental Change events, the average of the Market Price of the Common Stock for the ten trading day period beginning on the date of the Preliminary Fundamental Change.
Exercise Price:	The Exercise Price as adjusted and then in effect for the Warrant.
Dividend Rate:	The Company’s annualized dividend yield as of the date of the Preliminary Fundamental Change in the event of a Fundamental Change (the “Reference Date”).
Interest Rate:	The applicable U.S. 5 year treasury note risk free rate as of the Reference Date.
Model Type:	Black-Scholes
Exercise Type:	American
Put or Call:	Call
Trade Date:	The Reference Date
Expiration Date:	The expiration of the Exercise Period
Settle Date:	The Reference Date plus one business day
Exercise Delay:	0
Volatility:	The average daily volatility over the previous six months for the Common Stock as listed by Bloomberg L.P., as of the Reference Date

Such valuation of the Warrant based on the Black-Scholes methodology shall not be discounted in any way. If the holder disputes such Black-Scholes valuation pursuant to this Exhibit A as calculated by the Company, the Company and the holder will choose a mutually-agreeable firm to compute the valuation of the Warrant using the guidelines above, and such valuation shall be final. The fees and expenses of such firm shall be borne equally by the Company and the holder. In the event that a new warrant is issued by a company in a Spin-Off from the Company pursuant to Section 5.1(b) of the Warrant, references in this Exhibit A to such spun-off company’s “Dividend Rate” and “Volatility” shall refer those of the Company unless at the time of such measurement, such spun-off company has been trading in the public markets for at least 6 months.

EX-4.5

Exhibit 4.5

     This Warrant and any shares acquired upon the exercise of this Warrant have not been registered under the Securities Act of 1933, as amended, and may not be sold or transferred in the absence of such registration or an exemption therefrom under such Act and any applicable state securities laws.

     This Warrant is issued pursuant to the Warrant Purchase Agreement dated as of October 28, 2010 and if any provision of this Warrant is found to conflict with such Warrant Purchase Agreement, the provisions of such Warrant Purchase Agreement shall prevail.

No. W-3

HARVEST NATURAL RESOURCES, INC.

COMMON STOCK PURCHASE WARRANT

     Harvest Natural Resources, Inc., a Delaware corporation (together with any corporation which shall succeed to or assume the obligations of Harvest Natural Resources, Inc. hereunder, the “Company”), hereby certifies that, for value received, MSD Energy Investments Private II, LLC (the “Investor”), or its assigns, is entitled, subject to the terms set forth below, to purchase from the Company at any time during the Exercise Period (as defined in Section 12 hereof) up to 4,400,000 fully paid and non-assessable shares of Common Stock (as defined in Section 12 hereof), at a purchase price per share equal to the Exercise Price (as defined in Section 12 hereof). The number of shares of Common Stock for which this Warrant is exercisable and the Exercise Price are subject to adjustment as provided herein.

     This Warrant is issued pursuant to the Warrant Purchase Agreement (as amended and in effect from time to time, the “Warrant Purchase Agreement”), dated as of October 28, 2010, between the Company and the initial purchaser named therein, a copy of which is on file at the principal office of the Company. The holder of this Warrant shall be entitled to all of the benefits and shall be subject to all of the obligations of the Warrant Purchase Agreement.

1. DEFINITIONS. Terms defined in the Warrant Purchase Agreement and not otherwise defined herein are used herein with the meanings so defined. Certain terms are used in this Warrant as specifically defined in Section 12 hereof.

2. EXERCISE OF WARRANT.

     2.1. Exercise. This Warrant may be exercised prior to its expiration pursuant to Section 2.5 hereof by the holder hereof at any time or from time to time during the Exercise Period, by surrender of this Warrant, with the form of subscription attached hereto duly executed by such holder, to the Company at its principal office, indicating such holder’s election to exercise this Warrant as to a specified number of shares pursuant to the net exercise provisions of Section 2.2. This Warrant shall be deemed exercised for all purposes as of the close of business on the day on which the holder has delivered this Warrant and the subscription form to the Company, regardless of when the Company issues the certificates evidencing the shares issuable upon such exercise. In the event the Warrant is not exercised in full, the Company, at its expense, will forthwith issue and deliver to or

upon the order of the holder hereof a new Warrant or Warrants of like tenor, in the name of the holder hereof or as such holder (upon payment by such holder of any applicable transfer taxes) may request, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock equal (without giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of such shares (without giving effect to any adjustment therein) for which this Warrant shall have been exercised.

     2.2. Net Exercise. The holder may elect to exercise this Warrant at any time or from time to time, by receiving shares of Common Stock equal to the number of shares determined pursuant to the following formula:

X = Y (A - B)   A

     where,

X =	the number of shares of Common Stock to be issued to Holder;
Y =	the number of shares of Common Stock as to which this Warrant is to be exercised (as indicated on the subscription form);
A =	the closing price on the Principal Market of the Common Stock calculated as of the Trading Day immediately preceding the date of exercise; and
B =	the Exercise Price.

     2.3. Antitrust Notification. If the holder of this Warrant determines, in its sole judgment upon the advice of counsel, that an exercise of this Warrant pursuant to the terms hereof would be subject to the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), the Company shall, within seven (7) business days after receiving notice from such holder of the applicability of the HSR Act, file with the United States Federal Trade Commission (the “FTC”) and the United States Department of Justice (the “DOJ”) the notification and report form and any supplemental information required to be filed by it pursuant to the HSR Act in connection with the exercise of this Warrant. Any such notification and report form and supplemental information will be in full compliance with the requirements of the HSR Act. The Company will furnish to such holder promptly (but in no event more than five (5) business days) such information and assistance as such holder may reasonably request in connection with the preparation of any filing or submission required to be filed by such holder under the HSR Act. The Company shall respond promptly after receiving any inquiries or requests for additional information from the FTC or the DOJ (and in no event more than three (3) business days after receipt of such inquiry or request). The Company shall keep such holder apprised periodically and at such holder’s request of the status of any communications with, and any inquiries or requests for additional information from, the FTC or the DOJ. The Company shall bear all filing or other fees required to be paid by the Company and such holder (or the “ultimate parent entity” of such holder, if any) under the HSR Act or any other applicable law in connection with such filings and all costs and expenses (including, without limitation, attorneys’ fees and expenses) incurred by the Company and such holder in connection with the preparation of such filings and responses to inquiries or requests. In the event that this Section 2.3 is applicable to any exercise of this Warrant, the purchase by such holder of the Exercise Shares subject to such exercise, and the payment by such holder of the Exercise Price therefor, shall be subject to the expiration or earlier termination of the waiting period under the HSR Act (with the exercise date of this Warrant being deemed to be the date immediately following the date of such expiration or early termination).

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     2.4. Termination. This Warrant shall terminate upon the earlier to occur of (i) exercise in full or (ii) the expiration of the Exercise Period.

3. REGISTRATION RIGHTS. The holder of this Warrant has certain rights to require the Company to register the Warrant Shares under the Securities Act and any blue sky or securities laws of any jurisdictions within the United States at the time and in the manner specified in the Warrant Purchase Agreement.

4. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable after any exercise of this Warrant and in any event within three (3) Trading Days thereafter, the Company shall, at its expense (including the payment by it of any applicable issue or stamp taxes), cause to be issued in the name of and delivered to the holder, or as the holder may direct, a certificate or certificates evidencing the number of fully paid and nonassessable shares of Common Stock (or Other Securities, as applicable) (which number shall be rounded up to the nearest whole share in the event any fractional share may otherwise be issuable upon such exercise) to which the holder shall be entitled on such exercise, in such denominations as may be requested by the holder, which certificate or certificates shall be free of restrictive and trading legends (except for any such legends as may be required under the Securities Act). In lieu of delivering physical certificates for the shares of Common Stock (or Other Securities) issuable upon any exercise of this Warrant, provided the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program or a similar program, upon request of the holder, the Company shall use commercially reasonable efforts to cause its transfer agent to electronically transmit such shares of Common Stock (or Other Securities) issuable upon exercise of this Warrant to the holder (or its designee), by crediting the account of the holder’s (or such designee’s) broker with DTC through its Deposit Withdrawal Agent Commission system (provided that the same time periods herein as for stock certificates shall apply) as instructed by the holder (or its designee).

5. ADJUSTMENT FOR DIVIDENDS, DISTRIBUTIONS AND RECLASSIFICATIONS.

     5.1. Distribution of Assets; Spin-Off. If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a Spin-Off, dividend, reclassification, corporate rearrangement or other similar transaction, but excluding cash dividends adjustments in respect of which are provided for in Section 5.2 hereof and excluding stock dividends or stock splits adjustments in respect of which are provided for in Section 7 hereof) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:

          (a) (i) the Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction of which:

          (A) the numerator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date minus the Fair Market Value of the Distribution applicable to one share of Common Stock, and

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          (B) the denominator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date;

and (ii) the number of Exercise Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i) of this Section 5.1(a); and

          (b) Notwithstanding the provisions of the foregoing clause (a), in the event of a Spin-Off in which the Distribution is of common stock of a subsidiary of the Company, then (i) the Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction of which:

          (A) the numerator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date minus the Fair Market Value of the Distribution applicable to one share of Common Stock, and

          (B) the denominator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date;

and (ii) the number of Exercise Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (i) of this Section 5.1(b); and (iii) the holder of this Warrant shall receive an additional warrant to purchase common stock of such company, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of common stock of such company that would have been issuable or distributed to the holder of this Warrant pursuant to the Distribution had the holder exercised this Warrant for cash for the full number of shares of Common Stock on the face of this Warrant (notwithstanding the requirement that this Warrant be exercised pursuant to the net exercise provisions of Section 2.2) immediately prior to such record date and with an exercise price equal to the amount by which the Exercise Price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the preceding clause (i) of this Section 5.1(b).

     5.2. Cash Dividends. In case at any time or from time to time, the holders of Common Stock shall have received, or (on or after the record date fixed for the determination of shareholders eligible to receive) shall have become entitled to receive, any cash dividend or distribution, then (a) the Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such cash dividend or distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction of which:

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          (i) the numerator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date minus the amount of the cash dividend or distribution applicable to one share of Common Stock, and

          (ii) the denominator shall be the Market Price of the Common Stock on the Trading Day immediately preceding such record date;

and (b) the number of Exercise Shares obtainable upon exercise of this Warrant shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of Common Stock entitled to receive such cash dividend or distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding clause (a) of this Section 5.2.

     5.3. Other Events. If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features, or any stock repurchase or buyback), then the Company’s Board of Directors, acting in good faith and consistent with their fiduciary duties, shall make an appropriate adjustment in the Exercise Price and the number of shares of Common Stock obtainable upon exercise of this Warrant so as to protect the rights of the holders of the Warrant.

6. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.

     6.1. Certain Adjustments. In case at any time or from time to time, the Company shall (i) effect a capital reorganization, reclassification or recapitalization, (ii) consolidate with or merge into any other person, or (iii) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then in each such case, this Warrant shall thereafter be exercisable for the same kind and amounts of securities (including shares of stock) or other assets, or both, which were issuable or distributable to the holders of outstanding Common Stock upon such reorganization, reclassification, recapitalization, consolidation, merger or transfer, in respect of that number of shares of Common Stock for which this Warrant could have been exercised immediately prior to such reorganization, reclassification, recapitalization, consolidation, merger or transfer; and, in any such case, appropriate adjustments (as determined in good faith by the Board of Directors of the Company) shall be made to assure that the provisions set forth herein shall thereafter be applicable, as nearly as reasonably may be practicable, in relation to any securities or other assets thereafter deliverable upon the exercise of this Warrant.

     6.2. Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this Section 6, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 8 hereof.

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7. ADJUSTMENTS FOR ISSUANCE OF COMMON STOCK AND AMOUNT OF OUTSTANDING COMMON STOCK.

     7.1. General. If at any time there shall occur any stock split, stock dividend, reverse stock split or other subdivision of the Company’s Common Stock (“Stock Event”), then the number of shares of Common Stock to be received by the holder of this Warrant shall be appropriately adjusted such that the proportion of the number of shares issuable hereunder to the total number of shares of the Company (on a fully diluted basis) prior to such Stock Event is equal to the proportion of the number of shares issuable hereunder after such Stock Event to the total number of shares of the Company (on a fully-diluted basis) after such Stock Event. The Exercise Price shall be proportionately decreased or increased upon the occurrence of any Stock Event; provided that in no event will the Exercise Price be less than the par value of the Common Stock.

     7.2. Other Securities. In case any Other Securities shall have been issued, or shall then be subject to issue upon the conversion or exchange of any stock (or Other Securities) of the Company (or any other issuer of Other Securities or any other entity referred to in Section 6 hereof) or to subscription, purchase or other acquisition pursuant to any rights or options granted by the Company (or such other issuer or entity), the holder hereof shall be entitled to receive upon exercise hereof such amount of Other Securities (in lieu of or in addition to Common Stock) as is determined in accordance with the terms hereof, treating all references to Common Stock herein as references to Other Securities to the extent applicable, and the computations, adjustments and readjustments provided for in this Section 7 with respect to the number of shares of Common Stock issuable upon exercise of this Warrant shall be made as nearly as possible in the manner so provided and applied to determine the amount of Other Securities from time to time receivable on the exercise of the Warrant, so as to provide the holder of the Warrant with the benefits intended by this Section 7 and the other provisions of this Warrant.

     7.3. Adjustments for Dilutive and Other Events.

     (a) Issuance of Additional Shares of Common Stock. If at any time on or after the Bridge Date, the Company shall issue any Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 7.3(b) below), at a price per share (the “Offering Price”) which is lower than the Reference Price on the date of such issuance, then the number of shares of Common Stock to be received by the holder of this Warrant upon the exercise hereof shall be adjusted to that number determined by multiplying (a) the number of shares of Common Stock purchasable hereunder immediately prior thereto by (b) a fraction (i) the numerator of which shall be the sum of (A) the number of shares of Common Stock Deemed Outstanding immediately prior to the issuance of such shares of Common Stock plus (B) the number of shares of Common Stock issued in the subject transaction and (ii) the denominator of which shall be an amount equal to the sum of (x) the number of shares of Common Stock Deemed Outstanding immediately prior to the issuance of such shares of Common Stock plus (y) the quotient of (1) the Offering Price multiplied by the number of shares of Common Stock so issued by the Company, divided by (2) the Reference Price in effect immediately prior to the issuance of such shares. The provisions of this Section 7.3 shall not apply to (i) any issuance of additional Common Stock for which an adjustment is provided under Section 7.1 hereof, (ii) any issuance of Additional Shares of Common Stock the proceeds of which are immediately used for the repayment of all obligations of the Company under the Credit Agreement, and (iii) )(A) the issuance of Common Stock upon the exercise of options outstanding on the date hereof and (B) the issuance of options after the date hereof for the purchase of

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up to 1,169,848 shares (subject to adjustments for stock splits, reverse stock splits, combinations and similar events) of Common Stock, and the issuance of Common Stock upon the exercise of such options, pursuant to the Company’s 2001 Long Term Stock Incentive Plan, the Harvest Natural Resources 2004 Long Term Incentive Plan, the Harvest Natural Resources 2006 Long Term Incentive Plan and the Harvest Natural Resources 2010 Long-Term Incentive Plan (collectively, the “Excluded Options”). When any adjustment is required to be made to the number of shares hereunder pursuant to this Section 7.3(a), the Exercise Price shall be reduced to a price (calculated to the nearest cent) as is equal to the quotient obtained by dividing (x) the product of the Exercise Price multiplied by the number of shares of Common Stock issuable upon exercise of this Warrant, in each case as in effect immediately before such adjustment, by (y) the number of shares of Common Stock issuable upon exercise of this Warrant immediately after giving effect to such adjustment.

     (b)  Issue of Options and Convertible Securities Deemed Issue of Additional Shares of Common Stock. If the Company at any time or from time to time on or after the Bridge Date shall issue any Options (other than Excluded Options) or Convertible Securities, then the maximum number of shares of Common Stock (as set forth in the instrument relating thereto without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, or, in case a record date shall have been fixed for such issuance, as of the close of business on such record date, provided that Additional Shares of Common Stock shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 7.3(c) below) of such Additional Shares of Common Stock would be less than the Reference Price in effect on the date of and immediately prior to such issue, or such record date, as the case may be, and provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued (i) no further adjustment in the number of shares of Common Stock for which this Warrant is exerciseable shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities, and (ii) upon the expiration or termination of any unexercised Option, the number of shares of Common Stock for which this Warrant is then exerciseable shall be readjusted, and the Additional Shares of Common Stock deemed issued as the result of the original issue of such Option shall not be deemed issued for the purpose of such readjustment; provided, however, that with respect to any Options or Convertible Securities issued by the Company for which there is a subsequent adjustment which increases the number of shares of Common Stock issuable upon conversion or exercise of such Options or Convertible Securities or an adjustment which decreases the exercise price or conversion price of such Options or Convertible Securities, then an adjustment to the number of shares of Common Stock for which this Warrant is exerciseable shall be made under this Section 7.3 upon any such adjustment to such Options or Convertible Securities as if such Options or Convertible Securities were deemed to have been cancelled and reissued.

     (c)  Determination of Consideration. For purposes of this Section 7.3, the consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows:

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     (i) Cash and Property: Such consideration shall:

     (A) insofar as it consists of cash, be equal to the total cash received by the Company, excluding amounts paid or payable for accrued interest or accrued dividends;

     (B) insofar as it consists of property other than cash, be computed at the Fair Market Value thereof at the time of such issue determined as provided below; and

     (C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received that is allocated to such Additional Shares of Common Stock, computed as provided in or pursuant to clauses (A) and (B) above.

If the Company shall issue (or shall be deemed to issue) Additional Shares of Common Stock for no consideration, such Additional Shares of Common Stock shall be deemed to have been issued for consideration equal to $.01 per share.

     (ii) Options and Convertible Securities. The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section 7.3(b), relating to Options and Convertible Securities, shall be determined by dividing

     (A) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

     (B) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities.

8. NO DILUTION OR IMPAIRMENT. The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in taking all such action as may be necessary or appropriate in order to protect the rights of the holder of the Warrant against dilution. Without limiting the generality of the foregoing, the Company (i) will not increase the par value of any shares of stock receivable on the exercise of the Warrant above the amount payable therefor on such exercise, (ii) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of stock on the exercise of the Warrant from time to time outstanding, and (iii) subject to Section 14, will not transfer all or substantially all of its

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properties and assets to any other entity (corporate or otherwise), or consolidate with or merge into any other entity or permit any such entity to consolidate with or merge with the Company (if the Company is not the surviving entity), unless such other entity shall expressly assume in writing and will be bound by all the terms of this Warrant and the Warrant Purchase Agreement.

9. CERTIFICATE AS TO ADJUSTMENTS. In each case of any event that may require any adjustment or readjustment in the shares of Common Stock issuable on the exercise of this Warrant, the Company at its expense will promptly prepare a certificate setting forth such adjustment or readjustment, or stating the reasons why no adjustment or readjustment is being made, and showing, in detail, the facts upon which any such adjustment or readjustment is based, including a statement of (i) the number of shares of Common Stock Deemed Outstanding, and (ii) the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted and readjusted (if required by Section 7) on account thereof. The Company will forthwith mail a copy of each such certificate to each holder of a Warrant, and will, on the written request at any time of any holder of a Warrant, furnish to such holder a like certificate setting forth the calculations used to determine such adjustment or readjustment.

10. NOTICES OF RECORD DATE. In the event of:

     (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right; or

     (b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all the assets of the Company to or any consolidation or merger of the Company with or into any other Person or any other Fundamental Change; or

     (c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company,

     (d) any proposed issue or grant by the Company of any shares of stock of any class or any other securities, or any right or option to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities (other than any issuance or grant to which Section 7.3 hereof does not apply);

then, and in each such event, the Company will mail or cause to be mailed to the holder of this Warrant a notice specifying (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, (ii) the date on which any such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up is anticipated to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or Other Securities) shall be entitled to exchange their shares of Common Stock (or Other Securities) for securities or other property deliverable on such reorganization, reclassification, recapitalization, transfer, consolidation, merger, dissolution, liquidation or winding-up and (iii) the amount and

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character of any such stock or other such securities, or rights or options with respect thereto, proposed to be issued or granted, the date of such proposed issue or grant and the persons or class of persons to whom such proposed issue or grant is to be offered or made. Such notice shall be mailed at least thirty (30) days prior to the date specified in such notice on which any such action is to be taken.

11. RESERVATION OF STOCK ISSUABLE ON EXERCISE OF WARRANT. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of this Warrant, a number of shares of Common Stock equal to the total number of shares of Common Stock from time to time issuable upon exercise of this Warrant, and, from time to time, will take all steps necessary to amend its Certificate of Incorporation to provide sufficient reserves of shares of Common Stock issuable upon exercise of this Warrant.

12. DEFINITIONS. As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

      Additional Shares of Common Stock means all shares of Common Stock issued (or, pursuant to Section 7.3(b) hereof, deemed to be issued) by the Company after the date hereof, including without limitation any treasury shares sold or otherwise transferred by the Company, but excluding shares of Common Stock issued or issuable by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock for which an adjustment is made pursuant to Section 7.1 hereof, but excluding shares of Common Stock issued or issuable upon exercise of any Excluded Options.

     Appraisal Procedure means a procedure whereby two independent appraisers, one chosen by the Company and one by the holder (or if there is more than one holder, a majority in interest of holders), shall mutually agree upon the determinations then the subject of appraisal. Each party shall deliver a notice to the other appointing its appraiser within 15 days after the Appraisal Procedure is invoked. If within 30 days after appointment of the two appraisers they are unable to agree upon the amount in question, a third independent appraiser shall be chosen within 10 days thereafter by the mutual consent of such first two appraisers or, if such first two appraisers fail to agree upon the appointment of a third appraiser, such appointment shall be made by the American Arbitration Association, or any organization successor thereto, from a panel of arbitrators having experience in the appraisal of the subject matter to be appraised. The decision of the third appraiser so appointed and chosen shall be given within 30 days after the selection of such third appraiser. If three appraisers shall be appointed and the determination of one appraiser is disparate from the middle determination by more than twice the amount by which the other determination is disparate from the middle determination, then the determination of such appraiser shall be excluded, the remaining two determinations shall be averaged and such average shall be binding and conclusive on the Company and the holder; otherwise, the average of all three determinations shall be binding and conclusive on the Company and the holder. The costs of conducting any Appraisal Procedure shall be borne by the holder requesting such Appraisal Procedure, except (A) the fees and expenses of the appraiser appointed by the Company and any other costs incurred by the Company shall be borne by the Company and (B) if such Appraisal Procedure shall result in a determination that is disparate by 5% or more from the Company’s initial determination, all costs of conducting such Appraisal Procedure shall be borne by the Company.

     Bridge Date shall have the meaning assigned to such term in the Credit Agreement.

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     Common Stock means (i) the Company’s Common Stock, $.01 par value per share, (ii) any other capital stock of any class or classes (however designated) of the Company, the holders of which shall have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any shares entitled to preference, and (iii) any other securities into which or for which any of the securities described in clauses (i), or (ii) above have been converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

      Common Stock Deemed Outstanding means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock issuable at such time upon conversion of any Convertible Securities and Options (other than this Warrant and any other warrants issued under the Warrant Purchase Agreement) then outstanding to the extent such Convertible Security or Option is (i) convertible, exercisable or exchangeable at such time and (ii) convertible, exercisable or exchangeable at a price that is less than the Fair Market Value of a share of Common Stock issuable upon such conversion, exercise or exchange at such time.

      Convertible Securities means any evidences of Indebtedness, shares (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Common Stock.

     Exercise Period means the period commencing on the Bridge Date and ending on the fifth anniversary of the Bridge Date.

     Exercise Price means a purchase price per share equal to the lower of $15.00 or 120% of the average closing bid price, as reported by Bloomberg Financial Markets, on the Principal Market of the Common Stock for the twenty (20) consecutive Trading Days immediately preceding the Bridge Date.

     Exercise Shares means the shares of Common Stock for which this Warrant is then being exercised.

     Fair Market Value means, with respect to any security or other property, the fair market value of such security or other property as determined by the Board of Directors, acting in good faith. If the holder does not accept the Board of Director’s calculation of fair market value and the holder and the Company are unable to agree on fair market value, the Appraisal Procedure shall be used to determine Fair Market Value.

     Fundamental Change means the occurrence of one of the following:

     (i) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act files a Schedule TO or any schedule, form or report under the Exchange Act disclosing that such person or group has become the direct or indirect ultimate beneficial owner of common equity of the Company representing more than 50% of the voting power of the outstanding Common Stock;

     (ii) consummation of any consolidation or merger of the Company or similar transaction or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially all of the consolidated assets of the Company and its subsidiaries, taken as a whole, to any person , in each case pursuant to which the Common Stock will be converted into cash, securities or other property, other than pursuant to a transaction in which the persons that beneficially owned, directly or indirectly, voting shares of the Company immediately prior to such transaction beneficially own,

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directly or indirectly, voting shares representing a majority of the total voting power of all outstanding classes of voting shares of the continuing or surviving Person immediately after the transaction; or

     (iii) the Company’s stockholders approve and adopt a plan of liquidation or dissolution of the Company or a sale of all or substantially all of the Company’s assets.

     Market Price means, with respect to the Common Stock, on any given day, the closing sale price or, if no closing sale price is reported, the last reported sale price of the shares of the Common Stock on the New York Stock Exchange on such date. If the Common Stock is not traded on the New York Stock Exchange on any date of determination, the Market Price of the Common Stock on such date of determination means the closing sale price as reported in the composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is so listed or quoted, or, if no closing sale price is reported, the last reported sale price on the principal U.S. national or regional securities exchange on which the Common Stock is so listed or quoted, or if the Common Stock is not so listed or quoted on a U.S. national or regional securities exchange, the last quoted bid price for the Common Stock in the over-the-counter market as reported by Pink Sheets LLC or similar organization, or, if that bid price is not available, the market price of the Common Stock on that date as determined by a nationally recognized independent investment banking firm retained by the Company for this purpose.

     Option means any rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

     Other Securities refers to any stock (other than Common Stock) and other securities of the Company or any other entity (corporate or otherwise) (i) which the holder of this Warrant at any time shall be entitled to receive, or shall have received, on the exercise of this Warrant, in lieu of or in addition to Common Stock, or (ii) which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities, in each case pursuant to Section 5 or 6 hereof.

     Preliminary Fundamental Change means, with respect to the Company, (A) the execution of a definitive agreement for a transaction or (B) the recommendation that stockholders tender in response to a tender or exchange offer, in the case of both (A) and (B), that would reasonably be expected to result in a Fundamental Change.

     Principal Market means, at any time, the securities exchange, quotation system or over-the-counter trading facility on which the Common Stock is then principally traded or quoted at such time.

     Reference Price means, on any date of determination, the greater of (i) the Market Price per share as of such date and (ii) the Exercise Price.

     Spin-Off means a transaction in which the Company spins off or otherwise divests itself of a part of its business or operations or disposes all or a part of its assets in a transaction in which the Company does not receive compensation for such business, operations or assets, but causes securities of a subsidiary of the Company or another entity to be distributed or otherwise issued to security holders of the Company,

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     Trading Day means, at any time, a day on which the Principal Market is open for the general trading or quotation of securities and the Common Stock is traded or quoted thereon without suspension or interruption.

13. LIMITATION ON BENEFICIAL OWNERSHIP. Notwithstanding the foregoing, the holder shall not be entitled to receive shares of Common Stock upon exercise of this Warrant to the extent (but only to the extent) that such receipt would cause the holder to become, directly or indirectly, a “beneficial owner” (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) of a number of shares of Common Stock which exceeds the Maximum Percentage of the shares of Common Stock outstanding at such time. This limitation on beneficial ownership shall be terminated (i) upon 61 days’ notice to the Company by the holder or (ii) immediately on the date that is 30 days prior to the expiration of the Exercise Period. Any purported delivery of shares of Common Stock upon exercise of this Warrant shall be void and have no effect to the extent (but only to the extent) that such delivery would result in the holder becoming the beneficial owner of more than the Maximum Percentage of the shares of Common Stock outstanding at such time. If any delivery of shares of Common Stock owed to the holder upon exercise of this Warrant is not made, in whole or in part, as a result of this limitation, the Company’s obligation to make such delivery shall not be extinguished and the Company shall deliver such shares of Common Stock as promptly as practicable after the holder gives notice to the Company that such delivery would not result in such limitation being triggered. For purposes of this Section 13, (a) the term “Maximum Percentage” shall mean initially 5%; provided, that if at any time after the date hereof the Holder Group beneficially owns in excess of 5% of the outstanding shares of Common Stock (excluding any shares issuable under this Warrant and any other convertible security including a similar limitation), then the Maximum Percentage shall automatically increase to 10% so long as the Holder Group owns in excess of 5% of the outstanding shares of Common Stock (excluding any shares issuable under this Warrant and any other convertible security including a similar limitation), and (b) the term “Holder Group” shall mean the holder of this Warrant plus any other person with which such holder is considered to be part of a group under Section 13 of the Exchange Act or with which such holder otherwise files reports under Sections 13 and/or 16 of the Exchange Act. The limitations in this Section 13 shall not have an effect on any calculation or payment due to the Holder of this Warrant pursuant to Section 14 hereof.

14. FUNDAMENTAL CHANGE. Upon the occurrence of a Fundamental Change, the Company shall, upon the consummation of such Fundamental Change, repurchase all of this Warrant at the higher of (i) the Fair Market Value of the Warrant and (ii) a valuation based on a computation of the option value of the Warrant using Black-Scholes calculation methods and making the assumptions described in the Black-Scholes methodology described in Exhibit A. Payment of such purchase price by the Company to the holder of this Warrant shall be due in cash upon the occurrence of the Fundamental Change. The fact that this Warrant can only be exercised on a cashless net exercise basis as provided in Section 2.2 shall not have any effect on any calculation or payment due to the Holder of this Warrant pursuant to this Section 14. Any such calculation or payment shall assume that this Warrant may be exercised either for cash or on a cashless basis, at the Holder’s election. The Company agrees that it will not take any action resulting in a Preliminary Fundamental Change or a Fundamental Change in the absence of definitive documentation providing for such repurchase of the Warrant pursuant to this Section 14.

15. WARRANT AGENT. The Company may, by written notice to the holder of this Warrant, appoint an agent for the purpose of issuing Common Stock on the exercise of this Warrant pursuant to

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Section 2 hereof, and exchanging or replacing this Warrant pursuant to the Warrant Purchase Agreement, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

16. REMEDIES. The Company stipulates that the remedies at law of the holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate, and that such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

17. NOTICES. All notices and other communications from the Company to the holder of this Warrant shall be mailed by first class registered or certified mail, postage prepaid, or sent by overnight courier (or sent in the form of a telex or telecopy) at such address as may have been furnished to the Company in writing by such holder or, until any such holder furnishes to the Company an address, then to, and at the address of, the last holder of this Warrant who has so furnished an address to the Company.

18. MISCELLANEOUS. In case any provision of this Warrant shall be invalid, illegal or unenforceable, or partially invalid, illegal or unenforceable, the provision shall be enforced to the extent, if any, that it may legally be enforced and the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. This Warrant and any term hereof may be changed, waived, discharged or terminated only by a statement in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. This Warrant shall be governed by and construed in accordance with the domestic substantive laws (and not the conflict of law rules) of the State of New York. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. Notwithstanding anything contained herein to the contrary, any calculation or analysis under this Warrant shall assume that this Warrant may be exercised either for cash or on a cashless net exercise basis, at the Holder’s election, notwithstanding that this Warrant may only be exercised on a cashless basis pursuant to the net exercise provisions set forth in Section 2.2.

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     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer.

Dated as of October 28, 2010

HARVEST NATURAL RESOURCES, INC.
By:	/s/ James A. Edmiston
	Name:	James A. Edmiston
	Title:	President and Chief Executive Officer

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FORM OF SUBSCRIPTION

(To be signed only on exercise
of Common Stock Purchase Warrant)

TO: Harvest Natural Resources, Inc.

     1. The undersigned Holder of the attached Warrant hereby elects to exercise its purchase right under such Warrant to purchase shares of Common Stock of Harvest Natural Resources, Inc., a Delaware corporation (the “Company”), with respect to                    shares of Common Stock pursuant to the net exercise provisions specified in Section 2.2 of the Warrant.

     2. Please issue a stock certificate or certificates representing the appropriate number of shares of Common Stock in the name of the undersigned or in such other name(s) as is specified below:

Name:

Address:

TIN:

	Dated:
(Signature must conform exactly to name of Holder as specified on the face of the Warrant)

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FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)

     For value received, the undersigned hereby sells, assigns, and transfers unto                    the right represented by the within Warrant to purchase                 shares of Common Stock of Harvest Natural Resources, Inc., a Delaware corporation, to which the within Warrant relates, and appoints                                        attorney to transfer such right on the books of Harvest Natural Resources, Inc., with full power of substitution in the premises.

	[insert name of Holder]
Dated:	By:
		Title:
		[insert address of Holder]

Signed in the presence of:

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EXHIBIT A

Black-Scholes Assumptions

For the purpose of this Exhibit A:

     “Acquiror” means (A) the third party that has entered into definitive document for a transaction, or (B) the offeror in the event of a tender or exchange offer, which could reasonably result in a Fundamental Change upon consummation.

Underlying Security Price:		•	In the event of a merger or acquisition, (A) in the event of an “all cash” deal, the cash per share offered to the Company’s stockholders by the Acquiror; (B) in the event of an “all stock” deal, (1) in the event of a fixed exchange ratio transaction, the product of (i) the average of the Market Price of the Acquiror’s common stock for the ten trading day period ending on the day preceding the date of the Preliminary Fundamental Change and (ii) the number of Acquiror’s shares being offered for one share of Common Stock and (2) in the event of a fixed value transaction, the value offered by the Acquiror for one share of Common Stock; (C) in the event of a transaction contemplating various forms of consideration for each share of Common Stock, the cash portion, if any, shall be valued as clause (A) above and the stock portion shall be valued as clause (B) above and any other forms of consideration shall be valued by the Board of Directors of the Company in good faith, without applying any discounts to such consideration.
		•	In the event of all other Fundamental Change events, the average of the Market Price of the Common Stock for the ten trading day period beginning on the date of the Preliminary Fundamental Change.
Exercise Price:	The Exercise Price as adjusted and then in effect for the Warrant.
Dividend Rate:	The Company’s annualized dividend yield as of the date of the Preliminary Fundamental Change in the event of a Fundamental Change (the “Reference Date”).
Interest Rate:	The applicable U.S. 5 year treasury note risk free rate as of the Reference Date.
Model Type:	Black-Scholes
Exercise Type:	American
Put or Call:	Call
Trade Date:	The Reference Date
Expiration Date:	The expiration of the Exercise Period
Settle Date:	The Reference Date plus one business day
Exercise Delay:	0
Volatility:	The average daily volatility over the previous six months for the Common Stock as listed by Bloomberg L.P., as of the Reference Date

Such valuation of the Warrant based on the Black-Scholes methodology shall not be discounted in any way. If the holder disputes such Black-Scholes valuation pursuant to this Exhibit A as calculated by the Company, the Company and the holder will choose a mutually-agreeable firm to compute the valuation of the Warrant using the guidelines above, and such valuation shall be final. The fees and expenses of such firm shall be borne equally by the Company and the holder. In the event that a new warrant is issued by a company in a Spin-Off from the Company pursuant to Section 5.1(b) of the Warrant, references in this Exhibit A to such spun-off company’s “Dividend Rate” and “Volatility” shall refer those of the Company unless at the time of such measurement, such spun-off company has been trading in the public markets for at least 6 months.

EX-10.1

Exhibit 10.1

EXECUTION VERSION

CREDIT AGREEMENT

Dated as of October 28, 2010

between

Harvest Natural Resources, Inc.

as the Borrower

and

MSD Energy Investments Private II, LLC,

as Lender

TABLE OF CONTENTS

	Page
ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS		1
1.01. Defined Terms		1
1.02. Other Interpretive Provisions		18
1.03. Accounting Terms		19
1.04. Rounding		19
1.05. Times of Day		19
1.06. Currency Equivalents Generally		19
ARTICLE II. THE LOAN		20
2.01. The Loan		20
2.02. Prepayments		20
2.03. Repayment of Loan		21
2.04. Interest		21
2.05. Computation of Interest and Fees		21
2.06. Evidence of Debt		21
2.07. Payments Generally		21
ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY		22
3.01. Taxes		22
3.02. Increased Costs		25
3.03. Survival		26
ARTICLE IV. CONDITIONS PRECEDENT TO THE LOAN		26
4.01. Conditions of the Loan		26
ARTICLE V. REPRESENTATIONS AND WARRANTIES		28
5.01. Existence, Qualification and Power		28
5.02. Authorization; No Contravention		28
5.03. Governmental Authorization; Other Consents		28
5.04. Binding Effect		28
5.05. Financial Statements; No Material Adverse Effect		28
5.06. Litigation		29
5.07. No Default		29
5.08. Ownership of Property; Liens; Investments		29

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TABLE OF CONTENTS
(continued)

	Page
5.09. Environmental Compliance		30
5.10. Insurance		31
5.11. Taxes		31
5.12. ERISA Compliance		31
5.13. Subsidiaries; Equity Interests; Loan Parties		32
5.14. Margin Regulations; Investment Company Act		32
5.15. Disclosure		32
5.16. Compliance with Laws		33
5.17. Intellectual Property; Licenses, Etc.		33
5.18. Solvency		33
5.19. Casualty, Etc.		33
5.20. Labor Matters		33
5.21. Foreign Assets Control Regulations, Etc.		33
ARTICLE VI. AFFIRMATIVE COVENANTS		34
6.01. Financial Statements		34
6.02. Certificates; Other Information		35
6.03. Notices		37
6.04. Payment of Obligations		37
6.05. Preservation of Existence, Etc.		38
6.06. Maintenance of Properties		38
6.07. Maintenance of Insurance		38
6.08. Compliance with Laws		38
6.09. Books and Records		38
6.10. Inspection Rights		38
6.11. Use of Proceeds		39
6.12. Covenant to Guarantee Obligations		39
6.13. Compliance with Environmental Laws		39
6.14. Further Assurances		39
6.15. Compliance with Terms of Leaseholds		39
6.16. Material Contracts		40

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TABLE OF CONTENTS
(continued)

	Page
ARTICLE VII. NEGATIVE COVENANTS		40
7.01. Liens		40
7.02. Indebtedness		41
7.03. Investments		43
7.04. Fundamental Changes		45
7.05. Dispositions		46
7.06. Restricted Payments		47
7.07. Change in Nature of Business		48
7.08. Transactions with Affiliates		48
7.09. Burdensome Agreements		48
7.10. Use of Proceeds		48
7.11. Amendments of Organization Documents		49
7.12. Accounting Changes		49
7.13. Prepayments, Etc. of Indebtedness		49
7.14. Terrorism Sanctions Regulations		49
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES		49
8.01. Events of Default		49
8.02. Remedies upon Event of Default		51
8.03. Application of Funds		51
ARTICLE IX. MISCELLANENOUS		52
9.01. Amendments, Etc		52
9.02. Notices; Effectiveness		52
9.03. No Waiver; Cumulative Remedies; Enforcement		52
9.04. Expenses; Indemnity; Damage Waiver		52
9.05. Payments Set Aside		54
9.06. Tax Matters		54
9.07. Successors and Assigns		54
9.08. Right of Setoff		55
9.09. Interest Rate Limitation		55
9.10. Counterparts; Integration; Effectiveness		55

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TABLE OF CONTENTS
(continued)

	Page
9.11. Survival of Representations and Warranties		56
9.12. Severability		56
9.13. Governing Law; Jurisdiction; Etc		56
9.14. Waiver of Jury Trial		57
9.15. Electronic Execution of Assignments and Certain Other Documents		57
9.16. USA PATRIOT Act		57
9.17. Time of the Essence		57
9.18. ENTIRE AGREEMENT		58

iv

SCHEDULES

5.03		Certain Authorizations
5.06		Litigation
5.08	(b)	Existing Liens
5.08	(d)	Existing Investments
5.09		Environmental Matters
5.13		Subsidiaries and Other Equity Investments; Loan Parties
6.12		Guarantors
7.02		Existing Indebtedness
7.09		Burdensome Agreements
9.02		Lender’s Office, Certain Addresses for Notices

EXHIBITS

Form of
A	Note
B	Guaranty

CREDIT AGREEMENT

     This CREDIT AGREEMENT (“Agreement”) is entered into as of October 28, 2010, between Harvest Natural Resources, Inc., a Delaware corporation (the “Borrower”), and MSD Energy Investments Private II, LLC, a Delaware limited liability company (the “Lender”).

PRELIMINARY STATEMENTS:

     The Borrower has requested that the Lender provide a term loan facility, and the Lender has indicated its willingness to lend on the terms and subject to the conditions set forth herein.

     In consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS

     1.01. Defined Terms. As used in this Agreement, the following terms shall have the meanings set forth below:

     “Affiliate” means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

     “Affiliated Entity” means the Subsidiaries of the Borrower and any of their or the Borrower’s respective Controlled Affiliates.

     “Agreement” means this Credit Agreement.

     “Anti-Money Laundering Laws” has the meaning set forth in Section 5.21(c).

     “Applicable Rate” means (a) ten percent (10%) per annum from the Closing Date up to but not including the Bridge Date and (b) fifteen percent (15%) on and after the Bridge Date.

     “Asset Coverage Ratio” means the ratio of (a) Present Value of Proved Reserves of a Subsidiary to (b) Indebtedness of such Subsidiary (excluding, if applicable, Indebtedness under the Guaranty of such Subsidiary of the Obligations).

     “Attributable Indebtedness” means, on any date, (a) in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease or other agreement or instrument were accounted for as a Capitalized Lease and (c) all Synthetic Debt of such Person.

     “Audited Financial Statements” means the audited consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2009, and the related

consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto.

     “Bank Assignee” has the meaning set forth in Section 3.02(a).

     “Blocked Person” has the meaning set forth in Section 5.21(c).

     “Borrower” has the meaning specified in the introductory paragraph hereto.

     “Borrower Materials” has the meaning set forth in Section 6.02.

     “Bridge Date” means July 28, 2011; provided that so long as no Default or Event of Default shall be continuing, such date will be extended to October 28, 2011 upon notice by the Borrower to the Lender not less than ten (10) Business Days prior to July 28, 2011 of Borrower’s intention to extend such date and the payment by the Borrower to the Lender of an extension fee in the amount of $3,000,000 on or before July 28, 2011.

     “Budong-Budong, Indonesia Project” means that certain project owned by Harvest Budong-Budong, B.V. that covers 883,635 acres in West Sulawesi, Indonesia under a Production Sharing Contract in which Harvest Budong-Budong, B.V. has a 54.4 percent interest. During the exploration phase, Harvest Budong-Budong, B.V. and its partner have agreed to acquire and process seismic data and drill two exploration wells.

     “Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the State of New York.

     “Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases.

     “Cash Equivalents” means any of the following types of Investments, to the extent owned by the Borrower or any of its Subsidiaries free and clear of all Liens:

     (a) readily marketable obligations issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof having maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and credit of the United States of America is pledged in support thereof;

     (b) time deposits with, or insured certificates of deposit or bankers’ acceptances of, any commercial bank that (i) (A) is the Lender or (B) is organized under the laws of the United States of America, any state thereof or the District of Columbia or is the principal banking subsidiary of a bank holding company organized under the laws of the United States of America, any state thereof or the District of Columbia, and is a member of the Federal Reserve System, (ii) issues (or the parent of which issues) commercial paper rated as described in clause (c) of this definition and (iii) has combined capital and surplus of at least $1,000,000,000, in each case with maturities of not more than 180 days from the date of acquisition thereof;

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     (c) commercial paper in an aggregate amount of no more than $20,000,000 issued by any Person organized under the laws of any state of the United States of America and rated at least “Prime-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than 180 days from the date of acquisition thereof; and

     (d) Investments, classified in accordance with GAAP as current assets of the Borrower or any of its Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition.

     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980.

     “CERCLIS” means the Comprehensive Environmental Response, Compensation and Liability Information System maintained by the U.S. Environmental Protection Agency.

     “CFC” means a Person that is a controlled foreign corporation under Section 957 of the Code.

     “Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any guideline or directive (whether or not having the force of law) by any Governmental Authority.

     “Change of Control” means an event or series of events by which:

     (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan) other than the Equity Investors becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time (such right, an “option right”)), directly or indirectly, of 25% or more of the equity securities of Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such “person” or “group” has the right to acquire pursuant to any option right); or

     (b) during any period of 12 consecutive months, a majority of the members of the board of directors or other equivalent governing body of the Borrower cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or

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nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (excluding, in the case of both clause (ii) and clause (iii), any individual whose initial nomination for, or assumption of office as, a member of that board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the board of directors); or

     (c) any Person or two or more Persons (other than the Equity Investors) acting in concert shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation thereof, will result in its or their acquisition of the power to exercise, directly or indirectly, a controlling influence over the management or policies of the Borrower, or control over the equity securities of the Borrower entitled to vote for members of the board of directors or equivalent governing body of the Borrower on a fully-diluted basis (and taking into account all such securities that such Person or Persons have the right to acquire pursuant to any option right) representing 25% or more of the combined voting power of such securities; or

     (d) a “Fundamental Change” or any comparable term under, and as defined in, the Senior Convertible Notes shall have occurred.

     Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred upon the execution by the Borrower or any of its Subsidiaries of an agreement to enter into a Strategic Transaction; provided that no such Strategic Transaction shall be consummated and no Disposition shall occur pursuant to such agreement unless and until the Obligations have been paid in full in cash.

     For avoidance of doubt in determining whether a Change of Control has occurred, any rights (but excluding any exercise of such rights) of a pledgee in connection with a pledge by a pledgor of Equity Interests of the Borrower to secure an obligation shall not be deemed to be control over or beneficial ownership of those securities and shall not be deemed to confer any controlling influence over the management or policies of the Borrower.

     “Closing Date” means the first date all the conditions precedent in Section 4.01 are satisfied or waived in accordance with Section 9.01.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

     “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

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     “Debtor Relief Laws” means the Bankruptcy Code of the United States, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect and affecting the rights of creditors generally.

     “Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.

     “Default Rate” means an interest rate equal to the interest rate otherwise applicable to the Loan plus 2% per annum.

     “Disclosed Litigation” has the meaning set forth in Section 5.06.

     “Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including, without limitation, any sale and leaseback transaction) of any property by any Person (or the granting of any option or other right to do any of the foregoing) or the taking (including, without limitation, by way of regulation or other commercially equivalent manner) or nationalization of any property of such Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

     “Dollar” and “$” mean lawful money of the United States.

     “Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the Release of any Hazardous Materials into the environment including those related to air emissions and discharges to waste or public systems.

     “Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of the Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

     “Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

     “Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests),

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and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.

     “Equity Investors” means any Affiliate of the Lender and the holders of the Warrants.

     “ERISA” means the Employee Retirement Income Security Act of 1974.

     “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan (other than a Multiemployer Plan); (b) the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA; (e) the institution by the PBGC of proceedings to terminate a Pension Plan; (f) any event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan or any Multiemployer Plan is a plan in endangered or critical status within the meaning of Sections 430, 431 and 432 of the Code or Sections 303, 304 and 305 of ERISA; or (h) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

     “Event of Default” has the meaning specified in Section 8.01.

     “Excluded Taxes” means, with respect to the Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income, profits, or capital (however denominated), and franchise taxes imposed on it (in lieu of or in addition to net income, profits, or capital taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which such recipient is organized or in which its principal office is located or, in the case of the Lender, in which its Lending Office is located, (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction in which the Borrower is located or described in clause (a), (c) any withholding tax that (i) is imposed on amounts payable to the Lender (or any assignee of the Lender) at the time the Lender (or any assignee of the Lender) becomes a party to this Agreement (or designates a new Lending Office), or (ii) is imposed on amounts payable to the Lender (or any assignee of the Lender) as a result of the Lender (or any assignee of the Lender) failing to comply with Section 3.01(e), and (d) any U.S. federal taxes imposed pursuant to FATCA on any “withholdable payment” (as defined under FATCA) made to the Lender (or any assignee of the Lender).

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     “Extraordinary Receipt” means any cash received by or paid to or for the account of any Person not in the ordinary course of business, including tax refunds, pension plan reversions, proceeds of insurance (other than proceeds of business interruption insurance to the extent such proceeds constitute compensation for lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments and any purchase price adjustments. Notwithstanding the foregoing, (i) no receipt, directly or indirectly, by the Borrower or any of its Subsidiaries of dividends from Petrodelta or of payments of invoices from Petrodelta shall be deemed to constitute an extraordinary receipt and (ii) no receipt, directly or indirectly, by the Borrower or any of its Subsidiaries of payments with respect to capital calls made pursuant to joint operating agreements shall be deemed to constitute an extraordinary receipt.

     “Facility” means financing to be provided by a third party financial institution providing for an oil and gas reserve-based loan to any Subsidiary (other than a CFC and Harvest Holding LLC) of the Borrower, in each case in the aggregate principal amount not to exceed $200,000,000.

     “FATCA” shall mean Sections 1471 through 1474 of the Code and any Treasury regulations promulgated thereunder or official interpretations thereof.

     “FRB” means the Board of Governors of the Federal Reserve System of the United States.

     “GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or such other principles as may be approved by a significant segment of the accounting profession in the United States, that are applicable to the circumstances as of the date of determination, consistently applied.

     “Gabon Project” means Harvest Dussafu B.V.’s 66.667 percent interest in the Dussafu PSC signed in May 28, 2007 with the Dussafu PSC partners and the Republic of Gabon, represented by the Ministry of Mines, Energy, Petroleum and Hydraulic Resources. The Dussafu PSC contract area is located offshore Gabon, adjacent to the border with the Republic of Congo. It contains 680,000 acres with water depths to 1,000 feet. The exploration phase includes work commitment for the acquisition and processing of 500 kilometers of 2-D seismic, geology and geophysical interpretation, engineering studies and the drilling of a conditional well.

     “Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

     “Guarantee” means, as to any Person, any (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any

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manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.

     “Guarantors” means, collectively, the Subsidiaries of the Borrower listed on Schedule 6.12 and each other Subsidiary of the Borrower that shall be required to execute and deliver a guaranty or guaranty supplement pursuant to Section 6.12.

     “Guaranty” means, the Guaranty made by the Guarantors in favor of the Lender, substantially in the form of Exhibit B, together with each other guaranty and guaranty supplement delivered pursuant to Section 6.12.

     “Harvest (US) Holdings” means Harvest (US) Holdings, Inc., a Delaware corporation and wholly-owned Subsidiary of the Borrower.

     “Harvest Holding LLC” means Harvest Holding LLC, a Delaware limited liability company and wholly-owned Subsidiary of the Borrower.

     “Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.

     “Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, whether or not included as indebtedness or liabilities in accordance with GAAP:

     (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;

     (b) the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments;

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     (c) net obligations of such Person under any Swap Contract;

     (d) all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and not past due for more than 60 days after the date on which such trade account was created);

     (e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;

     (f) all Attributable Indebtedness in respect of Capitalized Leases and Synthetic Lease Obligations of such Person and all Synthetic Debt of such Person;

     (g) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and

     (h) all Guarantees of such Person in respect of any of the foregoing.

     For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.

     “Indemnified Taxes” means Taxes other than Excluded Taxes.

     “Indemnitees” has the meaning specified in Section 9.04(b).

     “Interest Payment Date” means the last Business Day of each month and the Maturity Date of the Loan.

     “Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person, or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person that constitute a business unit or all or a substantial part of the business of, such Person. For purposes of covenant compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.

     “IP Rights” has the meaning specified in Section 5.17.

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     “IRS” means the United States Internal Revenue Service.

     “Laws” means, collectively, all international, foreign, Federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

     “Lender” has the meaning specified in the introductory paragraph hereto and includes any assignee of the rights and obligations of the Lender hereunder or under any other Loan Documents.

     “Lending Office” means the office or offices of the Lender as it may from time to time notify the Borrower.

     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing).

     “Loan” means an extension of credit by the Lender to the Borrower under Article II.

     “Loan Documents” means, collectively, (a) this Agreement, (b) the Note, (c) the Guaranty, (d) the Warrant Purchase Agreement, and (e) the Warrants.

     “Loan Parties” means, collectively, the Borrower and each Guarantor.

     “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), or condition (financial or otherwise) of the Borrower or the Borrower and its Subsidiaries taken as a whole (which, for the avoidance of doubt, shall not include the drilling of one or more dry holes, as such term is commonly used in the oil and gas industry, but shall include the drilling of a material number of dry holes that would have a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), or condition (financial or otherwise) of the Borrower or the Borrower and its Subsidiaries taken as a whole); (b) a material impairment of the rights and remedies of the Lender under any Loan Document, or of the ability of any Loan Party to perform its obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.

     “Material Contract” means, with respect to any Person, each contract to which such Person is a party that is of a type that would be required to be disclosed by Harvest pursuant to Item 1.01 of a current report on Form 8-K under the rules and regulations of the SEC.

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     “Maturity Date” means October 28, 2012; provided, however, that if such date is not a Business Day, the Maturity Date shall be the next preceding Business Day.

     “Merrill Lynch Letter” means that certain engagement letter, dated September 24, 2010, between the Borrower and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as in effect on the Closing Date.

     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

     “Multiemployer Plan” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five plan years, has made or been obligated to make contributions.

     “Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including the Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.

     “Net Cash Proceeds” means:

     (a) with respect to any Disposition by the Borrower or any of its Subsidiaries, or any Extraordinary Receipt received or paid to the account of the Borrower or any of its Subsidiaries, the excess, if any, of (i) the sum of cash and Cash Equivalents received in connection with such transaction (including any cash or Cash Equivalents received by way of deferred payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so received) over (ii) the sum of (A) the principal amount of any Indebtedness that is secured by the applicable asset and that is required to be repaid in connection with such transaction (other than Indebtedness under the Loan Documents), (B) the reasonable and customary out-of-pocket expenses incurred by the Borrower or such Subsidiary in connection with such transaction and (C) income taxes reasonably estimated to be actually payable within two years of the date of the relevant transaction as a result of any gain recognized in connection therewith; provided that, if the amount of any estimated taxes pursuant to subclause (C) exceeds the amount of taxes actually required to be paid in cash in respect of such Disposition, the aggregate amount of such excess shall constitute Net Cash Proceeds; and

     (b) with respect to the incurrence or issuance of any Indebtedness by the Borrower or any of its Subsidiaries, the excess of (i) the sum of the cash and Cash Equivalents received in connection with such transaction over (ii) the underwriting discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred by the Borrower or such Subsidiary in connection therewith.

     “NewCo” has the meaning set forth in Section 7.02(i).

     “Note” means the promissory note made by the Borrower in favor of the Lender evidencing the Loan, substantially in the form of Exhibit A.

     “NPL” means the National Priorities List under CERCLA.

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     “Obligations” means all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to the Loan, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding.

     “OFAC” has the meaning set forth in Section 5.21(c).

     “OFAC Listed Person” has the meaning set forth in Section 5.21(c).

     “Oman Project” means Harvest Oman B.V.’s interest in the Exploration and Production Sharing Agreement (“EPSA”) with Oman for the Al Ghubar/Qarn Alam license, dated April 11, 2009, under which Harvest Oman B.V. has a 100 percent working interest in Block 64 EPSA during the exploration phase. Oman Oil Company has the option to back-in to up to a 20 percent interest in Block 64 EPSA after the discovery of gas. The work commitment is to drill two wells over a three year period.

     “Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

     “Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.

     “PBGC” means the Pension Benefit Guaranty Corporation.

     “Pension Act” means the Pension Protection Act of 2006.

     “Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in, with respect to plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

     “Pension Plan” means any employee pension benefit plan within the meaning of Section 3(3) of ERISA (including a Multiple Employer Plan or a Multiemployer Plan) that is maintained

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or is contributed to by the Borrower and any ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Code.

     “Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

     “Petrodelta” means Petrodelta, S.A., a Venezuelan corporation, 40% of the Equity Interests of which are owned by HNR Finance B.V., a Netherlands corporation, which is an 80% owned Subsidiary of the Borrower.

     “Petroleum Property” means any interest of a Subsidiary in oil and gas reserves and assets consisting primarily of gas gathering, processing and storage facilities and transmission pipelines.

     “Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA (including a Pension Plan) other than a Multiemployer Plan, maintained for employees of the Borrower or any ERISA Affiliate or any such Plan to which the Borrower or any ERISA Affiliate is required to contribute on behalf of any of its employees.

     “Present Value of Proved Reserves” means, at any time, the net present value, discounted at 10% per annum, of the future after-tax net revenues expected to accrue to a Subsidiary’s interests in Proved Reserves expected to be produced from their Petroleum Properties during the remaining expected economic lives of such reserves. Each calculation of such expected future after-tax net revenues shall be made in accordance with the then existing standards of the Society of Petroleum Engineers, provided that in any event (a) appropriate deductions shall be made for severance and ad valorem taxes, and for operating, gathering, transportation and marketing costs required for the production and sale of such reserves, (b) appropriate adjustments shall be made for hedging operations, provided that Swap Contracts with non-investment grade counterparties shall not be taken into account to the extent that such Swap Contracts improve the position of or otherwise benefit such Subsidiary, (c) the pricing assumptions used in determining net present value for any particular reserves shall be based upon the following price decks: (i) for natural gas, the quotation for deliveries of natural gas for each such year from the New York Mercantile Exchange for Henry Hub, provided that with respect to quotations for calendar years after the fifth calendar year, the quotation for the fifth calendar year shall be applied and (ii) for crude oil, the quotation for deliveries of West Texas Intermediate crude oil for each such calendar year from the New York Mercantile Exchange for Cushing, Oklahoma, provided that with respect to quotations for calendar years after the fifth calendar year, the quotation for the fifth calendar year shall be applied, and (d) the cash-flows derived from the pricing assumptions set forth in clause (c) above shall be further adjusted to account for the historical basis differentials for each month during the preceding 12-month period calculated by comparing realized crude oil and natural gas prices to Cushing, Oklahoma and Henry Hub NYMEX prices for each month during such period; provided that in calculating the Present Value of Proved Reserves, Proved Undeveloped Reserves shall not be taken into account to the extent that more than 40% of the Present Value of Proved Reserves is attributable to Proved Undeveloped Reserves. The Present Value of Proved Reserves will be determined and adjusted periodically as follows: (x) the calculation of Present Value of Proved Reserves will be determined from the most recent Reserve Report; (y) upon any sale by such Subsidiary of any Petroleum Property owned by such Subsidiary including but not

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limited to a sale of a lesser interest such as a royalty or a net profit interest to the extent the sale of such lesser interest is not considered to create a Lien (other than the sale of hydrocarbons after severance occurring in the ordinary course of such Subsidiary’s business), the calculation of Present Value of Proved Reserves shall be reduced, effective on the date of consummation of such sale, by an amount equal to the Present Value of Proved Reserves attributable to Proved Reserves included in such sale; and (z) immediately upon acquisition or development by such Subsidiary of any Petroleum Property owned directly by such Subsidiary and not reflected in the most recent Reserve Report, the calculation of Present Value of Proved Reserves shall be increased in an amount equal to the Present Value of Proved Reserves attributable to such Petroleum Property.

     “Project Financing Indebtedness” means Indebtedness incurred to finance oil and gas related projects by a special purpose Subsidiary of the Borrower to finance the acquisition, construction or development of a specific tangible property or asset (the “Specified Property”) and with respect to which the obligation to repay such obligation is recourse (a) only to the Specified Property, and not to the general credit of, or any other asset of, such Subsidiary or the Borrower or any of its other Subsidiaries and/or (b) only to contract revenues under a contract for the sale of products or services manufactured at and/or derived from the Specified Property by such Subsidiary and entered into in the ordinary course of business, and not to the general credit of, or any other asset of, such Subsidiary or the Borrower or any of its other Subsidiaries.

     “Proved Developed Non-Producing Reserves” has the meaning assigned to that term by the Society of Petroleum Engineers, as it may be amended from time to time, but generally shall mean the subcategory of “Proved Developed Reserves” (as defined by the Society of Petroleum Engineers) which will become “Proved Developed Producing Reserves” upon minor capital expenditures being made with respect to existing wells which will cause formerly non-producing completions or intervals to become open and producing to market.

     “Proved Developed Producing Reserves” has the meaning assigned to that term by the Society of Petroleum Engineers, as it may be amended from time to time, but generally shall mean the subcategory of “Proved Developed Reserves” (as defined by the Society of Petroleum Engineers) which are recoverable by natural reservoir energies (including pumping) from the completion intervals currently open and producing to market. Additional oil and gas expected to be obtained through the application of fluid injection or other improved recovery techniques for supplementing the natural forces and mechanisms of primary recovery will be included as “Proved Developed Producing Reserves” only after testing by a pilot project or after the operation of an installed program has confirmed through production response through existing completions producing to market that increased recovery will be achieved. Proved Developed Producing Reserves shall not include any Proved Developed Non-Producing Reserves.

     “Proved Reserves” means and includes Proved Developed Producing Reserves, Proved Developed Non-Producing Reserves and Proved Undeveloped Reserves.

     “Proved Undeveloped Reserves” has the meaning assigned to that term by the Society of Petroleum Engineers, as it may be amended from time to time, but generally shall mean those reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Proved Undeveloped

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Reserves on undrilled acreage shall be limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. Proved Undeveloped Reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that there is continuity of production from the existing productive formation. Under no circumstances should estimates for Proved Undeveloped Reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual tests in the area and in the same reservoir.

     “Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees and advisors of such Person and of such Person’s Affiliates.

     “Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment of any Hazardous Materials (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Materials).

     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the 30 day notice period has been waived.

     “Reserve Report” means the reserve report delivered to the Lender for the fiscal year ended December 31, 2009 and, subsequently, a report delivered by the Borrower pursuant to Section 6.01(c).

     “Responsible Officer” means the chief executive officer, president, chief financial officer or general counsel of a Loan Party. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party.

     “Restricted Payment” means any dividend or other distribution (whether in cash, securities or other property) with respect to any capital stock or other Equity Interest of any Person or any of its Subsidiaries, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, defeasance, acquisition, cancellation or termination of any such capital stock or other Equity Interest, or on account of any return of capital to any Person’s stockholders, partners or members (or the equivalent of any thereof), or any option, warrant or other right to acquire any such dividend or other distribution or payment; provided that, notwithstanding the foregoing, the term “Restricted Payment” shall not include any redemption, retirement, purchase or other acquisition of, any Warrants and/or any Senior Convertible Notes.

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., and any successor thereto.

     “SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

     “Second NewCo” has the meaning set forth in Section 7.03(c)(v).

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     “Senior Convertible Notes” means the $32,000,000 8.25% Senor Convertible Notes due 2013 as evidenced by that certain Indenture dated as of February 17, 2010 between the Borrower and U.S. Bank National Association, as Trustee (the “Trustee”), as supplemented by that certain First Supplemental Indenture dated as of February 17, 2010 between the Borrower and the Trustee, in each case as in effect on the Closing Date.

     “Significant Subsidiary” means a “Significant Subsidiary” as defined in Regulation S-X of the Securities Act of 1933, as amended from time to time.

     “Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and (e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

     “Strategic Transaction” means a “Transaction” as such term is defined in the Merrill Lynch Letter.

     “Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of securities or other interests having ordinary voting power for the election of directors or other governing body (other than securities or interests having such power only by reason of the happening of a contingency) are at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Borrower. For the avoidance of doubt, none of Fusion LLC and its Subsidiaries, nor Petrodelta and its Subsidiaries, shall be deemed to be Subsidiaries of the Borrower or any of its Subsidiaries as of October 28, 2010 based on the organizational structure and respective ownership percentages of the Borrower and its Subsidiaries as of such date.

     “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b)

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any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.

     “Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include the Lender or any Affiliate of the Lender).

     “Synthetic Debt” means, with respect to any Person as of any date of determination thereof, all obligations of such Person in respect of transactions entered into by such Person that are intended to function primarily as a borrowing of funds (including any minority interest transactions that function primarily as a borrowing) but are not otherwise included in the definition of “Indebtedness” or as a liability on the consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP.

     “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including sale and leaseback transactions), in each case, creating obligations that do not appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).

     “Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments or similar fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

     “Threshold Amount” means $3,000,000.

     “United States” and “U.S.” mean the United States of America.

     “U.S. Loan Party” means any Loan Party that is organized under the laws of one of the states of the United States of America and that is not a CFC.

     “WAB-21 Project” means Harvest Offshore China Company’s interest in a petroleum contract signed in December of 1996 with China National Offshore Oil Corporation for the WAB-21 area. The WAB-21 petroleum contract covers 6.2 million acres in the South China Sea, with an option for an additional 1.25 million acres under certain circumstances, and lies within an area which is the subject of a border dispute between the People’s Republic of China and Socialist Republic of Vietnam. Vietnam has executed an agreement on a portion of the same

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offshore acreage with another company. The border dispute has lasted for many years, and there has been limited exploration and no development activity in the WAB-21 area due to the dispute.

     “Warrants” means those certain common stock warrants issued by the Borrower evidencing rights to purchase, in the aggregate, 6,000,000 shares of common stock of the Borrower issued pursuant to the terms of the Warrant Purchase Agreement.

     “Warrant Purchase Agreement” means that certain Warrant Purchase Agreement, dated as of the Closing Date, between the Borrower and the purchasers named therein, as amended from time to time.

     “West Bay Leases” means those certain leases between Harvest (US) Holdings and third parties with respect to oil and gas properties located along the Gulf Coast region of the United States.

     “West Bay Project” means Harvest (US) Holdings’s interest in the Area of Mutual Interest agreement signed in March 2008, with a private third party for an area in the upper Gulf Coast Region of the United States. Harvest (US) Holdings has a 50 percent interest in the project and as operator will lease acreage, process 3-D seismic data and drill wells on the prospects that have been identified.

     1.02. Other Interpretive Provisions. With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:

     (a) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

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     (b) In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including.”

     (c) Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.

     1.03. Accounting Terms. (a) Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein.

     (b) Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Lender shall so request, the Lender and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP; provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Lender financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP.

     1.04. Rounding. Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

     1.05. Times of Day. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable).

     1.06. Currency Equivalents Generally. Any amount specified in this Agreement or any of the other Loan Documents to be in Dollars shall also include the equivalent of such amount in any currency other than Dollars, such equivalent amount thereof in the applicable currency to be determined by the Lender at such time on the basis of the Spot Rate (as defined below) for the purchase of such currency with Dollars. For purposes of this Section 1.06, the “Spot Rate” for a currency means the rate determined by the Lender to be the rate quoted by the Person acting in such capacity as the spot rate for the purchase by such Person of such currency with another currency through its principal foreign exchange trading office at approximately 11:00 a.m. on the date two Business Days prior to the date of such determination; provided that the Lender may obtain such spot rate from another financial institution designated by the Lender if the Person acting in such capacity does not have as of the date of determination a spot buying rate for any such currency.

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ARTICLE II.
THE LOAN

     2.01. The Loan. Subject to the terms and conditions set forth herein, the Lender agrees to make a single loan to the Borrower on the Closing Date in the amount of $60,000,000.

     2.02. Prepayments. (a) Optional. Subject to the last sentence of this Section 2.02(a), the Borrower may, upon notice to the Lender, at any time or from time to time voluntarily prepay the Loan in whole or in part without premium or penalty; provided that (A) such notice must be received by the Lender not later than 11:00 a.m. three Business Days prior to any date of prepayment of the Loan; and (B) any prepayment shall be in a principal amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof or, if less, the entire principal amount thereof then outstanding. Each such notice shall specify the date and amount of such prepayment. If such notice is given by the Borrower, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment shall be accompanied by all accrued interest on the amount prepaid. Notwithstanding anything to the contrary contained herein, if the Borrower prepays the Loan, in whole or in part, at any time before the Bridge Date, the Borrower shall pay a premium with respect to each such prepayment in the amount of 3.5% of the amount so prepaid.

     (b) Mandatory. (i) If the Borrower or any of its Subsidiaries Disposes of any property (other than any Disposition of any property permitted (x) by Sections 7.05(a), (b), (c), (d), (o), (p) or (q) and/or (y) by Sections 7.05(e), (f), (g), (h), (i), (j), (k), (l), (m), (n) or (r) only to the extent the fair market value of all Dispositions pursuant to these Sections in this clause (y) is less than $75,000,000 in the aggregate) which results in the realization by such Person of Net Cash Proceeds, the Borrower shall prepay an aggregate principal amount of the Loan equal to 100% of such Net Cash Proceeds immediately upon receipt thereof by such Person.

     (ii) Upon the incurrence or issuance by the Borrower or any of its Subsidiaries of any Indebtedness (other than Indebtedness expressly permitted to be incurred or issued pursuant to Section 7.02), the Borrower shall prepay an aggregate principal amount of Loan equal to 100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof by the Borrower or such Subsidiary.

     (iii) Upon any Extraordinary Receipt received by or paid to or for the account of the Borrower or any of its Subsidiaries, and not otherwise included in clause (i) or (ii) of this Section 2.02(b), the Borrower shall prepay an aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof by the Borrower or such Subsidiary.

     If the Borrower prepays the Loan, in whole or in part under this Section 2.02(b) at any time before the Bridge Date, the Borrower shall pay a premium with respect to each such prepayment in the amount of 3.5% of the amount so prepaid.

     Nothing in this section 2.02(b) shall be deemed to require a mandatory prepayment of any amounts or property received by the Borrower upon the sale of any Equity Interest in the Borrower.

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     2.03. Repayment of Loan. On the Maturity Date the Borrower shall repay to the Lender the aggregate principal amount of the Loan outstanding, together with interest accrued thereon and all other amounts due hereunder and under the other Loan Documents.

     2.04. Interest. (a) Subject to the provisions of Section 2.04(b), the Loan shall bear interest on the outstanding principal amount thereof at a rate equal to the Applicable Rate.

     (b) (i) If any amount of principal of the Loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

     (ii) If any amount (other than principal of the Loan) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then such amount shall thereafter bear interest at a rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

     (iii) While any Event of Default exists, the Borrower shall pay interest on the principal amount of all outstanding Obligations hereunder at a rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.

     (iv) Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.

     (c) Interest on the Loan shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.

     2.05. Computation of Interest and Fees. All computations of fees, if any, and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365-day year). Interest shall accrue on the Loan for the day on which the Loan is made, and shall not accrue on the Loan, or any portion thereof, for the day on which the Loan or such portion is paid, provided that any portion of the Loan that is repaid on the same day on which it is made shall, subject to Section 2.07, bear interest for one day. Each determination by the Lender of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.

     2.06. Evidence of Debt. The Loan made by the Lender shall be evidenced by one or more accounts or records maintained by the Lender. The accounts or records maintained by the Lender shall be conclusive absent manifest error of the amount of the Loan made by the Lender to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations.

     2.07. Payments Generally. All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as

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otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Lender at the Lender’s office at 645 Fifth Avenue, 21st Floor, New York, New York 10022 (or such other address as the Lender may from time to time notify the Borrower) in Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein. All payments received by the Lender after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next following Business Day, and such extension of time shall be reflected on computing interest or fees, as the case may be.

ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY

     3.01. Taxes. (a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes. Any and all payments by or on account of any obligation of the Loan Parties hereunder or under any other Loan Document shall to the extent permitted by applicable Laws be made free and clear of and without reduction or withholding for any Taxes. If, however, applicable Laws require the Loan Parties to withhold or deduct any Tax, such Tax shall be withheld or deducted in accordance with such Laws as determined by the Loan Parties upon the basis of the information and documentation to be delivered pursuant to subsection (e) below. If the Loan Parties shall be required by applicable Law to withhold or deduct any Taxes, including both United States Federal backup withholding and withholding taxes, from any payment, then (A) the Loan Parties shall withhold or make such deductions as are determined by the Loan Parties to be required based upon the information and documentation it has received pursuant to subsection (e) below, (B) the Loan Parties shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with applicable Laws, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes or Other Taxes, the sum payable by the Loan Parties shall be increased as necessary so that after any required withholding or the making of all required deductions (including deductions applicable to additional sums payable under this Section) the Lender receives an amount equal to the sum it would have received had no such withholding or deduction been made.

     (b) Payment of Other Taxes by the Loan Parties. Without limiting the provisions of subsection (a) above, the Loan Parties shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law, to the extent such Other Taxes are imposed on the Loan Parties under applicable Law.

     (c) Tax Indemnifications. (i) Without limiting the provisions of subsection (a) or (b) above, the Borrower shall, and does hereby, indemnify the Lender, and shall make payment in respect thereof within 30 days after demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by the Lender, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of any such payment or liability delivered to the Borrower by the Lender shall be conclusive absent manifest error.

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     (ii) Without limiting the provisions of subsection (a) or (b) above, the Lender shall, and does hereby, indemnify the Borrower, and shall make payment in respect thereof within 30 days after demand therefor, against any and all Taxes and any and all related losses, claims, liabilities, penalties, interest and expenses (including the fees, charges and disbursements of any counsel for the Borrower incurred by or asserted against the Borrower by any Governmental Authority as a result of the failure by the Lender to deliver, or as a result of the inaccuracy, inadequacy or deficiency of, any documentation required to be delivered by the Lender to the Borrower pursuant to subsection (e). The agreements in this clause (ii) shall survive the repayment, satisfaction or discharge of all of the Obligations.

     (d) Evidence of Payments. As soon as reasonably practicable after the request by the Borrower or the Lender, as the case may be, after any payment of Taxes by the Borrower or the Lender to a Governmental Authority as provided in this Section 3.01, the Borrower shall deliver to the Lender or the Lender shall deliver to the Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by Laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Lender, as the case may be.

     (e) Status of Lender; Tax Documentation. (i) If the Lender is entitled to an exemption from or a reduction of withholding taxes with respect to payments hereunder or under any other Loan Document, then the Lender shall deliver to the Borrower, on or prior to the date that the Lender becomes a party to this Agreement (and from time to time thereafter at the time or times prescribed by applicable Laws or when reasonably requested by the Borrower), such properly completed and executed documentation prescribed by applicable Laws or by the taxing authorities of any jurisdiction and such other reasonably requested information as will permit such payments made to be made without withholding or at a reduced rate of withholding. Additionally, the Lender shall deliver to the Borrower, on or prior to the date that the Lender becomes a party to this Agreement (and from time to time thereafter at the time or times prescribed by applicable Law or when reasonably requested by the Borrower), such properly completed and executed documentation prescribed by applicable Law or by the taxing authorities of any jurisdiction and such other reasonably requested information as will enable the Borrower (A) to determine whether or not payments made hereunder or under any other Loan Document are subject to Taxes, (B) to determine, if applicable, the required rate of withholding or deduction, and (C) otherwise to establish the Lender’s status for withholding tax purposes in the applicable jurisdiction.

     (ii) Without limiting the generality of subsection (i), if the Borrower is resident for tax purposes in the United States and the Lender is resident for tax purposes in the United States, the Lender shall deliver to the Borrower, on or prior to the date that the Lender becomes a party to this Agreement (and from time to time thereafter at the time or times prescribed by applicable Law or when reasonably requested by the Borrower), properly completed and executed originals of IRS Form W-9 (or successor form) or such other documentation or information prescribed by applicable Laws or reasonably requested by the Borrower as will certify that the Lender is not subject to United States Federal backup withholding tax and as will enable the Borrower to determine whether or not the Lender is subject to information reporting requirements.

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     (iii) Without limiting the generality of subsection (i), if the Borrower is resident for tax purposes in the United States, the Lender is not resident for tax purposes in the United States and the Lender is entitled under the Code or any applicable treaty to an exemption from or reduction of withholding tax with respect to payments hereunder or under any other Loan Document, the Lender shall deliver to the Borrower on or prior to the date on which the Lender becomes a party to this Agreement (and from time to time thereafter upon the request of the Borrower, but only if the Lender is legally entitled to do so), whichever of the following is applicable: (A) properly completed and executed originals of IRS W-8BEN (or successor form) claiming eligibility for benefits of an income tax treaty to which the United States is a party; (B) properly completed and executed originals of IRS Form W-8ECI (or successor form); (C) in the case of the Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (1) a certificate in a form approved by the Borrower to the effect that (i) the Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (ii) the Lender is not a “10 percent shareholder” of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, (iii) the Lender is not a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (iv) no payments made hereunder or under any other Loan Document are effectively connected with the Lender’s conduct of a United States trade or business and (2) properly completed and executed originals of IRS Form W-8BEN or (or successor form); or (D) any other form prescribed by applicable Law as a basis for claiming exemption from or reduction in United States Federal withholding tax, properly completed and executed, together with such other documentation as may be prescribed by applicable Law to permit the Borrower to determine the withholding or deduction required to be made.

     (iv) Without limiting the generality of subsection (i), if the Lender would be subject to United States Federal withholding taxes imposed by FATCA on payments made hereunder or under any other Loan Document and the Lender fails to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), the Lender shall provide such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower as may be necessary for the Borrower to comply with its obligations under FATCA, to determine that such Lender has complied with such Lender’s obligations under FATCA, or to determine the amount to deduct and withhold from any such payments.

     (v) The Lender shall promptly (A) notify the Borrower of any change in circumstances which would modify or render invalid any claimed exemption or reduction in withholding taxes with respect to payments made hereunder or under any other Loan Document, and (B) take such steps as shall not be materially disadvantageous to it, in the reasonable judgment of the Lender, and as may be reasonably necessary (including the designation of new Lending Office) to avoid any requirement of applicable Laws of any jurisdiction that the Borrower make any withholding or deduction for taxes from amounts payable to the Lender.

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     (f) Treatment of Certain Refunds. If the Lender, in its sole discretion, determines that it has received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses incurred by the Lender, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrower, upon the request of the Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Lender in the event the Lender is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require the Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

     3.02. Increased Costs. (a) Increased Costs Generally. If the Lender assigns, in accordance with Section 9.07, all or any part of the Loan to a commercial bank or any other entity that is subject to regulation by federal or state banking authorities (a “Bank Assignee”), and if any Change in Law shall:

     (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, the Bank Assignee;

     (ii) subject such Bank Assignee to any tax of any kind whatsoever with respect to this Agreement, or change the basis of taxation of payments to such Bank Assignee in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the imposition of, or any change in the rate of, any Excluded Tax payable by or with respect to such Bank Assignee); or

     (iii) impose on such Bank Assignee any other condition, cost or expense affecting this Agreement;

and the result of any of the foregoing shall be to reduce the amount of any sum received or receivable by such Bank Assignee hereunder (whether of principal, interest or any other amount) then, upon request of such Bank Assignee, the Borrower will pay to such Bank Assignee such additional amount or amounts as will compensate such Bank Assignee for such additional costs incurred or reduction suffered.

     (b) Capital Requirements. If a Bank Assignee determines that any Change in Law affecting such Bank Assignee or such Bank Assignee’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Bank Assignee’s capital or on the capital of such Bank Assignee’s holding company, if any, as a consequence of this Agreement or the portion of the Loan assigned to such Bank Assignee, to a level below that which such Bank Assignee or such Bank Assignee’s holding company could have achieved but for such Change in Law (taking into consideration such Bank Assignee’s policies and the policies of such Bank Assignee’s holding company with respect to capital

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adequacy), then from time to time the Borrower will pay to such Bank Assignee, such additional amount or amounts as will compensate such Bank Assignee or such Bank Assignee’s holding company for any such reduction suffered.

     (c) Certificates for Reimbursement. A certificate of a Bank Assignee setting forth the amount or amounts necessary to compensate such Bank Assignee or its holding company, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Bank Assignee the amount shown as due on any such certificate within 10 days after receipt thereof.

     (d) Delay in Requests. Failure or delay on the part of a Bank Assignee to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Bank Assignee’s right to demand such compensation, provided that the Borrower shall not be required to compensate such Bank Assignee pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Bank Assignee notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Bank Assignee’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

     3.03. Survival. All of the Borrower’s obligations under this Article III shall survive repayment of all other Obligations hereunder.

ARTICLE IV.
CONDITIONS PRECEDENT TO THE LOAN

     4.01. Conditions of the Loan. The obligation of the Lender to make the Loan hereunder is subject to satisfaction of the following conditions precedent:

     (a) The representations and warranties of the Borrower and each other Loan Party contained in Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct on and as of the date of the Loan.

     (b) No Default shall exist, or would result from the Loan or from the application of the proceeds thereof.

     (c) The Lender’s receipt of the following, each of which shall be originals or telecopies (followed promptly by originals) unless otherwise specified, each properly executed by a Responsible Officer of the signing Loan Party, each dated the Closing Date (or, in the case of certificates of governmental officials, a recent date before the Closing Date) and each in form and substance satisfactory to the Lender:

     (i) executed counterparts of this Agreement, the Guaranty and the Warrant Purchase Agreement, sufficient in number for distribution to the Lender and the Borrower;

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     (ii) a Note executed by the Borrower in favor of the Lender;

     (iii) such certificates of resolutions or other action, incumbency certificates and/or other certificates of Responsible Officers of each Loan Party as the Lender may require evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to act as a Responsible Officer in connection with this Agreement and the other Loan Documents to which such Loan Party is a party or is to be a party;

     (iv) such documents and certifications as the Lender may reasonably require to evidence that each Loan Party is duly organized or formed, and that each Loan Party is validly existing, in good standing and qualified to engage in business in each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect;

     (v) a favorable opinion of Fulbright & Jaworski L.L.P., counsel to the Loan Parties, addressed to the Lender and in form and substance satisfactory to the Lender;

     (vi) a certificate of a Responsible Officer of each Loan Party either (A) attaching copies of all consents, licenses and approvals required in connection with the execution, delivery and performance by such Loan Party and the validity against such Loan Party of the Loan Documents to which it is a party, and such consents, licenses and approvals shall be in full force and effect, or (B) stating that no such consents, licenses or approvals are so required;

     (vii) a certificate signed by a Responsible Officer of the Borrower certifying that the conditions specified in Sections 4.01(a) and (b) have been satisfied; and

     (viii) such other assurances, certificates, documents or consents as the Lender reasonably may require.

     (d) The Borrower shall have executed and issued Warrants to the Lender.

     (e) All fees required to be paid by the Borrower to the Lender on or before the Closing Date shall have been paid.

     (f) Unless waived by the Lender, the Borrower shall have paid all fees, charges and disbursements of counsel to the Lender (directly to such counsel if requested by the Lender) to the extent invoiced prior to or on the Closing Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Lender).

     (g) The Lender shall have received the results of a recent lien search with respect to each of the Loan Parties on terms and conditions satisfactory to the Lender.

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ARTICLE V.
REPRESENTATIONS AND WARRANTIES

     The Borrower represents and warrants to the Lender that:

     5.01. Existence, Qualification and Power. Each Loan Party and each of its Subsidiaries (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect.

     5.02. Authorization; No Contravention. The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is or is to be a party have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Contractual Obligation to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law.

     5.03. Governmental Authorization; Other Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required to be obtained by the Borrower or any Subsidiary in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document or (b) the exercise by the Lender of its rights under the Loan Documents, except for the authorizations, approvals, actions, notices and filings listed on Schedule 5.03, all of which have been duly obtained, taken, given or made and are in full force and effect.

     5.04. Binding Effect. This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, subject to the effects of any Debtor Relief Laws.

     5.05. Financial Statements; No Material Adverse Effect. (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied

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throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Borrower and its Subsidiaries as of the date thereof and required by GAAP to be reflected thereon, including liabilities for taxes, material commitments and Indebtedness.

     (b) The unaudited consolidated balance sheets of the Borrower and its Subsidiaries dated June 30, 2010, and the related consolidated statements of income or operations, shareholders’ equity and cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein, and (ii) fairly present the financial condition of the Borrower and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal year-end audit adjustments.

     (c) Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or could reasonably be expected to have a Material Adverse Effect.

     5.06. Litigation. There are no actions, suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against the Borrower or any of its Subsidiaries or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document, or (b) except as specifically disclosed in Schedule 5.06 (the “Disclosed Litigation”), either individually or in the aggregate, if determined adversely, could reasonably be expected to have a Material Adverse Effect.

     5.07. No Default. Neither any Loan Party nor any Subsidiary thereof is in default under or with respect to, or a party to, any Contractual Obligation that could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.

     5.08. Ownership of Property; Liens; Investments.

     (a) Each Loan Party and each of its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its business, except for such defects in title as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

     (b) Schedule 5.08(b) sets forth a complete and accurate list of all Liens on the property or assets of each Loan Party and each of its Subsidiaries, showing as of the date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Loan Party or such Subsidiary subject thereto. The property of each Loan Party and each of its Subsidiaries is subject to no Liens, other than Liens set forth on Schedule 5.08(b), and as otherwise permitted by Section 7.01.

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     (c) Each Loan Party and each of its Subsidiaries has good, marketable and insurable fee simple title to the real property owned by such Loan Party or such Subsidiary, free and clear of all Liens, other than Liens created or permitted by the Loan Documents.

     (d) Schedule 5.08(d) sets forth a complete and accurate list of all Investments held by any Loan Party or any Subsidiary of a Loan Party on the date hereof, showing as of the date hereof the amount, obligor or issuer and maturity, if any, thereof.

     5.09. Environmental Compliance.

     (a) The Loan Parties and their respective Subsidiaries conduct in the ordinary course of business a review of the effect of existing Environmental Laws on the Loan Parties’ and their respective Subsidiaries’ business, operations and properties and claims asserted against the Loan Parties and their respective Subsidiaries alleging potential liability or responsibility for violation of any Environmental Law, and as a result thereof the Borrower has reasonably concluded that such Environmental Laws and such claims could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

     (b) Except as otherwise set forth in Schedule 5.09, none of the properties currently or formerly owned or operated by any Loan Party or any of its Subsidiaries is listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or local list or, to the knowledge of the Loan Parties, is adjacent to any such property; there are no and never have been any underground or above-ground storage tanks other than in material compliance with applicable Environmental Laws or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed on any property currently owned or operated by any Loan Party or any of its Subsidiaries or, to the knowledge of the Loan Parties, on any property formerly owned or operated by any Loan Party or any of its Subsidiaries; other than in material compliance with applicable Environmental Laws, there is no asbestos or asbestos-containing material on any property currently owned or operated by any Loan Party or any of its Subsidiaries; and Hazardous Materials have not been Released, discharged or disposed of by any Loan Party or any of its Subsidiaries or, to the knowledge of the Loan Parties, any other Person on any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries.

     (c) Except as otherwise set forth on Schedule 5.09, or as could not reasonably be expected to have a Material Adverse Effect, neither any Loan Party nor any of its Subsidiaries is undertaking, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law; and to the knowledge of the Loan Parties, all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not reasonably expected to result in material liability to any Loan Party or any of its Subsidiaries.

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     5.10. Insurance. The properties of the Borrower and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Borrower, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower or the applicable Subsidiary operates.

     5.11. Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other material tax returns and reports required to be filed, and have paid all Federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise not yet delinquent, except (i) those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP or (ii) where failure to do so has not and could not reasonably be expected to result in a Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries has received any written notice from a Governmental Authority proposing a tax assessment against the Borrower or any of its Subsidiaries that would, if actually imposed, have a Material Adverse Effect. Neither any Loan Party nor any Subsidiary thereof is party to any tax sharing agreement; provided, that the allocation of taxes in connection with a business combination agreement does not constitute a tax sharing agreement.

     5.12. ERISA Compliance.

     (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state laws. Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter from the IRS to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the trust related thereto has been determined by the IRS to be exempt from federal income tax under Section 501(a) of the Code, or has an applicable remedial amendment period that will not have ended before the Closing Date. To the knowledge of the Borrower, nothing has occurred that would prevent or cause the loss of such tax-qualified status.

     (b) There are no pending or, to the knowledge of the Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that could reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan that has resulted or could reasonably be expected to result in a Material Adverse Effect.

     (c) (i) No ERISA Event has occurred, and neither the Borrower nor any ERISA Affiliate is aware of any fact, event or circumstance that could reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) the Borrower and each ERISA Affiliate has met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any Pension Plan which is not a Multiemployer Plan, the funding target attainment percentage (as defined in Section 430(d)(2) of the Code) is 60% or higher and neither the Borrower nor any ERISA Affiliate knows of any facts or circumstances that could reasonably be expected to cause the funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) neither the Borrower nor any ERISA Affiliate has

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incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, and no event or circumstance has occurred or exists that could reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan.

     (d) Neither the Borrower or any ERISA Affiliate maintains or contributes to, or has any unsatisfied obligation to contribute to, or liability under, any active or terminated Pension Plan.

     5.13. Subsidiaries; Equity Interests; Loan Parties. As of the Closing Date, no Loan Party has any Subsidiaries other than those specifically disclosed in Part (a) of Schedule 5.13, and all of the outstanding Equity Interests in such Subsidiaries have been validly issued, are fully paid and non-assessable and are owned by a Loan Party in the amounts specified on Part (a) of Schedule 5.13 free and clear of all Liens. No Loan Party has any equity investments in any other corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13. Set forth on Part (d) of Schedule 5.13 is a complete and accurate list of all Loan Parties, showing as of the Closing Date (as to each Loan Party) the jurisdiction of its incorporation, the address of its principal place of business and its U.S. taxpayer identification number or, in the case of any non-U.S. Loan Party that does not have a U.S. taxpayer identification number, its unique identification number issued to it by the jurisdiction of its incorporation. The copy of the charter of each Loan Party and each amendment thereto provided pursuant to Section 4.01(c)(iv) is a true and correct copy of each such document, each of which is valid and in full force and effect.

     5.14. Margin Regulations; Investment Company Act. (a) The Borrower is not engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock.

     (b) None of the Borrower, any Person Controlling the Borrower, or any Subsidiary is or is required to be registered as an “investment company” under the Investment Company Act of 1940.

     5.15. Disclosure. The Borrower has disclosed to the Lender (or such information is publicly available in documents filed with the SEC) all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial

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information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

     5.16. Compliance with Laws. Each Loan Party and each Subsidiary thereof is in compliance in all material respects with the requirements of all applicable Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.

     5.17. Intellectual Property; Licenses, Etc. Each Loan Party and each of its Subsidiaries own, or possess the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights (collectively, “IP Rights”) that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the knowledge of the Borrower, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party or any of its Subsidiaries infringes upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is pending or, to the knowledge of the Borrower, threatened, which, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

     5.18. Solvency. Each Loan Party is, individually and together with its Subsidiaries on a consolidated basis, Solvent.

     5.19. Casualty, Etc. Neither the businesses nor the properties of any Loan Party or any of its Subsidiaries have been affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

     5.20. Labor Matters. There are no collective bargaining agreements or Multiemployer Plans covering the employees of the Borrower or any of its Subsidiaries as of the Closing Date and neither the Borrower nor any Subsidiary has suffered any strikes, walkouts, work stoppages or other material labor difficulty within the last five years.

     5.21. Foreign Assets Control Regulations, Etc.

     (a) Neither the Borrower nor any Affiliated Entity is (i) a Person whose name appears on the list of Specially Designated Nationals and Blocked Persons published by the Office of Foreign Assets Control, U.S. Department of Treasury (“OFAC”) (an “OFAC Listed Person”) or (ii) a department, agency or instrumentality of, or is otherwise controlled by or acting on behalf of, directly or indirectly, (x) any OFAC Listed Person or (y) the government of a country subject to comprehensive U.S. economic sanctions administered by OFAC, currently Iran, Sudan, Cuba, Burma, Syria and North Korea (each OFAC Listed Person and each other entity described in clause (ii), a “Blocked Person”).

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     (b) No part of the proceeds from the Loan hereunder constitutes or will constitute funds obtained on behalf of any Blocked Person or will otherwise be used, directly by the Borrower or indirectly through any Affiliated Entity, in connection with any investment in, or any transactions or dealings with, any Blocked Person.

     (c) To the Borrower’s actual knowledge, neither the Borrower nor any Affiliated Entity (i) is under investigation by any Governmental Authority for, or has been charged with, or convicted of, money laundering, drug trafficking, terrorist-related activities or other money laundering predicate crimes under any applicable law (collectively, “Anti-Money Laundering Laws”), (ii) has been assessed civil penalties under any Anti-Money Laundering Laws or (iii) has had any of its funds seized or forfeited in an action under any Anti-Money Laundering Laws. The Borrower has taken reasonable measures appropriate to the circumstances (in any event as required by applicable law), to ensure that the Borrower and each Affiliated Entity is and will continue to be in compliance with all applicable current and future Anti-Money Laundering Laws.

     (d) No part of the proceeds from the Loan hereunder will be used, directly or indirectly, for any improper payments to any governmental official or employee, political party, official of a political party, candidate for political office, official of any public international organization or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage. The Borrower has taken reasonable measures appropriate to the circumstances (in any event as required by applicable law), to ensure that the Borrower and each Affiliated Entity is and will continue to be in compliance with all applicable current and future anti-corruption laws and regulations.

ARTICLE VI.
AFFIRMATIVE COVENANTS

     So long as the Loan or other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, 6.03 and 6.11) cause each Subsidiary to:

     6.01. Financial Statements. Deliver to the Lender, in form and detail satisfactory to the Lender:

     (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower (commencing with the fiscal year ended December 31, 2010), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal year, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP, such consolidated statements to be audited and accompanied by a report and opinion of an independent certified public accountant of nationally recognized standing reasonably acceptable to the Lender, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit, and such consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or

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controller of the Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the consolidated financial statements of the Borrower and its Subsidiaries;

     (b) as soon as available, but in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal quarter ended September 30, 2010), a consolidated balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related consolidated statements of income or operations, changes in shareholders’ equity, and cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, setting forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail, such consolidated statements to be certified by the chief executive officer, chief financial officer, treasurer or controller of the Borrower as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and the absence of footnotes;

     (c) by April 10th of each year, a report in form and substance reasonably satisfactory to the Lender prepared by or under the supervision of a petroleum engineer who may be an employee of the Borrower or its Subsidiaries, which shall evaluate all net Proved Reserves owned by Subsidiaries which have Indebtedness outstanding under Sections 7.02(i) or (j), such report to be as of the preceding December 31st and which shall set forth the information necessary to determine the Present Value of Proved Reserves as of such date, together with a review report thereon in form and substance reasonably satisfactory to the Lender by independent petroleum engineers of nationally recognized standing reasonably acceptable to the Lender.

     The filing by the Borrower on the SEC’s EDGAR system, within the time period set forth in Section 6.01(a) above, of the Borrower’s annual reports on Form 10-K, with certifications required by SEC rules, shall be deemed to satisfy the delivery and certification requirements of Section 6.01(a). The filing by the Borrower on the SEC’s EDGAR system, within the time period set forth in Section 6.01(b) above, of the Borrower’s quarterly reports on Form 10-Q, with certifications required by SEC rules, shall be deemed to satisfy the delivery and certification requirements of Section 6.01(b).

     6.02. Certificates; Other Information. Deliver to the Lender, in form and detail reasonably satisfactory to the Lender:

     (a) promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or of any of its Subsidiaries pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lender pursuant to Section 6.01 or any other clause of this Section 6.02;

     (b) as soon as available, but in any event within 30 days after the end of each fiscal year of the Borrower, a report summarizing the insurance coverage (specifying type, amount and carrier) in effect for each Loan Party and its Subsidiaries and containing such additional information as the Lender may reasonably specify;

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     (c) promptly, and in any event within five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof; provided however, that no Loan Party or any Subsidiary thereof shall be required to provide copies of any notice or other correspondence received from the SEC regarding routine reviews by the SEC of periodic filings;

     (d) not later than five Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of all notices, requests and other documents (including amendments, waivers and other modifications) so received under or pursuant to any instrument, indenture, loan or credit or similar agreement and, from time to time upon request by the Lender, such information and reports regarding such instruments, indentures and loan and credit and similar agreements as the Lender may reasonably request (excluding information sent in the ordinary course of administration under any such facility);

     (e) promptly after the assertion or occurrence thereof, notice of any action or proceeding against or of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that could (i) reasonably be expected to have a Material Adverse Effect or (ii) cause any related property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law;

     (f) as soon as available, but in any event within 30 days after the end of each fiscal year of the Borrower, a report supplementing Schedule 5.13 containing a description of all changes in the information included in such Schedule as may be necessary for such Schedule to be accurate and complete, such report to be signed by a Responsible Officer of the Borrower and to be in a form reasonably satisfactory to the Lender; and

     (g) promptly, such additional information regarding the business, financial, legal or corporate affairs of any Loan Party or any Subsidiary thereof, or compliance with the terms of the Loan Documents, as the Lender may from time to time reasonably request.

     The Borrower hereby acknowledges that the Lender may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Person’s securities. The Borrower hereby agrees that so long as the Borrower is the issuer of any outstanding debt or equity securities that are registered or issued pursuant to a private offering or is actively contemplating issuing any such securities (w) all materials and/or information provided by the Borrower hereunder (collectively, “Borrower Materials”) that are made available to the Lender shall, to the extent applicable, be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Lender to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States Federal and state securities laws; (y) all Borrower Materials marked “PUBLIC” are permitted to be made available to any personnel of the Lender and (z) Borrower Materials that are not marked “PUBLIC” may be made available to

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personnel who wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Person’s securities.

     The Borrower acknowledges and agrees that the Lender may notify the Borrower at any time and from time to time directing the Borrower (a) to terminate providing any Borrower Materials to the Lender that contain any material non-public information with respect to the Borrower or its securities and/or (b) to notify the Lender prior to making available to the Lender any Borrower Materials containing any material non-public information with respect to the Borrower or its securities.

     6.03. Notices. Promptly notify the Lender:

     (a) of the occurrence of any Default;

     (b) of any matter that has resulted or could reasonably be expected to result in a Material Adverse Effect, including (i) breach or non-performance of, or any default under, a Contractual Obligation of the Borrower or any Subsidiary; (ii) any dispute, litigation, investigation, proceeding or suspension between the Borrower or any Subsidiary and any Governmental Authority; or (iii) the commencement of, or any material development in, any litigation or proceeding affecting the Borrower or any Subsidiary, including pursuant to any applicable Environmental Laws;

     (c) of the occurrence of any ERISA Event;

     (d) of any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiary thereof; and

     (e) of the (i) occurrence of any Disposition of property or assets for which the Borrower is required to make a mandatory prepayment pursuant to Section 2.02(b)(i), (ii) incurrence or issuance of any Indebtedness for which the Borrower is required to make a mandatory prepayment pursuant to Section 2.02(b)(ii), and (iii) receipt of any Extraordinary Receipt for which the Borrower is required to make a mandatory prepayment pursuant to Section 2.0(b)(iii).

     Each notice pursuant to Section 6.03 (other than Section 6.03(e)) shall be accompanied by a statement of a Responsible Officer of the Borrower setting forth details of the occurrence referred to therein and stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.

     6.04. Payment of Obligations. Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless (i) the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the Borrower or such Subsidiary or (ii) the failure to do so would not have a Material Adverse Effect; (b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and

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payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.

     6.05. Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

     6.06. Maintenance of Properties. (a) Maintain, preserve and protect all of its material properties, leases and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear excepted; (b) make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; and (c) use the standard of care typical in the industry in the operation and maintenance of its facilities.

     6.07. Maintenance of Insurance. Maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons and providing for not less than 30 days’ prior notice to the Lender of termination, lapse or cancellation of such insurance.

     6.08. Compliance with Laws. Comply in all material respects with the requirements of all applicable Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith could not reasonably be expected to have a Material Adverse Effect.

     6.09. Books and Records. (a) Maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Borrower or such Subsidiary, as the case may be; and (b) maintain such books of record and account in material conformity with all applicable requirements of any Governmental Authority having regulatory jurisdiction over the Borrower or such Subsidiary, as the case may be.

     6.10. Inspection Rights. Permit representatives and independent contractors of the Lender to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Borrower; provided, however, that when an Event of Default exists the Lender (or any of its representatives or independent

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contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice.

     6.11. Use of Proceeds. Use the proceeds of Loan for working capital purposes and general corporate purposes not in contravention of any Law or of any Loan Document.

     6.12. Covenant to Guarantee Obligations. Upon the formation or acquisition of any new direct or indirect Subsidiary (other than any CFC or a Subsidiary that is held directly or indirectly by a CFC) by any Loan Party, then the Borrower shall, at the Borrower’s expense:

     (a) within 10 days after such formation or acquisition, cause such Subsidiary, and cause each direct and indirect parent of such Subsidiary (if it has not already done so), to duly execute and deliver to the Lender a guaranty or guaranty supplement, in form and substance satisfactory to the Lender, guaranteeing the other Loan Parties’ obligations under the Loan Documents, and

     (b) within 30 days after such formation or acquisition, deliver to the Lender, upon the request of the Lender in its sole discretion, a signed copy of a favorable opinion, addressed to the Lender, of counsel for the Loan Parties acceptable to the Lender as to the matters contained in clause (a), and as to such other matters as the Lender may reasonably request.

     6.13. Compliance with Environmental Laws. Comply, and, except with respect to oil and gas properties that are not operated by the Borrower or any of its Subsidiaries, cause all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and renew all Environmental Permits necessary for its operations and properties; and conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action required to remove and clean up all Hazardous Materials from any of its properties, as required under, and in accordance with the requirements of all Environmental Laws; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

     6.14. Further Assurances. Promptly upon request by the Lender, (a) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Lender may reasonably require from time to time in order to carry out more effectively the purposes of the Loan Documents, and cause each of its Subsidiaries to do so.

     6.15. Compliance with Terms of Leaseholds. Make all payments and otherwise perform all obligations in respect of all leases of real property to which the Borrower or any of its Subsidiaries is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled, notify the Lender of any default by any party with respect to such leases and cooperate with the Lender in

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all respects to cure any such default, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, could not be reasonably likely to have a Material Adverse Effect. Notwithstanding the foregoing, with respect to leases of oil and gas properties, the Borrower and its Subsidiaries may, in the ordinary course of business and in their sole discretion, allow any such leases to lapse, terminate, be forfeited or cancelled, provided that any such lapses, terminations, forfeitures or cancellations, either individually or in the aggregate, could not be reasonably likely to have a Material Adverse Effect, and the Borrower and its Subsidiaries shall not be required to notify the Lender of any such lapses, terminations, forfeitures or cancellations.

     6.16. Material Contracts. Perform and observe all the terms and provisions of each Material Contract to be performed or observed by it, maintain each such Material Contract in full force and effect and enforce in all material respects each such Material Contract in accordance with its terms.

ARTICLE VII.
NEGATIVE COVENANTS

     So long as the Loan or other Obligation hereunder shall remain unpaid or unsatisfied, the Borrower shall not, nor shall it permit any Subsidiary to, directly or indirectly:

     7.01. Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, or sign or file or suffer to exist under the Uniform Commercial Code of any jurisdiction a financing statement that names the Borrower or any of its Subsidiaries as debtor, or assign any accounts or other right to receive income, other than the following:

     (a) Liens pursuant to any Loan Document;

     (b) Liens existing on the date hereof and listed on Schedule 5.08(b) and any renewals or extensions thereof, provided that (i) the property covered thereby is not changed, (ii) the amount secured or benefited thereby is not increased except as contemplated by Section 7.02(e), (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.02(e);

     (c) Liens for taxes not yet delinquent or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;

     (d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person;

     (e) pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;

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     (f) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

     (g) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

     (h) Liens securing judgments for the payment of money not constituting an Event of Default under Section 8.01(h);

     (i) Liens securing Indebtedness permitted under Section 7.02(g); provided that (i) such Liens do not at any time encumber any property other than the property financed by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition;

     (j) Liens on the assets (excluding any Equity Interests owned by Harvest (US) Holdings) and the Equity Interests in Harvest (US) Holdings securing Indebtedness of Harvest (US) Holdings permitted under Section 7.02(i);

     (k) Liens on the Equity Interests in a Subsidiary (other than Harvest (US) Holdings and Harvest Holding LLC) which is not a CFC and the assets of such Subsidiary (excluding any Equity Interests owned by such Subsidiary) securing Indebtedness of such Subsidiary permitted under Section 7.02(j); and

     (l) Liens on the Specified Property (as defined in the definition of Project Financing Indebtedness) of the special purpose Subsidiary incurring the applicable Project Financing Indebtedness and/or Liens on the contract revenues under a contract for the sale of products or services manufactured at and/or derived from the Specified Property by such special purpose Subsidiary entered into in the ordinary course of business to secure Project Financing Indebtedness of such special purpose Subsidiary.

     7.02. Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except:

     (a) obligations (contingent or otherwise) existing or arising under any Swap Contract, provided that (i) such obligations are (or were) entered into by such Person in the ordinary course of business (and not for speculative purposes) to hedge or mitigate risks to which the Borrower or any Subsidiary (other than Harvest Holding LLC) is exposed in the conduct of its business or the management of its liabilities and (ii) such Swap Contract does not contain any provision exonerating the non-defaulting party from its obligation to make payments on outstanding transactions to the defaulting party; provided that the aggregate Swap Termination Value thereof shall not exceed $15,000,000 at any time outstanding;

     (b) Indebtedness of a Subsidiary of the Borrower (other than Harvest Holding LLC) owing to a wholly-owned Subsidiary of the Borrower (which is not a Loan Party or Harvest Holding LLC), which Indebtedness shall be permitted under the provisions of Section 7.03;

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     (c) Indebtedness of a Subsidiary of the Borrower (other than Harvest Holding LLC) owing to the Borrower or another Loan Party, which Indebtedness shall (i) be subordinated to the Obligations on terms and conditions satisfactory to the Lender and (ii) be otherwise permitted under the provisions of Section 7.03;

     (d) Indebtedness under the Loan Documents;

     (e) Indebtedness outstanding on the date hereof and listed on Schedule 7.02 and any refinancings, refundings, renewals or extensions thereof; provided that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and the direct or any contingent obligor with respect thereto is not changed, as a result of or in connection with such refinancing, refunding, renewal or extension; and provided, still further, that the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lender than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate;

     (f) Guarantees of the Borrower or any Guarantor in respect of Indebtedness of the Borrower or any other Guarantor otherwise permitted under clauses (a), (b), (c), (d) or (g) of this Section 7.02;

     (g) Indebtedness in respect of Capitalized Leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 7.01(i); provided, however, that (x) the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $10,000,000 and (y) Harvest Holding LLC shall not be permitted to create, incur, assume or suffer to exist any of such Indebtedness;

     (h) Indebtedness of the Borrower under the Senior Convertible Notes;

     (i) Indebtedness of Harvest (US) Holdings under a Facility and Indebtedness in the form of a Guarantee by Borrower of the obligations of Harvest (US) Holdings under such Facility so long as (x) the Guarantee by Borrower is subordinated to the Obligations on terms and conditions reasonably satisfactory to the Lender and (y) prior to incurring such Indebtedness Harvest (US) Holdings shall have transferred the Equity Interests of all of its Subsidiaries to a newly formed Subsidiary (“NewCo”) of the Borrower (which Subsidiary is not a CFC) and the requirements of Section 6.12 shall have been satisfied; provided that such Indebtedness under such Facility shall only be Indebtedness permitted under this clause (i) (1) if within six months after initially incurring such Indebtedness Harvest (US) Holdings shall have assigned the West Bay Leases to NewCo and (2) on any date if the Asset Coverage Ratio on such date is not less than 1.5 to 1.0;

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     (j) Indebtedness of a Subsidiary (other than Harvest (US) Holdings or Harvest Holding LLC) which is not a CFC under a Facility; provided that such Indebtedness under such Facility shall only be Indebtedness permitted under this clause (j) on any date if the Asset Coverage Ratio of such Subsidiary on such date is not less than 1.5 to 1.0;

     (k) Unsecured Indebtedness of Subsidiaries (other than Harvest Holding LLC) which is subordinated to the Obligations on terms and conditions satisfactory to the Lender in an aggregate principal amount outstanding not to exceed $20,000,000 at any time;

     (l) Unsecured Indebtedness of the Borrower incurred in connection with a Strategic Transaction, the proceeds of which shall be placed in escrow arrangements reasonably satisfactory to the Lender and the Borrower;

     (m) Unsecured Indebtedness of the Borrower incurred under clause (g) of the definition of Indebtedness in the form of an agreement to distribute certain Equity Interests of Second NewCo to the holders of the Equity Interests in the Borrower in connection with a Strategic Transaction, so long as such agreement at all times provides for the repayment at the closing of such Strategic Transaction of the Obligations in full in cash; provided that no such Strategic Transaction shall be consummated unless and until the Obligations have been paid in full in cash; and

     (n) Project Financing Indebtedness of any Subsidiary (other than Harvest Holding LLC) of the Borrower;

     provided that, notwithstanding anything contained in this Section 7.02, the Borrower shall not permit any Subsidiary to have outstanding any obligation (by Guarantee or otherwise) in favor of any holder of the Senior Convertible Note unless the Lender has a Guarantee of the Loan from such Subsidiary which is fully enforceable and pari passu with the claims of holder against such Subsidiary under the Senior Convertible Note.

     7.03. Investments. Make or hold any Investments, except:

     (a) Investments held by the Borrower and its Subsidiaries in the form of Cash Equivalents in an aggregate principal amount for all such Investments not to exceed $200,000,000 at any time outstanding;

     (b) advances to officers, directors and employees of the Borrower and Subsidiaries in an aggregate amount not to exceed $750,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;

     (c) (i) Investments by the Borrower and its Subsidiaries in their respective Subsidiaries outstanding on the date hereof, (ii) additional Investments by the Borrower and its Subsidiaries in Loan Parties, (iii) additional Investments by Subsidiaries of the Borrower that are not Loan Parties in other Subsidiaries (other than Harvest Holding LLC) that are not Loan Parties, (iv) so long as no Default has occurred and is continuing or would result from such Investment, additional Investments by the Loan Parties in wholly-owned Subsidiaries (other than Harvest Holding LLC) that are not Loan Parties; provided that, the aggregate amount of Investments made pursuant to this clause (iv) shall not exceed $700,000,000 in the aggregate and

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(v) so long as no Default has occurred and is continuing or would result from such Investment, an Investment by a Loan Party in a newly formed wholly-owned Subsidiary which is not a Loan Party (“Second NewCo”) in connection with a Strategic Transaction, the proceeds of which Investment shall be placed in escrow arrangements reasonably satisfactory to the Lender and the Borrower;

     (d) Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;

     (e) Guarantees permitted by Section 7.02;

     (f) Investments existing on the date hereof (other than those referred to in Section 7.03(c)(i)) and set forth on Schedule 5.08(d);

     (g) the purchase or other acquisition of all of the Equity Interests in, or all or substantially all of the property of, any Person that, upon the consummation thereof, will be wholly-owned directly by the Borrower or one or more of its wholly-owned Subsidiaries (other than Harvest Holding LLC) (including as a result of a merger or consolidation); provided that, with respect to each purchase or other acquisition made pursuant to this Section 7.03(g):

     (i) any such newly-created or acquired Subsidiary shall comply with any applicable requirements of Section 6.12;

     (ii) the lines of business of the Person to be (or the property of which is to be) so purchased or otherwise acquired shall be substantially the same lines of business as one or more of the principal businesses of the Borrower and its Subsidiaries in the ordinary course;

     (iii) such purchase or other acquisition shall not include or result in any contingent liabilities that could reasonably be expected to be material to the business, financial condition, operations or prospects of the Borrower and its Subsidiaries, taken as a whole (as determined in good faith by the board of directors (or the persons performing similar functions) of the Borrower or such Subsidiary if the board of directors is otherwise approving such transaction and, in each other case, by a Responsible Officer);

     (iv) the total cash and noncash consideration (including the fair market value of all Equity Interests issued or transferred to the sellers thereof, all indemnities, earnouts and other contingent payment obligations to, and the aggregate amounts paid or to be paid under noncompete, consulting and other affiliated agreements with, the sellers thereof, all write-downs of property and reserves for liabilities with respect thereto and all assumptions of debt, liabilities and other obligations in connection therewith) paid by or on behalf of the Borrower and its Subsidiaries for any such purchase or other acquisition, when aggregated with the total cash and noncash consideration paid by or on behalf of the Borrower and its Subsidiaries for all other purchases and other acquisitions made by the Borrower and its Subsidiaries pursuant to this Section 7.03(g) shall not exceed $200,000,000 in the aggregate; and

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     (v) immediately before and immediately after giving pro forma effect to any such purchase or other acquisition, no Default shall have occurred and be continuing;

     (h) Investments by the Borrower and its Subsidiaries (other than Harvest Holding LLC) not otherwise permitted under this Section 7.03; provided that, the aggregate amount of Investments made pursuant to this clause (h) shall not exceed $100,000,000 in the aggregate; further provided that, with respect to each Investment made pursuant to this Section 7.03(h):

     (i) such Investment shall not include or result in any contingent liabilities that could reasonably be expected to be material to the business, financial condition, operations or prospects of the Borrower and its Subsidiaries, taken as a whole (as determined in good faith by the board of directors (or persons performing similar functions) of the Borrower or such Subsidiary if the board of directors is otherwise approving such transaction and, in each other case, by a Responsible Officer);

     (ii) such Investment shall be in property that is part of, or in lines of business that are, substantially the same lines of business as one or more of the principal businesses of the Borrower and its Subsidiaries in the ordinary course;

     (iii) any determination of the amount of such Investment shall include all cash and noncash consideration (including the fair market value of all Equity Interests issued or transferred to the sellers thereof, all indemnities, earnouts and other contingent payment obligations to, and the aggregate amounts paid or to be paid under noncompete, consulting and other affiliated agreements with, the sellers thereof, all write-downs of property and reserves for liabilities with respect thereto and all assumptions of debt, liabilities and other obligations in connection therewith) paid by or on behalf of the Borrower and its Subsidiaries in connection with such Investment; and

     (iv) immediately before and immediately after giving pro forma effect to any such purchase or other acquisition, no Default shall have occurred and be continuing; and

     (i) other Investments (other than in Harvest Holding LLC) not exceeding $5,000,000 in the aggregate.

     7.04. Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:

     (a) any Subsidiary may merge with (i) the Borrower, provided that the Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries (other than Harvest Holding LLC), provided that when any Loan Party is merging with another Subsidiary, such Loan Party shall be the continuing or surviving Person;

     (b) any Loan Party may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another Loan Party (other than a Subsidiary which is obligated in respect of a Facility); and

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     (c) any Subsidiary that is not a Loan Party may dispose of all or substantially all its assets (including any Disposition that is in the nature of a liquidation) to (i) another Subsidiary (other than Harvest Holding LLC) that is not a Loan Party or (ii) to a Loan Party.

     7.05. Dispositions. Make any Disposition or enter into any agreement to make any Disposition, except:

     (a) Dispositions of obsolete or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;

     (b) Dispositions or sales of hydrocarbons in the ordinary course of business;

     (c) Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are promptly applied to the purchase price of such replacement property;

     (d) Dispositions of property by the Borrower or any Subsidiary to the Borrower or to a wholly-owned Subsidiary (excluding (x) a Subsidiary which is obligated in respect of a Facility and (y) Harvest Holding LLC); provided that if the transferor of such property is a Guarantor, the transferee thereof must either be the Borrower or a Guarantor;

     (e) Dispositions of assets related to the Monument Butte Extension area in Utah for cash and possible payment of past costs;

     (f) Farmouts of a percentage of Subsidiaries’ working interest in the Gabon Project for cash and possible payment of past costs;

     (g) Farmouts of a percentage of Subsidiaries’ working interest for cash and possible payment of past costs in the Oman Project;

     (h) Farmouts of a percentage of Subsidiaries’ working interest, payment of past costs or receipt of a carried interest in future exploration and development costs in the West Bay Project;

     (i) Farmouts of a percentage of the Subsidiaries’ working interest, payment of past costs or receipt of a carried interest in future exploration and development costs in the Budong Budong, Indonesia Project;

     (j) Disposition of all or part of the Borrower’s or its Subsidiaries’ Equity Interest in Fusion LLC;

     (k) Disposition of all or part of Subsidiaries’ interest in the WAB-21 Block Project;

     (l) Execution of an agreement to enter into a Strategic Transaction, so long as such agreement at all times provides for the repayment at the closing of such Strategic Transaction of the Obligations in full in cash; provided that no such Strategic Transaction shall be consummated

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and no Disposition shall occur pursuant to such agreement unless and until the Obligations have been paid in full in cash;

     (m) Entering into of any West Bay Leases;

     (n) Entering into any assignments of leasehold interests to form AMIs (Areas of Mutual Interest) with third parties in the ordinary course of business and on customary terms and conditions;

     (o) Dispositions permitted by Section 7.04;

     (p) Subject to Section 7.14, Dispositions by the Borrower and its Subsidiaries of property pursuant to sale-leaseback transactions, provided that the book value of all property so Disposed of shall not exceed $5,000,000 in any fiscal year;

     (q) Dispositions by the Borrower and its Subsidiaries not otherwise permitted under this Section 7.05; provided that (i) at the time of such Disposition, no Default or Event of Default shall exist or would result from such Disposition, (ii) the aggregate book value of all property Disposed of in reliance on this clause (q) in any fiscal year shall not exceed $5,000,000 and (iii) the purchase price for such asset shall be paid to the Borrower or such Subsidiary solely in cash;

     (r) Dispositions of oil and gas properties in the ordinary course of business not exceeding $20,000,000 in the aggregate and not otherwise permitted under this Section 7.05;

     (s) A Disposition in the form of the execution of an agreement to make a Restricted Payment as permitted by Section 7.02(m), so long as such agreement at all times provides for the repayment at the closing of such Strategic Transaction of the Obligations in full in cash; provided that no such Disposition and Strategic Transaction shall be consummated unless and until the Obligations have been paid in full in cash; and

     (t) A Disposition in the form of cash as permitted by Section 7.03(c)(v).

provided, however, that any Disposition pursuant to Section 7.05(a) through Section 7.05(s) shall be for fair market value.

     7.06. Restricted Payments. Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, or issue or sell any Equity Interests or accept any capital contributions, except that, so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom:

     (a) each Subsidiary may make Restricted Payments to (i) the Borrower, (ii) any Subsidiaries of the Borrower that are Guarantors and (iii) any other Person that owns a direct Equity Interest in such Subsidiary (to the extent such Subsidiary is making a contemporaneous Restricted Payment to the Borrower or Guarantor which also holds an Equity Interest in such Subsidiary), in each case ratably according to their respective holdings of the type of Equity Interest in respect of which such Restricted Payment is being made;

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     (b) the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in the common stock or other common Equity Interests of such Person;

     (c) capital contributions permitted by Sections 7.03(c)(ii)and (v) and Section 7.05(d); and

     (d) the execution of an agreement to make a Restricted Payment as permitted by Section 7.02(m), so long as such agreement at all times provides for the repayment at the closing of such Strategic Transaction of the Obligations in full in cash; provided that no such Restricted Payment shall be made and no such Strategic Transaction shall be consummated unless and until the Obligations have been paid in full in cash.

     7.07. Change in Nature of Business. Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.

     7.08. Transactions with Affiliates. Enter into any transaction of any kind with any Affiliate of the Borrower, whether or not in the ordinary course of business, other than on fair and reasonable terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate; provided, however, that nothing herein shall prohibit (a) intercompany loans to fund expenditures of a Subsidiary in the ordinary course of business and permitted under Sections 7.02 and 7.03 or (b) the transfer of the Equity Interests of Harvest (US) Holdings’s Subsidiaries to NewCo or the assignment of the West Bay Leases by Harvest (US) Holdings to NewCo permitted by Section 7.02(i).

     7.09. Burdensome Agreements. Enter into or permit to exist any Contractual Obligation (other than this Agreement or any other Loan Document) that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to the Borrower or any Guarantor or to otherwise transfer property to or invest in the Borrower or any Guarantor, except for any agreement in effect (A) on the date hereof and set forth on Schedule 7.09 or (B) at the time any Subsidiary becomes a Subsidiary of the Borrower, so long as such agreement was not entered into solely in contemplation of such Person becoming a Subsidiary of the Borrower, (ii) of any Subsidiary to Guarantee the Indebtedness of the Borrower or (iii) of the Borrower or any Subsidiary to create, incur, assume or suffer to exist Liens on property of such Person; provided, however, that this clause (iii) shall not prohibit any negative pledge incurred or provided in favor of any holder of Indebtedness permitted under Section 7.02(g) solely to the extent any such negative pledge relates to the property financed by or the subject of such Indebtedness; or (b) requires the grant of a Lien to secure an obligation of such Person if a Lien is granted to secure another obligation of such Person.

     7.10. Use of Proceeds. Use the proceeds of the Loan, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.

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     7.11. Amendments of Organization Documents. Amend any of its Organization Documents in any way that would have an adverse effect on the ability of the Loan Parties to repay the Loan.

     7.12. Accounting Changes. Make any change in (a) accounting policies or reporting practices, except as required by GAAP, or (b) fiscal year.

     7.13. Prepayments, Etc. of Indebtedness. Prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity thereof in any manner, or make any payment in violation of any subordination terms of, any Indebtedness, except (a) the prepayment of the Loan in accordance with the terms of this Agreement, (b) regularly scheduled or required repayments or redemptions of Indebtedness set forth in Schedule 7.02 and (c) conversions into common stock of the Borrower under the Senior Convertible Notes or mandatory repurchases of any Senior Convertible Notes, in each case in accordance with the terms thereof.

     7.14. Terrorism Sanctions Regulations. The Borrower will not and will not permit any Affiliated Entity to (a) become an OFAC Listed Person or (b) have any investments in, or engage in any dealings or transactions with, any Blocked Person.

ARTICLE VIII.
EVENTS OF DEFAULT AND REMEDIES

     8.01. Events of Default. Any of the following shall constitute an Event of Default:

     (a) Non-Payment. The Borrower or any other Loan Party fails to (i) pay when and as required to be paid herein, any amount of principal of the Loan, or (ii) pay within three days after the same becomes due, any interest on the Loan, or any fee due hereunder, or (iii) pay within five days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or

     (b) Specific Covenants. (i) the Borrower fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10, 6.11, 6.12, or Article VII, or (ii) any of the Guarantors fails to perform or observe any term, covenant or agreement contained in the Guaranty; or

     (c) Other Defaults. Any Loan Party fails to perform or observe in any material respect any other covenant or agreement (not specified in Section 8.01(a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for 30 days; or

     (d) Representations and Warranties. Any representation, warranty, certification or statement of fact made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith shall be materially incorrect or misleading when made; or

     (e) Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness

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hereunder and Indebtedness under Swap Contracts) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the effect of which default or other event is to cause, or to permit the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; or (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Loan Party or such Subsidiary as a result thereof is greater than the Threshold Amount; or

     (f) Insolvency Proceedings, Etc. Any Loan Party or any Significant Subsidiary thereof institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for 60 calendar days, or an order for relief is entered in any such proceeding; or

     (g) Inability to Pay Debts; Attachment. (i) Any Loan Party or any Significant Subsidiary thereof becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within 30 days after its issue or levy; or

     (h) Judgments. There is entered against any Loan Party or any Significant Subsidiary thereof (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments and orders) exceeding the Threshold Amount (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage), or (ii) any one or more non-monetary final judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of 10 consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or

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     (i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of the Borrower under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

     (j) Invalidity of Loan Documents. Any material provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all the Obligations, ceases to be in full force and effect to the same extent as on the Closing Date; or any Loan Party or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document; or

     (k) Change of Control. There occurs any Change of Control.

     8.02. Remedies upon Event of Default. If any Event of Default occurs and is continuing, the Lender may take any or all of the following actions:

     (a) declare the unpaid principal amount of the outstanding Loan, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; and

     (b) exercise all rights and remedies available to it under the Loan Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the unpaid principal amount of the outstanding Loan and all interest and other amounts as aforesaid shall automatically become due and payable.

     8.03. Application of Funds. After the exercise of remedies provided for in Section 8.02 (or after the Loan has automatically become immediately due and payable), any amounts received on account of the Obligations shall be applied by the Lender in the following order:

     First, to payment of that portion of the Obligations constituting fees, indemnities, expenses and other amounts (including fees, charges and disbursements of counsel to the Lender and amounts payable under Article III) payable to the Lender;

     Second, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loan and other Obligations arising under the Loan Documents;

     Third, to payment of that portion of the Obligations constituting unpaid principal of the Loan; and

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     Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.

ARTICLE IX.
MISCELLANENOUS

     9.01. Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Lender and the Borrower or the applicable Loan Party, as the case may be, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

     9.02. Notices; Effectiveness.

     (a) Notices Generally. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier to the address or telecopier number specified for the Borrower or the Lender, as applicable, on Schedule 9.02.

     Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).

     (b) Change of Address, Etc. Each of the Borrower and the Lender may change its address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.

     9.03. No Waiver; Cumulative Remedies; Enforcement. No failure by the Lender, to exercise, and no delay by the Lender in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.

     9.04. Expenses; Indemnity; Damage Waiver. (a) Expenses. The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Lender and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Lender), in connection with the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or any assignment, syndication, or grant of participation of the Lender’s rights and obligations hereunder (whether or not the transactions contemplated hereby or thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by the Lender (including the reasonable fees, charges and disbursements of any counsel for the Lender, in connection with the

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enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with Loan made hereunder, including all such out-of-pocket expenses incurred during any workout, litigation, restructuring or negotiations in respect of the Loan.

     (b) Indemnification by the Borrower. The Borrower shall indemnify the Lender and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) the Loan or the use or proposed use of the proceeds therefrom, (iii) any actual or alleged presence or Release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental Liability related to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party or any of the Borrower’s or such Loan Party’s directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction.

     (c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.

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     (d) Payments. All amounts due under this Section shall be payable not later than ten Business Days after demand therefor.

     (e) Survival. The agreements in this Section shall survive the replacement of the Lender and the repayment, satisfaction or discharge of all the other Obligations.

     9.05. Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to the Lender, or the Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred.

     9.06. Tax Matters. The Borrower and the Lender agree and acknowledge that the Warrants and the Note are being issued together as an “investment unit” within the meaning of Section 1273(c)(2) of the Code. For the purposes of allocating the issue price to the Warrants and the Note as required by Section 1273(c)(2) of the Code and the Treasury regulations promulgated thereunder, the Borrower and the Lender agree that the fair market value of the Warrants on the date of issue is as set forth in the Warrant Purchase Agreement (the “Warrant Fair Market Value”), and the fair market value of the Note on the date of issue is the result of $60,000,000 minus the Warrant Fair Market Value. Except as otherwise required by applicable Law, the Borrower and the Lender agree that they will use such allocation to prepare and file all tax returns and other reports consistent with such allocation. The Borrower and the Lender acknowledge that this Section 9.06 is intended to establish the allocation of the issue price of the “investment unit” in accordance with Treasury regulations section 1.1273-2(h)(1) and Section 1273(c)(2) of the Code, which allocation is binding on the Borrower and the Lender pursuant to Treasury regulations section 1.1273-2(h)(2).

     9.07. Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Lender (and any other attempted assignment or transfer by the Borrower shall be null and void). Prior to the occurrence of an Event of Default, the Lender may assign, grant participations in or otherwise transfer any of its rights or obligations hereunder and under the other Loan Documents (a) to an Affiliate, but only to an Affiliate, of the Lender without the consent of the Borrower and (b) to a non-affiliate of the Lender with the consent of the Borrower, which consent shall not be unreasonably withheld or delayed. After the occurrence of an Event of Default, the Lender may assign, grant participations in or otherwise transfer any of its rights or obligations hereunder and under the other Loan Documents to one or more third parties without the consent of the Borrower. As a condition to any permitted assignment by the Lender hereunder, the assignee shall be required to execute and deliver to the Borrower a confidentiality agreement in form and substance reasonably acceptable to the Borrower (it being agreed and understood that a confidentiality agreement in substantially the same form as previously entered into by the Borrower with an

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Affiliate of the Lender is acceptable to the Borrower). The Borrower agrees to promptly execute and deliver to the Lender any and all amendments, agreements, notes and/or documents in connection with any such permitted assignment, participation or other transfer as requested by the Lender, including, without limitation, amended and restated loan documents to reflect a syndicated credit facility. Any transferee or assignee permitted hereunder shall deliver to the Borrower the documents and certifications required to be provided by a Lender under Section 3.01(e). Notwithstanding anything herein to the contrary, no transferee or assignee shall be entitled to any greater increased payments under Section 3.01 than that which the transferor Lender was otherwise entitled.

     9.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, the Lender and its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by the Lender or any such Affiliate to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under this Agreement or any other Loan Document to the Lender, irrespective of whether or not the Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or office of the Lender different from the branch or office holding such deposit or obligated on such indebtedness. The rights of the Lender and its Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that the Lender or its Affiliates may have. The Lender agrees to notify the Borrower promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

     9.09. Interest Rate Limitation. Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loan or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.

     9.10. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement.

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     9.11. Survival of Representations and Warranties. All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Lender, regardless of any investigation made by the Lender or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default at the time of the Loan, and shall continue in full force and effect, as of the time made, as long as the Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.

     9.12. Severability. If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     9.13. Governing Law; Jurisdiction; Etc. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     (b) SUBMISSION TO JURISDICTION. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

     (c) WAIVER OF VENUE. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY

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COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

     (d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW

     9.14. Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     9.15. Electronic Execution of Assignments and Certain Other Documents. The words “execution,” “signed,” “signature,” and words of like import in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

     9.16. USA PATRIOT Act. The Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), may be required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow the Lender to identify each Loan Party in accordance with the Act. The Borrower shall, promptly following a request by the Lender, provide all documentation and other information that the Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

     9.17. Time of the Essence. Time is of the essence of the Loan Documents.

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     9.18. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

HARVEST NATURAL RESOURCES, INC.
By:	/s/ James A. Edmiston
	Name:	James A. Edmiston
	Title:	President and Chief Executive Officer
MSD ENERGY INVESTMENTS PRIVATE II, LLC
By:	/s/ Marcello Liguori
	Name:	Marcello Liguori
	Title:	Vice President

EXHIBIT A

FORM OF TERM NOTE

$60,000,000 October 28, 2010

     FOR VALUE RECEIVED, the undersigned HARVEST NATURAL RESOURCES, INC., a Delaware corporation (the “Borrower”), hereby promises to pay to the order of MSD ENERGY INVESTMENTS PRIVATE II, LLC (the “Lender”) at the Lender’s office at 645 Fifth Avenue, 21st Floor, New York, New York 10022:

     (a) prior to or on the Maturity Date the principal amount of Sixty Million and 00/100 Dollars ($60,000,000), evidencing the Loan made by the Lender to the Borrower pursuant to the Credit Agreement dated of even date herewith (as amended and in effect from time to time, the “Credit Agreement”), between the Borrower and the Lender;

     (b) the principal outstanding hereunder from time to time at the times provided in the Credit Agreement; and

     (c) interest from the date hereof on the principal amount from time to time outstanding to and including the maturity hereof at the rates and terms and in all cases in accordance with the terms of the Credit Agreement.

     This Term Note evidences borrowings under and has been issued by the Borrower in accordance with the terms of the Credit Agreement. The Lender and any holder hereof is entitled to the benefits of the Credit Agreement and the other Loan Documents, and may enforce the agreements of the Borrower contained therein, and any holder hereof may exercise the respective remedies provided for thereby or otherwise available in respect thereof, all in accordance with the respective terms thereof. All capitalized terms used in this Term Note and not otherwise defined herein shall have the same meanings herein as in the Credit Agreement.

     The Borrower irrevocably authorizes the Lender to make or cause to be made, at the time of receipt of any payment of principal of this Term Note, an appropriate notation on the grid attached to this Term Note, or the continuation of such grid, or any other similar record, including computer records, reflecting the receipt of such payment. The outstanding amount of the Loan set forth on the grid attached to this Term Note, or the continuation of such grid, or any other similar record, including computer records, maintained by the Lender with respect to the Loan shall be, absent manifest error, prima facie evidence of the principal amount of the Loan owing and unpaid to the Lender, but the failure to record, or any error in so recording, any such amount on any such grid, continuation or other record shall not limit or otherwise affect the obligation of the Borrower hereunder or under the Credit Agreement to make payments of principal of and interest on this Term Note when due.

     The Borrower has the right in certain circumstances and the obligation under certain other circumstances to prepay the whole or part of the principal of this Term Note on the terms and conditions specified in the Credit Agreement.

Exhibit A - 1

     If any one or more of the Events of Default shall occur, the entire unpaid principal amount of this Term Note and all of the unpaid interest accrued thereon may become or be declared due and payable in the manner and with the effect provided in the Credit Agreement.

     No delay or omission on the part of the Lender or any holder hereof in exercising any right hereunder shall operate as a waiver of such right or of any other rights of the Lender or such holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar or waiver of the same or any other right on any future occasion.

     The Borrower and every endorser and guarantor of this Term Note or the obligation represented hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Term Note, and assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of collateral and to the addition or release of any other party or person primarily or secondarily liable.

     THIS TERM NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. THE BORROWER AGREES THAT, AS MORE FULLY SET FORTH IN § 9.12(b) OF THE CREDIT AGREEMENT, ANY ACTION OR PROCEEDING FOR THE ENFORCEMENT OF THIS TERM NOTE MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SCHEDULE 9.02 OF THE CREDIT AGREEMENT. THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT AS MORE FULLY SET FORTH IN § 9.12(c) OF THE CREDIT AGREEMENT.

     THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS TERM NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER OR SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS TERM NOTE AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.

Exhibit A - 2

     IN WITNESS WHEREOF, the undersigned has caused this Term Note to be signed by its duly authorized officer as of the day and year first above written.

HARVEST NATURAL RESOURCES, INC.
By:
	Name:
	Title:

Exhibit A - 3

	Amount of	Balance of
	Principal Paid	Principal	Notation
Date	or Prepaid	Unpaid	Made By:

Exhibit A - 4

EXHIBIT B

FORM OF GUARANTY

     GUARANTY, dated as of October 28, 2010 (this “Guaranty”), by Harvest US Holdings, Inc., a Delaware corporation (“Harvest US Holdings”), Harvest Natural Resources, Inc. (UK), a Delaware corporation (“HNR UK”), and Harvest Offshore China Company, a Colorado corporation (“Harvest Offshore”, and together with Harvest US Holdings and HNR UK, each individually, a “Guarantor”, and collectively, the “Guarantors”), in favor of MSD Energy Investments Private II, LLC, a Delaware limited liability company (the “Lender”).

     WHEREAS, Harvest Natural Resources, Inc., a Delaware corporation (the “Borrower”), has entered into that certain Credit Agreement dated as of the date hereof (as amended and in effect from time to time, the “Credit Agreement”), with the Lender, pursuant to which the Lender, subject to the terms and conditions contained therein, is to provide the Borrower with the term loan facility as provided for therein;

     WHEREAS, the Borrower and the Guarantors are members of a group of related entities, the success of any one of which is dependent in part on the success of the other members of such group;

     WHEREAS, the Guarantors expect to receive substantial direct and indirect benefits from the extensions of credit to the Borrower by the Lender pursuant to the Credit Agreement (which benefits are hereby acknowledged);

     WHEREAS, it is a condition precedent to the Lender’s making any loan or otherwise extending credit to the Borrower under the Credit Agreement that the Guarantors execute and deliver to the Lender a guaranty substantially in the form hereof; and

     WHEREAS, the Guarantors wish to guaranty the Borrower’s obligations to the Lender under or in respect of the Credit Agreement as provided herein.

     NOW, THEREFORE, each Guarantor hereby agrees with the Lender as follows:

     1. Definitions. The term “Obligations” and all other capitalized terms used herein without definition shall have the respective meanings provided therefor in the Credit Agreement.

     2. Guaranty of Payment and Performance. Each Guarantor hereby jointly and severally guarantees to the Lender the full and punctual payment when due (whether at stated maturity, by required pre-payment, by acceleration or otherwise), as well as the performance, of all of the Obligations including all such Obligations which would become due but for the operation of the automatic stay pursuant to §362(a) of the Federal Bankruptcy Code and the operation of §§502(b) and 506(b) of the Federal Bankruptcy Code. This Guaranty is an absolute, unconditional and continuing guaranty of the full and punctual payment and performance of all of the Obligations and not of their collectibility only and is in no way conditioned upon any requirement that the Lender first attempt to collect any of the Obligations from the Borrower or

Exhibit B - 1

any other guarantor or resort to any collateral security, guarantee of the Obligations or other means of obtaining payment. Should the Borrower default in the payment or performance of any of the Obligations, the obligations of each Guarantor hereunder with respect to such Obligations in default shall become immediately due and payable to the Lender, without demand or notice of any nature, all of which are expressly waived by each Guarantor. Payments by the Guarantors hereunder may be required by the Lender on any number of occasions. All payments by the Guarantors hereunder shall be made to the Lender, in the manner and at the place of payment specified therefor in the Credit Agreement.

     3. Guarantors’ Agreement to Pay Enforcement Costs, etc. Each Guarantor further agrees, as the principal obligor and not as a guarantor only, to pay to the Lender, on demand, all costs and expenses (including court costs, legal expenses and costs and expenses incurred during any workout, litigation, restructuring or negotiations in respect of the Obligations) incurred or expended by the Lender and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Lender) in connection with the Obligations, this Guaranty and the enforcement thereof, together with interest on amounts recoverable under this §3 from the time when such amounts become due until payment, whether before or after judgment, at the rate of interest for overdue principal set forth in the Credit Agreement, provided that if such interest exceeds the maximum amount permitted to be paid under applicable law, then such interest shall be reduced to such maximum permitted amount.

     4. Waivers by Guarantor; Lender’s Freedom to Act. Each Guarantor agrees that the Obligations will be paid and performed strictly in accordance with their respective terms, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Lender with respect thereto. Each Guarantor waives promptness, diligence, presentment, demand, protest, notice of acceptance, notice of any Obligations incurred and all other notices of any kind, all defenses which may be available by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in effect, any right to require the marshalling of assets of the Borrower or any other entity or other person primarily or secondarily liable with respect to any of the Obligations, and all suretyship defenses generally. Without limiting the generality of the foregoing, each Guarantor agrees to the provisions of any instrument evidencing, securing or otherwise executed in connection with any Obligation and agrees that the obligations of such Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (i) the failure of the Lender to assert any claim or demand or to enforce any right or remedy against the Borrower or any other entity or other person primarily or secondarily liable with respect to any of the Obligations; (ii) any extensions, compromise, refinancing, consolidation or renewals of any Obligation; (iii) any change in the time, place or manner of payment of any of the Obligations or any rescissions, waivers, compromise, refinancing, consolidation, amendments or modifications of any of the terms or provisions of the Credit Agreement, the Notes, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any of the Obligations; (iv) the addition, substitution or release of any entity or other person primarily or secondarily liable for any Obligation, (v) the adequacy of any rights which the Lender may have against any collateral security or other means of obtaining repayment of any of the Obligations; (vi) the impairment of any collateral securing any of the Obligations, including without limitation the failure to perfect or preserve any rights which the Lender might have in such collateral security or the substitution, exchange, surrender, release, loss or destruction of any such collateral

Exhibit B - 2

security; or (vii) any other act or omission which might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a release or discharge of such Guarantor, all of which may be done without notice to the Guarantors. To the fullest extent permitted by law, each Guarantor hereby expressly waives any and all rights or defenses arising by reason of (A) any “one action” or “anti-deficiency” law which would otherwise prevent the Lender from bringing any action, including any claim for a deficiency, or exercising any other right or remedy (including any right of set-off), against such Guarantor before or after the Lender’s commencement or completion of any foreclosure action, whether judicially, by exercise of power of sale or otherwise, or (B) any other law which in any other way would otherwise require any election of remedies by the Lender. To the extent that it lawfully may, each Guarantor hereby agrees that it will not invoke any law (other than the applicable statute of limitations) which might cause delay in or impede the enforcement of the rights and remedies of the Lender under this Guaranty, and to the fullest extent it lawfully may, such Guarantor hereby irrevocably waives the benefits of all such laws. In addition, and notwithstanding anything to the contrary contained herein, the Lender shall have the right, at any time, to name any Guarantor as a party defendant in any foreclosure action(s) it or its assignee may commence to foreclose upon any and all collateral of the Borrower or any other guarantor which secures the Obligations.

     5. Unenforceability of Obligations Against Borrower or Other Guarantors. If for any reason the Borrower or any other guarantor has no legal existence or is under no legal obligation to discharge any of the Obligations, or if any of the Obligations have become irrecoverable from the Borrower or any other guarantor by reason of the Borrower’s or such other guarantor’s insolvency, bankruptcy or reorganization or by other operation of law or for any other reason, this Guaranty shall nevertheless be binding on each Guarantor, to the same extent as if such Guarantor at all times had been the principal obligor on all such Obligations. In the event that acceleration of the time for payment of any of the Obligations is stayed upon the insolvency, bankruptcy or reorganization of the Borrower, or for any other reason, all such amounts otherwise subject to acceleration under the terms of the Credit Agreement, the Notes, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any Obligation shall be immediately due and payable by the Guarantor.

     6. Subrogation; Subordination.

     6.1. Waiver of Rights Against Borrower. Until the final payment and performance in full of all of the Obligations and any and all other obligations of the Borrower to the Lender or any affiliate of the Lender, no Guarantor shall exercise any rights against the Borrower or any other guarantor of the Obligations arising as a result of payment by any Guarantor hereunder (or any other guarantor), by way of subrogation, reimbursement, restitution, contribution or otherwise, and no Guarantor will prove any claim in competition with the Lender or such affiliate in respect of any payment hereunder in any bankruptcy, insolvency or reorganization case or proceedings of any nature; no Guarantor will claim any setoff, recoupment or counterclaim against the Borrower in respect of any liability of any Guarantor to the Borrower; and each Guarantor waives any benefit of and any right to participate in any collateral security which may be held by the Lender or such affiliate.

Exhibit B - 3

     6.2. Subordination to Lender. The payment of any amounts due with respect to any indebtedness of the Borrower or any other guarantor of the Obligations now or hereafter owed to the Guarantor is hereby subordinated to the prior payment in full of all of the Obligations and any and all other obligations of the Borrower or any other guarantor of the Obligations to the Lender or any affiliate of the Lender. Each Guarantor agrees that, after the occurrence of any default in the payment or performance of any of the Obligations, such Guarantor will not demand, sue for or otherwise attempt to collect any such indebtedness of the Borrower or any other guarantor of the Obligations to such Guarantor until all of the Obligations shall have been paid in full. If, notwithstanding the foregoing sentence, the Guarantor shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such Guarantor as trustee for the Lender and be paid over to the Lender on account of the Obligations without affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty.

     6.3. Subordination of Obligations. Each Guarantor covenants and agrees, and the Lender, by its acceptance of this Guaranty likewise covenants and agrees, that payment of the Obligations by any of the Guarantors arising under this Guaranty shall be subordinated to the Indebtedness of Subsidiaries permitted under Section 7.02(j) and Section 7.02(n) of the Credit Agreement, such subordination arrangements to be on terms and conditions reasonably satisfactory to the Lender.

     6.4. Provisions Supplemental. The provisions of this §6 shall be supplemental to and not in derogation of any rights and remedies of the Lender or any affiliate of the Lender under any separate subordination agreement which the Lender or such affiliate may at any time and from time to time enter into with any Guarantor.

     7. Security; Setoff. Each Guarantor grants to the Lender, as security for the full and punctual payment and performance of all of such Guarantor’s obligations hereunder, a continuing lien on and security interest in all securities or other property belonging to such Guarantor now or hereafter held by the Lender and in all deposits (general or special, time or demand, provisional or final) and other sums credited by or due from the Lender to such Guarantor or subject to withdrawal by such Guarantor. Regardless of the adequacy of any collateral security or other means of obtaining payment of any of the Obligations, the Lender is hereby authorized at any time and from time to time, without notice to such Guarantor (any such notice being expressly waived by such Guarantor) and to the fullest extent permitted by law, to set off and apply such deposits and other sums against the obligations of such Guarantor under this Guaranty, whether or not the Lender shall have made any demand under this Guaranty and although such obligations may be contingent or unmatured.

     8. Further Assurances. Each Guarantor agrees that it will from time to time, at the request of the Lender, provide to the Lender such Guarantor’s most recent audited and unaudited balance sheets and related statements of income and changes in financial condition and such other information relating to the business and affairs of such Guarantor as the Lender may reasonably request. Each Guarantor also agrees to do all such things and execute all such documents as the Lender may consider necessary or desirable to give full effect to this Guaranty and to perfect and preserve the rights and powers of the Lender hereunder. Each Guarantor

Exhibit B - 4

acknowledges and confirms that such Guarantor itself has established its own adequate means of obtaining from the Borrower on a continuing basis all information desired by such Guarantor concerning the financial condition of the Borrower and that such Guarantor will look to the Borrower and not to the Lender in order for such Guarantor to keep adequately informed of changes in the Borrower’s financial condition.

     9. Termination; Reinstatement. Upon final payment and performance in full in cash of the Obligations (other than inchoate indemnification liabilities arising under the Loan Documents) and termination of all lending and other credit commitments of the Lender and its affiliates in respect thereof, this Guaranty shall terminate. Such termination shall not affect any rights of the Lender or of any affiliate of the Lender hereunder (including without limitation the rights set forth in §§4 and 6) with respect to any Obligations incurred or accrued prior to the receipt of such notice or any Obligations incurred or accrued pursuant to any contract or commitment in existence prior to such receipt. Notwithstanding the foregoing, this Guaranty shall continue to be effective or be reinstated if at any time any payment made or value received with respect to any Obligation is rescinded or must otherwise be returned by the Lender upon the insolvency, bankruptcy or reorganization of the Borrower, or otherwise, all as though such payment had not been made or value received.

     10. Successors and Assigns. This Guaranty shall be binding upon each Guarantor, its successors and assigns, and shall inure to the benefit of and be enforceable by the Lender and its successors, transferees and assigns. Without limiting the generality of the foregoing sentence, the Lender may assign or otherwise transfer the Credit Agreement, the Notes, the other Loan Documents or any other agreement or note held by it evidencing, securing or otherwise executed in connection with the Obligations, or sell participations in any interest therein, to any other entity or other person, and such other entity or other person shall thereupon become vested, to the extent set forth in the agreement evidencing such assignment, transfer or participation, with all the rights in respect thereof granted to the Lender herein. No Guarantor may assign its rights hereunder.

     11. Amendments and Waivers. No amendment or waiver of any provision of this Guaranty nor consent to any departure by any Guarantor therefrom shall be effective unless the same shall be in writing and signed by the Lender. No failure on the part of the Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

     12. Notices.

     12.1. Notices Generally. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows: if to any Guarantor, at the address or telecopier number set forth beneath its signature hereto, and if to the Lender, at the address for notices to the Lender set forth in Schedule 9.02 of the Credit Agreement.

Exhibit B - 5

     Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).

     12.2. Change of Address. Each Guarantor and the Lender may change its address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.

     12.3. Reliance by Lender. The Lender shall be entitled to rely and act upon any notices purportedly given by or on behalf of any Guarantor even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Each Guarantor shall indemnify the Lender and the Related Parties (as defined in the Credit Agreement) of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of such Guarantor.

     13. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     14. Submission to Jurisdiction. EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST ANY GUARANTOR OR ANY OTHER LOAN PARTY (AS DEFINED IN THE CREDIT AGREEMENT) OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

     15. Waiver of Venue. EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO

Exhibit B - 6

THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN §14. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

     16. Service of Process. EACH GUARANTOR IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN §12. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF THE LENDER OR ANY GUARANTOR TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

     17. Waiver of Jury Trial. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EXCEPT AS PROHIBITED BY LAW, EACH GUARANTOR HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH GUARANTOR (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER OR SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS §17.

     18. Joint and Several Nature of Guaranty. Notwithstanding any term contained herein to the contrary, each of the obligations and liabilities of each of the Guarantors hereunder are expressly agreed to be joint and several.

     19. Contribution. To the extent any Guarantor makes a payment hereunder in excess of the aggregate amount of the benefit received by such Guarantor in respect of the extensions of credit under the Credit Agreement (the “Benefit Amount”), then such Guarantor, after the payment in full, in cash, of all of the Obligations, shall be entitled to recover from each other guarantor of the Obligations such excess payment, pro rata, in accordance with the ratio of the Benefit Amount received by each such other guarantor to the total Benefit Amount received by all guarantors of the Obligations, and the right to such recovery shall be deemed to be an asset and property of such Guarantor so funding; provided, that all such rights to recovery shall be subordinated and junior in right of payment to the final and undefeasible payment in full in cash of all of the Obligations.

Exhibit B - 7

     20. Miscellaneous. This Guaranty constitutes the entire agreement of each Guarantor with respect to the matters set forth herein. The rights and remedies herein provided are cumulative and not exclusive of any remedies provided by law or any other agreement, and this Guaranty shall be in addition to any other guaranty of or collateral security for any of the Obligations. The invalidity or unenforceability of any one or more sections of this Guaranty shall not affect the validity or enforceability of its remaining provisions. Captions are for the ease of reference only and shall not affect the meaning of the relevant provisions. The meanings of all defined terms used in this Guaranty shall be equally applicable to the singular and plural forms of the terms defined.

[Remainder of page intentionally left blank.]

Exhibit B - 8

     IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and delivered as of the date first above written.

HARVEST (US) HOLDINGS, INC.
By:
	Name:	Stephen C. Haynes
	Title:	Vice President and Chief Financial Officer
	Address:	1177 Enclave Parkway, Suite 300  Houston, TX 77077
HARVEST NATURAL RESOURCES, INC. (UK)
By:
	Name:	Stephen C. Haynes
	Title:	Vice President and Chief Financial Officer
	Address:	First Floor, Talbot House 17 Church Street Rickmansworth Hertfordshire WD3 1DE United Kingdom
HARVEST OFFSHORE CHINA COMPANY
By:
	Name:	Stephen C. Haynes
	Title:	Vice President and Chief Financial Officer
	Address:	1177 Enclave Parkway, Suite 300 Houston, TX 77077

Exhibit B - 9

SCHEDULE 5.03

CERTAIN AUTHORIZATIONS

None.

Schedule 5.03

SCHEDULE 5.06

LITIGATION

None.

Schedule 5.06

SCHEDULE 5.08(b)

EXISTING LIENS

• Joint Exploration and Development Agreement dated October 24, 2007, by and between Branta Exploration & Production, L.P. (“Branta”) and Harvest (US) Holdings, Inc. (“Harvest US”) on the Antelope Prospect. The Agreement and four related Joint Operating Agreements between the parties each contains mutual rights of first offer with respect to the sale of either party’s rights or interests.

• Pursuant to each Joint Operating Agreement between Harvest US and Branta, each party has granted to the other a lien and security interest to secure payment of the grantor’s share of costs when due.

• Petroleum Contract dated May 8, 1992 by and between China National Offshore Oil Corporation (“CNOOC”) and Harvest Offshore China Corporation (formerly Crestone Energy Corporation) (“Harvest China”) for the Contract Area WAB-21 in the South China Sea of China. Assignment of the Contract by Harvest China requires CNOOC’s consent.

• Exploration and Production Sharing Agreement dated April 11, 2009, by and between the Government of the Sultanate of Oman (“Government”) and Harvest Oman, B.V. (“Harvest”) and Oman Oil Company. Assignment of the Agreement requires Government approval.

• Joint Operating Agreement for the Dussafu Block, Offshore Gabon. The Agreement contains consent requirements and mutual rights of first offer with respect to the sale of either party’s interest.

• Production Sharing Contract and Joint Operating Agreement with respect to Budong-Budong Block, West Sulawesi Area. Transfers of interest require the consent of each party and BPMIGAS.

• Contract for Conversion to a Mixed Company between Corporation Venezolana Del Petroleo, S.A., Harvest-Vinccler, S.C.A. and HNR Finance B.V. (“HNR Finance”) signed on

Schedule 5.08(b)-1

September 11, 2007. The transfer of Petrodelta shares by HNR Finance is subject to a right of first refusal.

• Participation Agreement dated March 28, 2008, by and between Harvest (US) Holdings, Inc. and Legends II LLC for West Bay. A transfer of interest requires the consent of the non-transferring party.

• Operating Agreement dated September 18, 2009, by and between Newfield Production Company, as Operator, and Harvest (US) Holdings, Inc. and Branta Exploration & Production LLC, as Non-Operator. Each party has granted to the others a lien and security interest to secure payment of the grantor’s share of costs when due.

• The assignment of certain oil and gas leases held by Harvest (US) Holdings, Inc. requires the consent of the lessor.

Schedule 5.08(b)-2

SCHEDULE 5.08(d)

EXISTING INVESTMENTS

• Fusion Geophysical, L.L.C. — Harvest (US) Holdings, Inc. owns a 49% interest in Fusion Geophysical, L.L.C.

• Petrodelta, S.A. — Harvest Natural Resources, Inc. indirectly owns an 80 percent interest in HNR Finance BV. HNR Finance BV has a 40 percent ownership interest in Petrodelta, S.A. Harvest Natural Resources, Inc. indirectly owns a net 32 percent interest in Petrodelta, S.A.

• On April 9, 2009, Harvest Natural Resources, Inc. entered into a service agreement with Fusion Petroleum Technologies Inc. whereby Harvest prepaid $1.5 million for certain services. As of September 30, 2010, the balance under the service agreement was approximately $500,000.

Schedule 5.08(d)

SCHEDULE 5.09

ENVIRONMENTAL MATTERS

None.

Schedule 5.09

SCHEDULE 5.13

Part (a)

SUBSIDIARIES

Subsidiaries of Borrower	Percent owned
HNR Energia B.V. (Netherlands Antilles)	100%
HNR Sukuk Partner B.V. (Netherlands)	100%
Harvest Holding LLC (Delaware)	100%
Harvest Natural Resources Malta Limited (Malta)	100%
Harvest Cayman Holding Ltd. (Cayman Islands, BWI)	100%
Harvest Natural Resources Finance Malta Limited (Malta)	100%
Harvest Natural Resources Holding Malta Limited (Malta)	100%
Harvest-Vinccler Dutch Holding B.V. (Netherlands)	80%
HNR Finance B.V. (Netherlands)	80%
Harvest Vinccler Ltd. (Cayman)	80%
Harvest Vinccler, S.C.A. (Venezuela)	80%
HNR Global Holding B.V. (Netherlands)	100%
HNR International B.V. (Netherlands)	100%
Harvest Senami Behar B.V. (Netherlands)	100%
Harvest Budong-Budong B.V. (Netherlands)	100%
Harvest Oman B.V. (Netherlands)	100%
Harvest Far East Pte. Ltd. (Singapore)	100%
Harvest Dussafu B.V. (Netherlands)	100%
Harvest Natural Resources, Inc. (UK) (Delaware)	100%
Harvest (US) Holdings, Inc. (Delaware)	100%
Benton Oil and Gas Company of Venezuela (BVI)	100%
Harvest Offshore China Company (Colorado)	100%
Subsidiaries of Harvest (US) Holdings, Inc.
Harvest Offshore China Company (Colorado)	100%
Subsidiaries of Harvest Natural Resources, Inc. (UK)
None
Subsidiaries of Harvest Offshore China Company
None

Schedule 5.13 — Part (a)

SCHEDULE 5.13

Part (b)

SUBSIDIARIES AND OTHER EQUITY INVESTMENTS; LOAN PARTIES

• Fusion Geophysical, L.L.C. — Harvest (US) Holdings, Inc. owns a 49% interest in Fusion Geophysical, L.L.C.

• Petrodelta, S.A. — Harvest Natural Resources, Inc. indirectly owns an 80 percent interest in HNR Finance BV. HNR Finance BV has a 40 percent ownership interest in Petrodelta, S.A. Harvest Natural Resources, Inc. indirectly owns a net 32 percent interest in Petrodelta, S.A.

Schedule 5.13 — Part (b)

SCHEDULE 5.13

Part (d)

SUBSIDIARIES AND OTHER EQUITY INVESTMENTS; LOAN PARTIES

Harvest Natural Resources, Inc., a Delaware corporation
1177 Enclave Parkway, Suite 300
Houston, TX 77077
U.S. TAX ID#: 77-0196707

Harvest (US) Holdings, Inc., a Delaware corporation
1177 Enclave Parkway, Suite 300
Houston, TX 77077
U.S. TAX ID#: 77-0451721

Harvest Offshore China Company, a Colorado corporation
1177 Enclave Parkway, Suite 300
Houston, TX 77077
U.S. TAX ID#: 84-0847015

Harvest Natural Resources, Inc. (UK), a Delaware corporation
Regus Rickmansworth Cardinal Point
Park Road
Rickmansworth, Herts
United Kingdom WD3 1RE
U.S. TAX ID#: 03-0589773

Schedule 5.13 — Part (d)

SCHEDULE 6.12

GUARANTORS

• Harvest Natural Resources, Inc. (UK), a Delaware corporation

• Harvest Offshore China Company, a Colorado corporation

• Harvest (US) Holdings, Inc., a Delaware corporation

Schedule 6.12

SCHEDULE 7.02

EXISTING INDEBTEDNESS

Guarantee dated December 27, by Harvest Natural Resources Inc. guaranteeing farm-in obligations of Harvest Budong-Budong B.V. (“Harvest Budong”) under the Farmout Agreement dated December 22, 2007 between Tately Budong-Budong N.V. and Harvest Budong.

Letter of Credit dated February 24, 2010 issued by JPMorgan Chase Bank, N.A. for the account of Harvest Far East Pte. Ltd. in the face amount of $1,000,000 in connection with a joint study for Binjai, North Sumatra.

Schedule 7.02

SCHEDULE 7.09

BURDENSOME AGREEMENTS

See Schedule 5.08(b).

Schedule 7.09

SCHEDULE 9.02

LENDER’S OFFICE, CERTAIN ADDRESSES FOR NOTICES

Borrower:

Harvest Natural Resources, Inc.
1177 Enclave Parkway, Suite 300
Houston, TX 77077
Attention: General Counsel
Ph: 281-899-5700
Fax: 281-899-5702

With a copy to:

Fulbright & Jaworski LLP
2200 Sul Ross Avenue, Suite 2800
Dallas, TX 75201
Attention: Harva Dockery
Ph: 214-855-8369
Fax: 214-855-8200

Lender:

MSD Energy Investments Private II, LLC
645 Fifth Avenue, 21st Floor
New York, NY 10022
Attention: General Counsel

Ph: 212-303-1650
Fax: 212-303-1772

Schedule 9.02

EX-10.2

Exhibit 10.2

EXECUTION VERSION

GUARANTY

     GUARANTY, dated as of October 28, 2010 (this “Guaranty”), by Harvest US Holdings, Inc., a Delaware corporation (“Harvest US Holdings”), Harvest Natural Resources, Inc. (UK), a Delaware corporation (“HNR UK”), and Harvest Offshore China Company, a Colorado corporation (“Harvest Offshore”, and together with Harvest US Holdings and HNR UK, each individually, a “Guarantor”, and collectively, the “Guarantors”), in favor of MSD Energy Investments Private II, LLC, a Delaware limited liability company (the “Lender”).

     WHEREAS, Harvest Natural Resources, Inc., a Delaware corporation (the “Borrower”), has entered into that certain Credit Agreement dated as of the date hereof (as amended and in effect from time to time, the “Credit Agreement”), with the Lender, pursuant to which the Lender, subject to the terms and conditions contained therein, is to provide the Borrower with the term loan facility as provided for therein;

     WHEREAS, the Borrower and the Guarantors are members of a group of related entities, the success of any one of which is dependent in part on the success of the other members of such group;

     WHEREAS, the Guarantors expect to receive substantial direct and indirect benefits from the extensions of credit to the Borrower by the Lender pursuant to the Credit Agreement (which benefits are hereby acknowledged);

     WHEREAS, it is a condition precedent to the Lender’s making any loan or otherwise extending credit to the Borrower under the Credit Agreement that the Guarantors execute and deliver to the Lender a guaranty substantially in the form hereof; and

     WHEREAS, the Guarantors wish to guaranty the Borrower’s obligations to the Lender under or in respect of the Credit Agreement as provided herein.

     NOW, THEREFORE, each Guarantor hereby agrees with the Lender as follows:

     1. Definitions. The term “Obligations” and all other capitalized terms used herein without definition shall have the respective meanings provided therefor in the Credit Agreement.

     2. Guaranty of Payment and Performance. Each Guarantor hereby jointly and severally guarantees to the Lender the full and punctual payment when due (whether at stated maturity, by required pre-payment, by acceleration or otherwise), as well as the performance, of all of the Obligations including all such Obligations which would become due but for the operation of the automatic stay pursuant to §362(a) of the Federal Bankruptcy Code and the operation of §§502(b) and 506(b) of the Federal Bankruptcy Code. This Guaranty is an absolute, unconditional and continuing guaranty of the full and punctual payment and performance of all of the Obligations and not of their collectibility only and is in no way conditioned upon any requirement that the Lender first attempt to collect any of the Obligations from the Borrower or any other guarantor or resort to any collateral security, guarantee of the Obligations or other means of obtaining payment. Should the Borrower default in the payment or performance of any of the Obligations, the obligations of each Guarantor hereunder with respect to such Obligations in default shall become immediately due and payable to the Lender, without demand or notice of any nature, all of which are expressly waived by each Guarantor. Payments by the Guarantors hereunder may be required by the Lender on any number of occasions. All payments by the

Guarantors hereunder shall be made to the Lender, in the manner and at the place of payment specified therefor in the Credit Agreement.

     3. Guarantors’ Agreement to Pay Enforcement Costs, etc. Each Guarantor further agrees, as the principal obligor and not as a guarantor only, to pay to the Lender, on demand, all costs and expenses (including court costs, legal expenses and costs and expenses incurred during any workout, litigation, restructuring or negotiations in respect of the Obligations) incurred or expended by the Lender and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Lender) in connection with the Obligations, this Guaranty and the enforcement thereof, together with interest on amounts recoverable under this §3 from the time when such amounts become due until payment, whether before or after judgment, at the rate of interest for overdue principal set forth in the Credit Agreement, provided that if such interest exceeds the maximum amount permitted to be paid under applicable law, then such interest shall be reduced to such maximum permitted amount.

     4. Waivers by Guarantor; Lender’s Freedom to Act. Each Guarantor agrees that the Obligations will be paid and performed strictly in accordance with their respective terms, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Lender with respect thereto. Each Guarantor waives promptness, diligence, presentment, demand, protest, notice of acceptance, notice of any Obligations incurred and all other notices of any kind, all defenses which may be available by virtue of any valuation, stay, moratorium law or other similar law now or hereafter in effect, any right to require the marshalling of assets of the Borrower or any other entity or other person primarily or secondarily liable with respect to any of the Obligations, and all suretyship defenses generally. Without limiting the generality of the foregoing, each Guarantor agrees to the provisions of any instrument evidencing, securing or otherwise executed in connection with any Obligation and agrees that the obligations of such Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (i) the failure of the Lender to assert any claim or demand or to enforce any right or remedy against the Borrower or any other entity or other person primarily or secondarily liable with respect to any of the Obligations; (ii) any extensions, compromise, refinancing, consolidation or renewals of any Obligation; (iii) any change in the time, place or manner of payment of any of the Obligations or any rescissions, waivers, compromise, refinancing, consolidation, amendments or modifications of any of the terms or provisions of the Credit Agreement, the Notes, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any of the Obligations; (iv) the addition, substitution or release of any entity or other person primarily or secondarily liable for any Obligation, (v) the adequacy of any rights which the Lender may have against any collateral security or other means of obtaining repayment of any of the Obligations; (vi) the impairment of any collateral securing any of the Obligations, including without limitation the failure to perfect or preserve any rights which the Lender might have in such collateral security or the substitution, exchange, surrender, release, loss or destruction of any such collateral security; or (vii) any other act or omission which might in any manner or to any extent vary the risk of any Guarantor or otherwise operate as a release or discharge of such Guarantor, all of which may be done without notice to the Guarantors. To the fullest extent permitted by law, each Guarantor hereby expressly waives any and all rights or defenses arising by reason of (A) any “one action” or “anti-deficiency” law which would otherwise prevent the Lender from bringing any action, including any claim for a deficiency, or exercising any other right or remedy (including any right of set-off), against such Guarantor before or after the Lender’s commencement or completion of any foreclosure action, whether judicially, by exercise of power

of sale or otherwise, or (B) any other law which in any other way would otherwise require any election of remedies by the Lender. To the extent that it lawfully may, each Guarantor hereby agrees that it will not invoke any law (other than the applicable statute of limitations) which might cause delay in or impede the enforcement of the rights and remedies of the Lender under this Guaranty, and to the fullest extent it lawfully may, such Guarantor hereby irrevocably waives the benefits of all such laws. In addition, and notwithstanding anything to the contrary contained herein, the Lender shall have the right, at any time, to name any Guarantor as a party defendant in any foreclosure action(s) it or its assignee may commence to foreclose upon any and all collateral of the Borrower or any other guarantor which secures the Obligations.

     5. Unenforceability of Obligations Against Borrower or Other Guarantors. If for any reason the Borrower or any other guarantor has no legal existence or is under no legal obligation to discharge any of the Obligations, or if any of the Obligations have become irrecoverable from the Borrower or any other guarantor by reason of the Borrower’s or such other guarantor’s insolvency, bankruptcy or reorganization or by other operation of law or for any other reason, this Guaranty shall nevertheless be binding on each Guarantor, to the same extent as if such Guarantor at all times had been the principal obligor on all such Obligations. In the event that acceleration of the time for payment of any of the Obligations is stayed upon the insolvency, bankruptcy or reorganization of the Borrower, or for any other reason, all such amounts otherwise subject to acceleration under the terms of the Credit Agreement, the Notes, the other Loan Documents or any other agreement evidencing, securing or otherwise executed in connection with any Obligation shall be immediately due and payable by the Guarantor.

     6. Subrogation; Subordination.

     6.1. Waiver of Rights Against Borrower. Until the final payment and performance in full of all of the Obligations and any and all other obligations of the Borrower to the Lender or any affiliate of the Lender, no Guarantor shall exercise any rights against the Borrower or any other guarantor of the Obligations arising as a result of payment by any Guarantor hereunder (or any other guarantor), by way of subrogation, reimbursement, restitution, contribution or otherwise, and no Guarantor will prove any claim in competition with the Lender or such affiliate in respect of any payment hereunder in any bankruptcy, insolvency or reorganization case or proceedings of any nature; no Guarantor will claim any setoff, recoupment or counterclaim against the Borrower in respect of any liability of any Guarantor to the Borrower; and each Guarantor waives any benefit of and any right to participate in any collateral security which may be held by the Lender or such affiliate.

     6.2. Subordination to Lender. The payment of any amounts due with respect to any indebtedness of the Borrower or any other guarantor of the Obligations now or hereafter owed to the Guarantor is hereby subordinated to the prior payment in full of all of the Obligations and any and all other obligations of the Borrower or any other guarantor of the Obligations to the Lender or any affiliate of the Lender. Each Guarantor agrees that, after the occurrence of any default in the payment or performance of any of the Obligations, such Guarantor will not demand, sue for or otherwise attempt to collect any such indebtedness of the Borrower or any other guarantor of the Obligations to such Guarantor until all of the Obligations shall have been paid in full. If, notwithstanding the foregoing sentence, the Guarantor shall collect, enforce or receive any amounts in respect of such indebtedness, such amounts shall be collected, enforced and received by such

Guarantor as trustee for the Lender and be paid over to the Lender on account of the Obligations without affecting in any manner the liability of such Guarantor under the other provisions of this Guaranty.

     6.3. Subordination of Obligations. Each Guarantor covenants and agrees, and the Lender, by its acceptance of this Guaranty likewise covenants and agrees, that payment of the Obligations by any of the Guarantors arising under this Guaranty shall be subordinated to the Indebtedness of Subsidiaries permitted under Section 7.02(j) and Section 7.02(n) of the Credit Agreement, such subordination arrangements to be on terms and conditions reasonably satisfactory to the Lender.

     6.4. Provisions Supplemental. The provisions of this §6 shall be supplemental to and not in derogation of any rights and remedies of the Lender or any affiliate of the Lender under any separate subordination agreement which the Lender or such affiliate may at any time and from time to time enter into with any Guarantor.

     7. Security; Setoff. Each Guarantor grants to the Lender, as security for the full and punctual payment and performance of all of such Guarantor’s obligations hereunder, a continuing lien on and security interest in all securities or other property belonging to such Guarantor now or hereafter held by the Lender and in all deposits (general or special, time or demand, provisional or final) and other sums credited by or due from the Lender to such Guarantor or subject to withdrawal by such Guarantor. Regardless of the adequacy of any collateral security or other means of obtaining payment of any of the Obligations, the Lender is hereby authorized at any time and from time to time, without notice to such Guarantor (any such notice being expressly waived by such Guarantor) and to the fullest extent permitted by law, to set off and apply such deposits and other sums against the obligations of such Guarantor under this Guaranty, whether or not the Lender shall have made any demand under this Guaranty and although such obligations may be contingent or unmatured.

     8. Further Assurances. Each Guarantor agrees that it will from time to time, at the request of the Lender, provide to the Lender such Guarantor’s most recent audited and unaudited balance sheets and related statements of income and changes in financial condition and such other information relating to the business and affairs of such Guarantor as the Lender may reasonably request. Each Guarantor also agrees to do all such things and execute all such documents as the Lender may consider necessary or desirable to give full effect to this Guaranty and to perfect and preserve the rights and powers of the Lender hereunder. Each Guarantor acknowledges and confirms that such Guarantor itself has established its own adequate means of obtaining from the Borrower on a continuing basis all information desired by such Guarantor concerning the financial condition of the Borrower and that such Guarantor will look to the Borrower and not to the Lender in order for such Guarantor to keep adequately informed of changes in the Borrower’s financial condition.

     9. Termination; Reinstatement. Upon final payment and performance in full in cash of the Obligations (other than inchoate indemnification liabilities arising under the Loan Documents) and termination of all lending and other credit commitments of the Lender and its affiliates in respect thereof, this Guaranty shall terminate. Such termination shall not affect any rights of the Lender or of any affiliate of the Lender hereunder (including without limitation the rights set forth in §§4 and 6) with respect to any Obligations incurred or accrued prior to the receipt of such notice or any Obligations incurred or accrued pursuant to any contract or

commitment in existence prior to such receipt. Notwithstanding the foregoing, this Guaranty shall continue to be effective or be reinstated if at any time any payment made or value received with respect to any Obligation is rescinded or must otherwise be returned by the Lender upon the insolvency, bankruptcy or reorganization of the Borrower, or otherwise, all as though such payment had not been made or value received.

     10. Successors and Assigns. This Guaranty shall be binding upon each Guarantor, its successors and assigns, and shall inure to the benefit of and be enforceable by the Lender and its successors, transferees and assigns. Without limiting the generality of the foregoing sentence, the Lender may assign or otherwise transfer the Credit Agreement, the Notes, the other Loan Documents or any other agreement or note held by it evidencing, securing or otherwise executed in connection with the Obligations, or sell participations in any interest therein, to any other entity or other person, and such other entity or other person shall thereupon become vested, to the extent set forth in the agreement evidencing such assignment, transfer or participation, with all the rights in respect thereof granted to the Lender herein. No Guarantor may assign its rights hereunder.

     11. Amendments and Waivers. No amendment or waiver of any provision of this Guaranty nor consent to any departure by any Guarantor therefrom shall be effective unless the same shall be in writing and signed by the Lender. No failure on the part of the Lender to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

     12. Notices.

     12.1. Notices Generally. All notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopier as follows: if to any Guarantor, at the address or telecopier number set forth beneath its signature hereto, and if to the Lender, at the address for notices to the Lender set forth in Schedule 9.02 of the Credit Agreement.

     Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by telecopier shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next business day for the recipient).

     12.2. Change of Address. Each Guarantor and the Lender may change its address or telecopier number for notices and other communications hereunder by notice to the other parties hereto.

     12.3. Reliance by Lender. The Lender shall be entitled to rely and act upon any notices purportedly given by or on behalf of any Guarantor even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. Each Guarantor shall

indemnify the Lender and the Related Parties (as defined in the Credit Agreement) of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of such Guarantor.

     13. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

     14. Submission to Jurisdiction. EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH GUARANTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS GUARANTY OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AGAINST ANY GUARANTOR OR ANY OTHER LOAN PARTY (AS DEFINED IN THE CREDIT AGREEMENT) OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

     15. Waiver of Venue. EACH GUARANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN §14. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

     16. Service of Process. EACH GUARANTOR IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN §12. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF THE LENDER OR ANY GUARANTOR TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.

     17. Waiver of Jury Trial. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR

THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EXCEPT AS PROHIBITED BY LAW, EACH GUARANTOR HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH GUARANTOR (I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER OR SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS §17.

     18. Joint and Several Nature of Guaranty. Notwithstanding any term contained herein to the contrary, each of the obligations and liabilities of each of the Guarantors hereunder are expressly agreed to be joint and several.

     19. Contribution. To the extent any Guarantor makes a payment hereunder in excess of the aggregate amount of the benefit received by such Guarantor in respect of the extensions of credit under the Credit Agreement (the “Benefit Amount”), then such Guarantor, after the payment in full, in cash, of all of the Obligations, shall be entitled to recover from each other guarantor of the Obligations such excess payment, pro rata, in accordance with the ratio of the Benefit Amount received by each such other guarantor to the total Benefit Amount received by all guarantors of the Obligations, and the right to such recovery shall be deemed to be an asset and property of such Guarantor so funding; provided, that all such rights to recovery shall be subordinated and junior in right of payment to the final and undefeasible payment in full in cash of all of the Obligations.

     20. Miscellaneous. This Guaranty constitutes the entire agreement of each Guarantor with respect to the matters set forth herein. The rights and remedies herein provided are cumulative and not exclusive of any remedies provided by law or any other agreement, and this Guaranty shall be in addition to any other guaranty of or collateral security for any of the Obligations. The invalidity or unenforceability of any one or more sections of this Guaranty shall not affect the validity or enforceability of its remaining provisions. Captions are for the ease of reference only and shall not affect the meaning of the relevant provisions. The meanings of all defined terms used in this Guaranty shall be equally applicable to the singular and plural forms of the terms defined.

[Remainder of page intentionally left blank.]

     IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed and delivered as of the date first above written.

HARVEST (US) HOLDINGS, INC.
By:	/s/ Stephen C. Haynes
	Name:	Stephen C. Haynes
	Title:	Vice President and Chief Financial Officer
	Address:	1177 Enclave Parkway, Suite 300 Houston, TX 77077

HARVEST NATURAL RESOURCES, INC. (UK)
By:	/s/ Stephen C. Haynes
	Name:	Stephen C. Haynes
	Title:	Vice President and Chief Financial Officer
	Address:	First Floor, Talbot House 17 Church Street Rickmansworth Hertfordshire WD3 1DE United Kingdom

HARVEST OFFSHORE CHINA COMPANY
By:	/s/ Stephen C. Haynes
	Name:	Stephen C. Haynes
	Title:	Vice President and Chief Financial Officer
	Address:	1177 Enclave Parkway, Suite 300 Houston, TX 77077

EX-10.3

Exhibit 10.3

TERM NOTE

$60,000,000 October 28, 2010

     FOR VALUE RECEIVED, the undersigned HARVEST NATURAL RESOURCES, INC., a Delaware corporation (the “Borrower”), hereby promises to pay to the order of MSD ENERGY INVESTMENTS PRIVATE II, LLC (the “Lender”) at the Lender’s office at 645 Fifth Avenue, 21st Floor, New York, New York 10022:

     (a) prior to or on the Maturity Date the principal amount of Sixty Million and 00/100 Dollars ($60,000,000), evidencing the Loan made by the Lender to the Borrower pursuant to the Credit Agreement dated of even date herewith (as amended and in effect from time to time, the “Credit Agreement”), between the Borrower and the Lender;

     (b) the principal outstanding hereunder from time to time at the times provided in the Credit Agreement; and

     (c) interest from the date hereof on the principal amount from time to time outstanding to and including the maturity hereof at the rates and terms and in all cases in accordance with the terms of the Credit Agreement.

     This Term Note evidences borrowings under and has been issued by the Borrower in accordance with the terms of the Credit Agreement. The Lender and any holder hereof is entitled to the benefits of the Credit Agreement and the other Loan Documents, and may enforce the agreements of the Borrower contained therein, and any holder hereof may exercise the respective remedies provided for thereby or otherwise available in respect thereof, all in accordance with the respective terms thereof. All capitalized terms used in this Term Note and not otherwise defined herein shall have the same meanings herein as in the Credit Agreement.

     The Borrower irrevocably authorizes the Lender to make or cause to be made, at the time of receipt of any payment of principal of this Term Note, an appropriate notation on the grid attached to this Term Note, or the continuation of such grid, or any other similar record, including computer records, reflecting the receipt of such payment. The outstanding amount of the Loan set forth on the grid attached to this Term Note, or the continuation of such grid, or any other similar record, including computer records, maintained by the Lender with respect to the Loan shall be, absent manifest error, prima facie evidence of the principal amount of the Loan owing and unpaid to the Lender, but the failure to record, or any error in so recording, any such amount on any such grid, continuation or other record shall not limit or otherwise affect the obligation of the Borrower hereunder or under the Credit Agreement to make payments of principal of and interest on this Term Note when due.

     The Borrower has the right in certain circumstances and the obligation under certain other circumstances to prepay the whole or part of the principal of this Term Note on the terms and conditions specified in the Credit Agreement.

     If any one or more of the Events of Default shall occur, the entire unpaid principal amount of this Term Note and all of the unpaid interest accrued thereon may become or be declared due and payable in the manner and with the effect provided in the Credit Agreement.

     No delay or omission on the part of the Lender or any holder hereof in exercising any right hereunder shall operate as a waiver of such right or of any other rights of the Lender or such holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar or waiver of the same or any other right on any future occasion.

     The Borrower and every endorser and guarantor of this Term Note or the obligation represented hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Term Note, and assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of collateral and to the addition or release of any other party or person primarily or secondarily liable.

     THIS TERM NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL PURPOSES BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. THE BORROWER AGREES THAT, AS MORE FULLY SET FORTH IN § 9.12(b) OF THE CREDIT AGREEMENT, ANY ACTION OR PROCEEDING FOR THE ENFORCEMENT OF THIS TERM NOTE MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SCHEDULE 9.02 OF THE CREDIT AGREEMENT. THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT AS MORE FULLY SET FORTH IN § 9.12(c) OF THE CREDIT AGREEMENT.

     THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS TERM NOTE OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). THE BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDER OR ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDER OR SUCH

-2-

OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS TERM NOTE AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.

[Remainder of page intentionally left blank. Signature page follows.]

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     IN WITNESS WHEREOF, the undersigned has caused this Term Note to be signed by its duly authorized officer as of the day and year first above written.

HARVEST NATURAL RESOURCES, INC.
By:	/s/ James A. Edmiston
	Name:	James A. Edmiston
	Title:	President and Chief Executive Officer

[Signature Page to Term Note]

	Amount of	Balance of
	Principal Paid	Principal	Notation
Date	or Prepaid	Unpaid	Made By:

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

HARVEST NATURAL RESOURCES ANNOUNCES
CLOSING OF A $60.0 MILLION TERM LOAN FACILITY

HOUSTON, October 29, 2010, Harvest Natural Resources, Inc. (NYSE: HNR) today announced the closing of a $60.0 million term loan facility with MSD Energy Investments Private II, LLC, an affiliate of MSD Capital, L.P., as the sole Lender under the term loan facility. The net proceeds of the term loan facility to Harvest are approximately $59.5 million, after deducting fees related to the transaction. Harvest intends to use the net proceeds of the term loan facility to fund capital expenditures and for working capital needs and general corporate purposes.

The term loan facility will be a general unsecured obligation, ranking equally with all of Harvest’s other unsecured senior indebtedness and senior in right of payment to any of its subordinated indebtedness, if any. Under the terms of the term loan facility, Harvest will pay interest on a monthly basis and the term loan facility will mature on October 28, 2012. The initial rate of interest under the term loan facility will be 10%, which increases to 15% on July 28, 2011, the Bridge Date. Harvest shall have the option to extend the Bridge Date for three months by paying a fee to the Lender in the amount of 5% of the initial principal amount of the term loan facility. MSD Energy Investments, L.P., an affiliate of MSD Capital, L.P., is currently a shareholder and a convertible note holder of Harvest.

Additionally, at closing, the Lender received:

• 1,200,000 warrants exercisable at any time on or after the closing date for a period of five years from the closing date on a cashless exercise basis at $15 per share until the Bridge Date, at which time the exercise price per share will equal the lower of $15.00 or 120% of the average closing bid price of Harvest’s common stock for the 20 trading days immediately preceding the Bridge Date.

• 400,000 warrants exercisable at any time on or after the closing date for a period of five years from the closing date on a cashless exercise basis at $20 per share until the Bridge Date, at which time the exercise price per share will equal the lower of $15.00 or 120% of the average closing bid price of Harvest’s common stock for the 20 trading days immediately preceding the Bridge Date.

• 4,400,000 warrants exercisable at any time on or after the Bridge Date for a period of five years from the Bridge Date on a cashless exercise basis at the lower of $15 per share or 120% of the average of the closing price for the twenty trading days preceding the Bridge Date. These warrants may be redeemed by Harvest for $0.01 per share at any time prior to the Bridge Date in conjunction with Harvest’s repayment of the loan prior to the Bridge Date.

Harvest President and Chief Executive Officer, James A. Edmiston, said: “The proceeds from this term loan facility provides us with substantial liquidity to maintain the uninterrupted funding of our business plan during our previously announced exploration of strategic alternatives to enhance shareholder value,

1177 Enclave Parkway, Suite 300 • Houston, Texas 77077 • ph: 281.899.5700 fax: 281.899.5702

which we are currently conducting with the assistance of BofA Merrill Lynch. Our objectives for this funding, in addition to the injection of liquidity during this process, were to minimize dilution given our belief that our stock price continues to be undervalued relative to its asset values and to maintain unencumbered operational flexibility in order to execute our ongoing business. I believe this agreement meets those objectives.”

About Harvest Natural Resources

Harvest Natural Resources, Inc., headquartered in Houston, Texas, is an independent energy company with principal operations in Venezuela, producing and exploration assets in the United States, exploration assets in Indonesia, West Africa, China and Oman and business development offices in Singapore and the United Kingdom. For more information visit the Company’s website at www.harvestnr.com.

CONTACT:
Stephen C. Haynes
Vice President, Chief Financial Officer
(281) 899-5716

“This press release may contain projections and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. They include estimates and timing of expected oil and gas production, oil and gas reserve projections of future oil pricing, future expenses, planned capital expenditures, anticipated cash flow and our business strategy. All statements other than statements of historical facts may constitute forward-looking statements. Although Harvest believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Actual results may differ materially from Harvest’s expectations as a result of factors discussed in Harvest’s 2009 Annual Report on Form 10-K and other public filings.”

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