10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended June 30, 2007 or

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

for the transition period from                      to                     

Commission File No. 1-10762

Harvest Natural Resources, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	77-0196707
(State or Other Jurisdiction of Incorporation or Organization)	(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, former address and former fiscal year, if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o       Accelerated Filer þ      Non-Accelerated Filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

     At July 19, 2007, 37,737,230 shares of the registrant’s common stock were outstanding.

HARVEST NATURAL RESOURCES, INC.

FORM 10-Q

TABLE OF CONTENTS

			Page
PART I FINANCIAL INFORMATION
	Item 1.	FINANCIAL STATEMENTS
		Unaudited Consolidated Balance Sheets at June 30, 2007 and December 31, 2006		3
		Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2007 and 2006		4
		Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2007 and 2006		5
		Notes to Consolidated Financial Statements		6
	Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		14
	Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		18
	Item 4.	CONTROLS AND PROCEDURES		18
PART II OTHER INFORMATION
	Item 1.	LEGAL PROCEEDINGS		20
	Item 1A.	RISK FACTORS		20
	Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		21
	Item 3.	DEFAULTS UPON SENIOR SECURITIES		21
	Item 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		21
	Item 5.	OTHER INFORMATION		21
	Item 6.	EXHIBITS		21
Signatures				23
Employment Agreement - Keith L. Head
Stock Option Agreement - Keith L. Head
Employee Restricted Stock - Keith L. Head
Separation Agreement - Kerry R. Brittain
Consulting Agreement - Kerry R. Brittain
Certification of the Principal Executive Officer Pursuant to Section 302
Certification of the Principal Financial Officer Pursuant to Section 302
Certification of the Principal Executive Officer Pursuant to Section 906
Certification of the Principal Financial Officer Pursuant to Section 906

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30,			December 31,
	2007			2006
	(in thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	135,705		$	148,079
Restricted cash		24,197			15,888
Accounts and notes receivable:
Joint interest and other, net		9,482			9,811
Advances to provisional equity affiliate		15,366			19,146
Deferred income tax		5,608			5,608
Prepaid expenses and other		1,084			1,246
TOTAL CURRENT ASSETS		191,442			199,778
RESTRICTED CASH		51,097			73,001
OTHER ASSETS		181			176
INVESTMENT IN EQUITY AFFILIATE		4,415			—
INVESTMENT IN PROVISIONAL EQUITY AFFILIATE		146,436			146,436
PROPERTY AND EQUIPMENT:
Oil and gas properties (full cost method – costs of $2,900 excluded from amortization in 2007 and 2006, respectively)		2,900			2,900
Other administrative property		1,412			1,375
		4,312			4,275
Accumulated depletion, depreciation and amortization		(1,003	)		(955	)
		3,309			3,320
	$	396,880		$	422,711
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable, trade and other	$	3,473		$	3,827
Accounts payable, related party		9,867			9,637
Accrued expenses		8,557			12,975
Accrued interest		6,537			6,850
Deferred revenue		11,217			11,217
Income taxes payable		73			34
Current portion of long-term debt		47,442			37,674
TOTAL CURRENT LIABILITIES		87,166			82,214
LONG-TERM DEBT		47,907			66,977
COMMITMENTS AND CONTINGENCIES		—			—
MINORITY INTEREST		27,261			28,634
STOCKHOLDERS’ EQUITY:
Preferred stock, par value $0.01 a share; authorized 5,000 shares; outstanding, none					—
Common stock, par value $0.01 a share; authorized 80,000 shares; issued 38,143 shares at June 30, 2007 and 37,974 shares at December 31, 2006		381			380
Additional paid-in capital		197,043			194,176
Retained earnings		40,771			54,174
Treasury stock, at cost, 759 shares at June 30, 2007 and 770 shares at December 31, 2006		(3,649	)		(3,844	)
TOTAL STOCKHOLDERS’ EQUITY		234,546			244,886
	$	396,880		$	422,711

See accompanying notes to consolidated financial statements.

3

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
	(in thousands, except per share data)
REVENUES
Oil sales	$	—		$	327		$	—		$	54,858
Gas sales		—			7			—			4,648
		—			334			—			59,506
EXPENSES
Operating expenses		—			672			—			9,241
Depletion, depreciation and amortization		17			70			298			10,376
General and administrative		7,596			6,876			14,029			13,745
Taxes other than on income		185			178			422			2,577
		7,798			7,796			14,749			35,939
INCOME (LOSS) FROM OPERATIONS		(7,798	)		(7,462	)		(14,749	)		23,567
OTHER NON-OPERATING INCOME (EXPENSE)
Investment earnings and other		2,847			2,320			5,234			4,381
Interest expense		(2,466	)		(15,735	)		(4,947	)		(15,854	)
Net gain (loss) on exchange rates		(28	)		(4	)		28			(6	)
		353			(13,419	)		315			(11,479	)
INCOME (LOSS) FROM CONSOLIDATED COMPANIES BEFORE INCOME TAXES AND MINORITY INTERESTS		(7,445	)		(20,881	)		(14,434	)		12,088
INCOME TAX EXPENSE		52			40,810			166			55,572
LOSS BEFORE MINORITY INTERESTS		(7,497	)		(61,691	)		(14,600	)		(43,484	)
MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY COMPANIES		(736	)		(11,409	)		(1,373	)		(7,070	)
NET LOSS FROM CONSOLIDATED COMPANIES		(6,761	)		(50,282	)		(13,227	)		(36,414	)
NET LOSS FROM UNCONSOLIDATED EQUITY AFFILIATE		(137	)		—			(176	)		—
NET LOSS	$	(6,898	)	$	(50,282	)	$	(13,403	)	$	(36,414	)
NET LOSS PER COMMON SHARE:
Basic	$	(0.18	)	$	(1.35	)	$	(0.36	)	$	(0.98	)
Diluted	$	(0.18	)	$	(1.35	)	$	(0.36	)	$	(0.98	)

See accompanying notes to consolidated financial statements.

4

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2007			2006
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(13,403	)	$	(36,414	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depletion, depreciation and amortization		298			10,376
Net loss from unconsolidated equity affiliate		176			—
Non-cash compensation-related charges		2,898			2,524
Minority interest in consolidated subsidiary companies		(1,373	)		(7,070	)
Deferred income tax		—			(2,557	)
Changes in operating assets and liabilities:
Accounts and notes receivable		329			58,860
Advances to provisional equity affiliate		3,780			(9,186	)
Prepaid expenses and other		162			705
Accounts payable		(354	)		3,044
Accounts payable, related party		230			233
Accrued expenses		(4,504	)		(9,270	)
Accrued interest		(313	)		15,628
Deferred revenue		—			4,489
Asset retirement liability		—			24
Income taxes payable		39			35,628
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(12,035	)		67,014
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property and equipment		(287	)		(1,473	)
Investment in equity affiliate		(4,591	)		—
Investments in provisional equity affiliate		—			(347	)
Decrease in restricted cash		13,595			—
Investment costs		(5	)		539
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		8,712			(1,281	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuances of common stock		251			849
Payments of notes payable		(9,302	)		(2,884	)
NET CASH USED IN FINANCING ACTIVITIES		(9,051	)		(2,035	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(12,374	)		63,698
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		148,079			163,019
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	135,705		$	226,717

Supplemental Schedule of Noncash Investing and Financing Activities:

     During the six months ended June 30, 2007, we issued 0.3 million shares of restricted stock valued at $2.6 million. Also during the six months ended June 30, 2007, most of our employees elected to pay withholding tax on a 2004 restricted stock grant on a cashless basis which resulted in 8,793 shares being added to treasury stock at cost. In addition, 20,000 shares held in treasury were reissued as restricted stock.

See accompanying notes to consolidated financial statements.

5

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three and Six Months Ended June 30, 2007 and 2006 (unaudited)

Note 1 — Organization and Summary of Significant Accounting Policies

Interim Reporting

     In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position as of June 30, 2007, and the results of operations and cash flows for the three and six months ended June 30, 2007 and 2006. The unaudited consolidated financial statements are presented in accordance with the requirements of Form 10-Q and do not include all disclosures normally required by accounting principles generally accepted in the United States of America (“GAAP”). Reference should be made to our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended 2006, which include certain definitions and a summary of significant accounting policies and should be read in conjunction with this Quarterly Report on Form 10-Q.

Organization

     Harvest Natural Resources, Inc. is engaged in the exploration, development, production and management of oil and natural gas properties. We conduct our business principally in Venezuela through our subsidiary Harvest Vinccler, S.C.A. (“Harvest Vinccler”) in which we indirectly own an 80-percent interest. Effective April 1, 2006, our activities under our Operating Service Agreement (“OSA”) are reflected under the equity method of accounting. Since such activities are subject to the completion of the conversion of the OSA to Petrodelta S. A. (“Petrodelta”), we have not recorded any net earnings from such activities since April 1, 2006, including the three and six months ended June 30, 2007.

     On March 31, 2006, Harvest Vinccler signed a Memorandum of Understanding (the “MOU”) with two affiliates of PDVSA, Corporación Venezolana del Petroleo S.A. (“CVP”) and PDVSA Petroleo S.A. (“PPSA”), to convert the OSA into a minority interest in Petrodelta. On June 18, 2007, we announced that the Venezuela National Assembly approved the formation of Petrodelta and the direct award of the Isleño, El Salto and Temblador fields (the “New Fields”) to Petrodelta. Venezuela National Assembly approval clears the way for Harvest Vinccler, HNR Finance B.V. and CVP to execute the Contract of Conversion (the “Conversion Contract”). Upon execution of the Conversion Contract, Petrodelta will be formed. Upon receipt of the transfer decree formally transferring to Petrodelta the rights to the Uracoa, Tucupita and Bombal fields (“SMU fields”) and the New Fields and subject to the conditions of the Conversion Contract, the OSA will be cancelled, Harvest Vinccler will transfer substantially all of its tangible assets and contracts, permits and rights related to the SMU fields in Venezuela to Petrodelta. Petrodelta will engage in the exploration, production, gathering, transportation and storage of hydrocarbons from the SMU fields, as well as the New Fields awarded to Petrodelta by the Venezuela National Assembly. Upon completion of conversion, HNR Finance B.V. will have a 40 percent ownership interest in Petrodelta. As we indirectly own 80 percent of HNR Finance B.V., we will indirectly own a net 32 percent interest in Petrodelta and our partner, Oil & Gas Technology Consultants (Netherlands) Coöperatie U.A., a controlled affiliate of Venezolana de Inversiones y Construcciones Clerico, C.A. (“Vinccler”), will indirectly own a net eight percent interest. CVP will own the remaining 60 percent. At our request, CVP has added HNR Finance B.V. as a party to the Conversion Contract. Petrodelta will be governed by its own Charter and By-Laws.

Principles of Consolidation

     The consolidated financial statements include the accounts of all wholly-owned and majority-owned subsidiaries. The equity method of accounting is used for companies in which we have significant influence. All intercompany profits, transactions and balances have been eliminated.

Reporting and Functional Currency

     The U.S. Dollar is our functional and reporting currency.

6

Revenue Recognition

     Oil and natural gas revenue is accrued monthly based on production and delivery. Until March 31, 2006, each quarter, Harvest Vinccler invoiced PDVSA Petroleo S.A., an affiliate of Petroleos de Venezuela S.A. (“PDVSA”), based on barrels of oil accepted by PDVSA during the quarter, using quarterly adjusted U.S. Dollar contract service fees per barrel. The related OSA with PDVSA provided for Harvest Vinccler to receive an operating fee for each barrel of crude oil delivered and the right to receive a capital recovery fee for certain of its capital expenditures, provided that such operating fee and capital recovery fee could not exceed the maximum total fee per barrel set forth in the agreement. In August 2005, Harvest Vinccler and PDVSA executed a Transitory Agreement (the “Transitory Agreement”) which provided that the maximum total fee per barrel paid under the OSA could not exceed 66.67 percent of the total value of the crude oil as determined under an Annex to the Transitory Agreement. This limitation was applied retroactively to January 1, 2005 and approximates 47 percent of West Texas Intermediate (“WTI”). The operating fee was subject to quarterly adjustments to reflect changes in the special energy index of the U.S. Consumer Price Index. Until March 31, 2006, each quarter, Harvest Vinccler also invoiced PDVSA for natural gas sales based on a fixed price of $1.03 per Mcf. In addition, Harvest Vinccler agreed to sell to PDVSA 4.5 million barrels of oil stipulated as additional volumes resulting from the natural gas production (“Incremental Crude Oil”). A portion of the Incremental Crude Oil was invoiced to PDVSA quarterly at a fixed price of $7.00 per Bbl. The invoices were prepared and submitted to PDVSA by the end of the first month following the end of each calendar quarter, and payment was due from PDVSA by the end of the second month following the end of each calendar quarter. Harvest Vinccler has recorded deferred revenue of $11.2 million for 2005 and first quarter 2006 deliveries pending clarification on the calculation of crude prices under the Transitory Agreement.

     As of June 30, 2007, the conversion to Petrodelta had not yet been completed pending the execution of the Conversion Contract, formation of Petrodelta and receipt of the transfer decree. In April 2006, the Venezuelan National Assembly passed legislation unilaterally terminating all operating service agreements and directing the government to take over the operations carried out by the private companies without prejudice to the incorporation of mixed companies for that purpose. This action, coupled with the unfinished conversion to Petrodelta, left Harvest Vinccler without a contractual means recognized by the government of Venezuela to address revenues or costs and expenses since March 31, 2006. As a result of this situation, our consolidated financial statements prepared in accordance with GAAP for the three and six months ended June 30, 2007 do not reflect the net results of our producing operations in Venezuela. We will not be able to include the results of our Venezuelan operations in our consolidated financial statements until the conversion to Petrodelta is completed or there is a contractual means recognized by the government of Venezuela to address revenues, costs and expenses. Although the MOU provides that there will be an adjustment between the parties to obtain the same economic result as if the conversion had been completed on April 1, 2006, this adjustment will not occur until the conversion is completed. Harvest Vinccler continues in the day-to-day operations of its properties in Venezuela and continues to incur expenses in doing so. The equity method of accounting will be followed for Petrodelta to reflect our net 32 percent interest. At June 30, 2007, Harvest Vinccler had advances to fund operations outstanding to PDVSA of $15.4 million.

Cash and Cash Equivalents

     Cash equivalents include money market funds and short term certificates of deposit with original maturity dates of less than three months. At June 30, 2007, Harvest Vinccler had 20.4 billion Venezuela Bolivars (“Bolivars”) which are shown in the June 30, 2007 financial statements as $9.5 million in cash and cash equivalents.

Restricted Cash

     Restricted cash represents cash and cash equivalents held in U.S. banks used as collateral for Harvest Vinccler’s line of credit and loan agreements, and is classified as current or non-current based on the terms of the agreements. See Note 2 – Long-Term Debt.

7

Minority Interests

     We record a minority interest attributable to the minority shareholder of our Venezuela and Barbados subsidiaries. The minority interest in net income and losses is subtracted or added to arrive at consolidated net income.

Earnings Per Share

     Basic earnings per common share (“EPS”) are computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. The weighted average number of common shares outstanding for computing basic EPS was 37.6 million and 37.5 million for the three and six months ended 2007, respectively, and 37.2 million and 37.1 million for the three and six months ended 2006, respectively. Diluted EPS reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. The weighted average number of common shares outstanding for computing diluted EPS, including dilutive stock options, was 37.6 million and 37.5 million for the three and six months ended 2007, respectively, and 37.2 million and 37.1 million for the three and six months ended 2006, respectively.

     An aggregate of 1.7 million options to purchase common stock were excluded from the earnings per share calculations because their exercise price exceeded the average price for the three and six months ended 2007, respectively. An aggregate of 0.9 million and 1.5 million options to purchase common stock were excluded from the earnings per share calculations because their exercise price exceeded the average price for the three and six months ended 2006.

Stock-Based Compensation

     At June 30, 2007, we had several stock-based employee compensation plans, which are more fully described in Note 5 in our Annual Report on Form 10-K for the year ended 2006. Prior to 2003, we accounted for those plans under the recognition and measurement provisions of Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. Effective January 1, 2003, we adopted the fair value recognition provisions of Statement of Financial Accounting Standard (“SFAS”) No. 123 (“SFAS 123”), Accounting for Stock-Based Compensation as amended by SFAS No. 148 (“SFAS 148”), prospectively to all employee awards granted, modified, or settled after January 1, 2003. Effective January 1, 2005, we adopted SFAS 123 (revised 2004) Share-Based Payment (“SFAS 123R”) to all employee awards granted, modified, or settled after October 1, 2005. Awards under our plans vest in periodic installments after one year of their grant and expire seven to ten years from the grant date. Therefore, the cost related to stock-based employee compensation included in the determination of net income in the three and six months ended June 30, 2006 is less than that which would have been recognized if the fair value based method had been applied to all awards since the original effective date of SFAS 123. The following table illustrates the effect on net income and earnings per share if the fair value based method had been applied to all outstanding and unvested awards in each period.

8

	Three Months Ended			Six Months Ended
	June 30,			June 30,
	2006			2006
	(in thousands, except per share data)
Net loss, as reported	$	(50,282	)	$	(36,414	)
Add: Stock based employee compensation cost, net of tax		1,025			1,894
Less: Total stock-based employee compensation cost determined under fair value based method, net of tax		(1,028	)		(1,928	)
Net loss – proforma	$	(50,285	)	$	(36,448	)
Loss per share:
Basic — as reported	$	(1.35	)	$	(0.98	)
Basic — proforma	$	(1.35	)	$	(0.98	)
Diluted — as reported	$	(1.35	)	$	(0.98	)
Diluted — proforma	$	(1.35	)	$	(0.98	)

     Stock options of 0.1 million were exercised in the six months ended June 30, 2007 and 2006, respectively, resulting in cash proceeds of $0.3 million and $0.9 million, respectively.

Note 2 — Long-Term Debt

Long-Term Debt

     Long-term debt consists of the following:

	June 30,		December 31,
	2007		2006
	(in thousands)
Note payable with interest at 10.0%	$	39,535	$	39,535
Note payable with interest at 10.0%		9,302		9,302
Note payable with interest at 10.0%		46,512		55,814
		95,349		104,651
Less current portion		47,442		37,674
	$	47,907	$	66,977

     On September 27, 2006, Harvest Vinccler entered into a three-year term loan with a Venezuelan bank for 105 billion Bolivars (approximately $48.8 million). The first principal payment is due 360 days after the funding date in the amount of 21 billion Bolivars (approximately $9.8 million), and 21 billion Bolivars (approximately $9.8 million) every 180 days thereafter. A payment in the amount of 20 billion Bolivars (approximately $9.3 million) was made on December 18, 2006. The interest rate for the first year is fixed at 10.0 percent and will be renegotiated for the second year subject to a maximum of 95 percent of the average interest rate charged by six major Venezuelan banks. This loan is collateralized by a $32.3 million deposit plus interest in a U.S. bank. The loan was used to meet income tax assessments and related interest of the SENIAT, the Venezuelan income tax authority.

     On October 3, 2006, Harvest Vinccler entered into a term loan with a Venezuelan bank for 20 billion Bolivars (approximately $9.3 million). The original loan matured on April 2, 2007. At maturity, Harvest Vinccler and the Venezuelan bank agreed to extend the loan for an additional 180 days subject to the same terms and conditions. The extended loan matures September 28, 2007 at a fixed interest rate of 10.0 percent. The loan was used to meet the SENIAT income tax assessments and related interest. This loan is collateralized by a $7.7 million deposit plus interest in a U.S. bank.

9

     On November 20, 2006, Harvest Vinccler entered into a three-year term loan with a Venezuelan bank for 120 billion Bolivars (approximately $55.8 million). The first principal payment was due 180 days after the funding date in the amount of 20 billion Bolivars (approximately $9.3 million), and 20 billion Bolivars (approximately $9.3 million) every 180 days thereafter. The interest rate for the first 180 days is fixed at 10.0 percent and may be adjusted from time to time thereafter within the limits set forth by the Central Bank of Venezuela or in accordance with the conditions in the financial market. The interest rate has not been adjusted. The loan is collateralized by a $33.7 million deposit plus interest in a U.S. bank. The loan was used to meet the SENIAT income tax assessments and related interest, refinance a portion of the 105 billion Bolivar loan and to fund operating requirements.

Note 3 — Commitments and Contingencies

     Excel Enterprises L.L.C. vs. Benton Oil & Gas Company, now known as Harvest Natural Resources, Inc., Chemex, Inc., Harvest Vinccler, C.A., Gale Campbell and Sheila Campbell in the District Court for Harris County, Texas. This suit was brought in May 2003 by Excel alleging, among other things, breach of a consulting agreement between Excel and us, misappropriation of proprietary information and trade secrets, and fraud. Excel seeks actual and exemplary damages, injunctive relief and attorneys’ fees. In October 2003, the Court abated the suit pending final judgment of a case pending in Louisiana to which we are not a party. In April 2007, the Court lifted the abatement and recently set the case for trial. We dispute Excel’s claims and plan to vigorously defend against them. We are unable to estimate the amount or range of any possible loss.

     Uracoa Municipality Tax Assessments. Harvest Vinccler has received nine assessments from a tax inspector for the Uracoa municipality in which part of the SMU fields are located as follows:

• Three claims were filed in July 2004 and allege a failure to withhold for technical service payments and a failure to pay taxes on the capital fee reimbursement and related interest paid by PDVSA under the Operating Services Agreement. Harvest Vinccler has filed a motion to enjoin and dismiss one of the claims with the Tax Court in Barcelona, Venezuela and has protested the remaining claims with the municipality.

• Two claims were filed in July 2006 alleging the failure to pay taxes at a new rate set by the Municipality. Harvest Vinccler has filed a protest on these claims with the Tax Court in Barcelona.

• Two claims were filed in August 2006 alleging a failure to pay taxes on estimated revenues for the second quarter of 2006 and a withholding error with respect to certain vendor payments. Harvest Vinccler has filed a protest on one claim with the Tax Court in Barcelona and filed a protest on the other claim with the municipality.

• Two claims were filed in March 2007 alleging a failure to pay taxes on estimated revenues for the third and fourth quarters of 2006. Harvest Vinccler has filed a protest on these claims with the municipality.

Harvest Vinccler disputes the Uracoa tax assessments and believes it has a substantial basis for its positions. Harvest Vinccler is unable to estimate the amount or range of any possible loss. As a result of the SENIAT’s interpretation of the tax code as it applies to operating service agreements, Harvest Vinccler has filed claims against the Uracoa Municipality in the Tax Court in Caracas for the refund of all municipal taxes paid since 1997.

     Libertador Municipality Tax Assessments. Harvest Vinccler has received five assessments from a tax inspector for the Libertador municipality in which part of the SMU fields are located as follows:

• One claim was filed in April 2005 alleging the failure to pay taxes at a new rate set by the Municipality. Harvest Vinccler has filed a motion to enjoin and dismiss the claim with the Tax Court in Barcelona, Venezuela.

• Two claims were filed in July 2004. One claim relates to the period 2003 through 2006 and seeks to impose a tax on interest paid by PDVSA under the Operating Services Agreement. The second claim alleges a failure to pay taxes on estimated revenues for the third and fourth quarters of 2006. Harvest

10

	Vinccler has filed a motion to enjoin and dismiss the claims with the Tax Court in Barcelona, Venezuela.
•	Two claims were filed in July 2007 seeking to impose penalties on tax assessments filed and settled in 2004. Harvest Vinccler has filed a motion to enjoin and dismiss the claims with the Tax Court in Barcelona.

Harvest Vinccler disputes the Libertador allegations set forth in the assessments and believes it has a substantial basis for its position. Harvest Vinccler is unable to estimate the amount or range of any possible loss. As a result of the SENIAT’s interpretation of the tax code as it applies to operating service agreements, Harvest Vinccler has filed claims against the Libertador Municipality in the Tax Court in Caracas for the refund of all municipal taxes paid since 2002

     In June 2007, the SENIAT issued an assessment in the amount of $0.4 million for Harvest Vinccler’s failure to withhold value added tax (“VAT”) from vendors during 2005. The SENIAT has recognized a payment made by Harvest Vinccler in 2006 for the under withheld VAT and has partially confirmed that some of the affected vendors have remitted the under withheld VAT. Harvest Vinccler has received credit, less penalties and interest, from the SENIAT for the VAT remitted by the vendors. Harvest Vinccler has filed claims against the SENIAT for the portion of VAT not recognized by the SENIAT and believes it has a substantial basis for its position.

     International Arbitration. As a result of the actions taken by PDVSA, the Ministry of Energy and Petroleum (“MEP”) and the SENIAT, in July 2005, we delivered formal notices to Venezuelan government officials of an investment dispute under Venezuelan law and bilateral investment treaties entered into by the government of Venezuela. The bilateral investment treaties and Venezuelan law provide for international arbitration of investment disputes conducted through the International Centre for Settlement of Investment Disputes of the World Bank.

     We are a defendant in or otherwise involved in other litigation incidental to our business. In the opinion of management, there is no such litigation which will have a material adverse impact on our financial condition, results of operations and cash flows.

Note 4 — Taxes

Taxes Other Than on Income

     Harvest Vinccler paid municipal taxes on operating fee revenues it received under the OSA for oil deliveries from the SMU fields. The components of taxes other than on income were (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006
Venezuelan Municipal Taxes	$	—	$	19	$	—	$	2,162
Franchise Taxes		37		38		90		76
Payroll and Other Taxes		148		121		332		339
	$	185	$	178	$	422	$	2,577

Note 5 — Operating Segments

     We regularly allocate resources to, and assess the performance of, our operations by segments that are organized by unique geographic and operating characteristics. The segments are organized in order to manage regional business, currency and tax related risks and opportunities. As a result of the situation in Venezuela, our GAAP consolidated financial statements for the three and six months ended June 30, 2007, do not reflect the net results of our producing operations in Venezuela. See Note 6 – Venezuela. Revenue from Venezuela is derived primarily from the delivery and sale of oil and natural gas. Operations included under the heading “United States and Other” include corporate management, cash management, business development and financing activities performed in the United States and other countries which do not meet the requirements for separate disclosure. All intersegment revenues, other income and equity earnings, expenses and receivables are eliminated in order to

11

reconcile to consolidated totals. Corporate general and administrative and interest expenses are included in the United States and Other segment and are not allocated to other operating segments:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006
	(in thousands)
Segment Revenues
Oil and gas sales:
Venezuela oil and gas sales	$	—		$	334		$	—		$	59,506
Segment Income (Loss)
Venezuela	$	(2,960	)	$	(45,638	)	$	(5,490	)	$	(28,282	)
United States and other		(3,938	)		(4,644	)		(7,913	)		(8,132	)
Net loss	$	(6,898	)	$	(50,282	)	$	(13,403	)	$	(36,414	)

	June 30,			December 31,
	2007			2006
	(in thousands)
Operating Segment Assets
Venezuela	$	264,147		$	306,289
United States and other		152,414			155,973
		416,561			462,262
Intersegment eliminations		(19,681	)		(39,551	)
	$	396,880		$	422,711

Note 6 — Venezuela

     Currently, our only producing assets are in Venezuela. Since 1992, Harvest Vinccler has been providing operating services to PDVSA for the SMU fields under the OSA. However, beginning in 2005, the government of Venezuela initiated a series of actions to compel companies with operating service agreements to convert those agreements into new companies in which PDVSA would have a majority interest. On March 31, 2006, Harvest Vinccler signed a MOU with two affiliates of PDVSA, CVP and PPSA, to convert the OSA into a minority interest in Petrodelta. The MOU is subject to certain conditions, including execution of the Conversion Contract and Venezuelan government approvals. On August 16, 2006, the MOU was amended to provide for the addition of the New Fields to Petrodelta as additional consideration for our conversion of the OSA to Petrodelta. On December 18, 2006, at a Special Meeting of the Stockholders of Harvest Natural Resources, Inc., the transactions contemplated by the MOU were approved. On June 18, 2007, we announced that the Venezuela National Assembly approved the formation of Petrodelta and the direct award of the New Fields to Petrodelta. We await the execution of the Conversion Contract, formation of Petrodelta and receipt of the transfer decree, all of which are necessary to complete the conversion. Based on our ongoing discussions with Venezuelan officials and the recent action by the Venezuela National Assembly, we believe the conversion will be completed, but we cannot provide assurance when or if it will occur.

     In April 2006, the Venezuela National Assembly passed legislation terminating all operating service agreements and directing the government to take over the operations carried out by the private companies without prejudice to the incorporation of mixed companies for that purpose. This action, coupled with the unfinished conversion to Petrodelta, has left Harvest Vinccler without a contractual means recognized by the government of Venezuela to address revenues or costs and expenses since March 31, 2006. As a result of this situation, our consolidated financial statements prepared in accordance with GAAP for the year ended December 31, 2006 and the three and six months ended June 30, 2007, do not reflect the net results of our producing operations in Venezuela. We will not be able to include the results of our Venezuelan operations in our consolidated financial statements until the conversion to Petrodelta is completed or there is a contractual means recognized by the government of Venezuela to address revenues, costs and expenses. Although the MOU provides that upon completion of the conversion, there will be an adjustment between the parties to obtain the same economic result as if the conversion had been completed on April 1, 2006, this adjustment will not occur until the conversion is completed.

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     Since signing the MOU, CVP has designated Petrodelta’s board members, a General Manager and President, each of whom influence Harvest Vinccler’s operations and staffing. Harvest Vinccler continues in the day-to-day operations of its properties in Venezuela, and since April 1, 2006, it has accrued cash advances of $58.0 million to fund operations. At the request of PDVSA, Harvest Vinccler invoiced PDVSA for these costs and as of July 12, 2007, $42.6 million, representing April 2006 through February 2007 advances, have been reimbursed.

Note 7 — Domestic Operations

     In January 2007, we purchased a 45 percent interest in Fusion Geophysical, L.L.C. (“Fusion”) for $4.6 million. Fusion is a technical firm specializing in the areas of geophysics, geosciences and reservoir engineering. Our minority equity investment in Fusion is accounted for using the equity method of accounting. Operating Revenue and Total Assets represent 100 percent of Fusion. No dividends were paid during the period. Summarized financial information for Fusion follows:

	Three Months Ended			Six Months Ended
	June 30,			June 30,
	2007			2007
	(in thousands)
Operating Revenues	$	1,478		$	3,051
Net Income	$	71		$	338
Equity interest in unconsolidated equity affiliate		45	%		45	%
Net income from unconsolidated equity affiliate		32			152
Amortization of fair value of intangibles		(169	)		(328	)
Net loss from unconsolidated equity affiliate	$	(137	)	$	(176	)

	June 30,
	2007
Current assets	$	3,677
Total assets		13,884
Current liabilities		875
Total liabilities		885

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Harvest Natural Resources, Inc. (“Harvest” or the “Company”) cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this report or made by management of the Company involve risks and uncertainties and are subject to change based on various important factors. When used in this report, the words “budget”, “guidance”, “forecast”, “anticipate”, “expect”, “believes”, “goals”, “projects”, “plans”, “anticipates”, “estimates”, “should”, “could”, “assume” and similar expressions are intended to identify forward-looking statements. In accordance with the provisions of the Private Securities Litigation Reform Act of 1995, we caution you that important factors could cause actual results to differ materially from those in the forward-looking statements. Such factors include our concentration of operations in Venezuela, the political and economic risks associated with international operations (particularly those in Venezuela), the anticipated future development costs for our undeveloped reserves, conversion of Venezuelan assets to Petrodelta, the risk that actual results may vary considerably from reserve estimates, the dependence upon the abilities and continued participation of certain of our key employees, the risks normally incident to the operation and development of oil and gas properties, risks incumbent to being a minority shareholder in a corporation, the permitting and the drilling of oil and natural gas wells, the availability of materials and supplies necessary to projects and operations, the price for oil and natural gas and related financial derivatives, changes in interest rates, basis risk and counterparty credit risk in executing commodity price risk management activities, the Company’s ability to acquire oil and natural gas properties that meet its objectives, changes in operating costs, overall economic conditions, political instability, civil unrest, acts of terrorism, currency and exchange risks, currency controls, changes in existing or potential tariffs, duties or quotas, changes in taxes, changes in governmental policy, availability of sufficient financing, changes in weather conditions, and ability to hire, retain and train management and personnel. A discussion of these factors is included in our Annual Report on Form 10-K for the year ended 2006, which includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Quarterly Report.

Venezuela

     In June 2007, the Venezuela National Assembly approved the formation of mixed company Petrodelta, S.A. (“Petrodelta”) and the direct award of three additional fields to Petrodelta. Venezuela National Assembly approval is a key event to finalizing the conversion of our Operating Services Agreement (the “OSA”) to a mixed company. An 80 percent owned Harvest affiliate will own 40 percent of Petrodelta and Corporación Venezolana del Petroleo S.A. (“CVP”) will own the remaining 60 percent.

     The new fields, Isleño, Temblador and El Salto (the “New Fields”), awarded to Petrodelta are geographically close to the Uracoa, Tucupita and Bombal fields (the “SMU fields”) and have the same geology and productive formations as the SMU fields operated by our Venezuelan subsidiary, Harvest Vinccler S.C.A. (“Harvest Vinccler”) under the OSA. The award of the New Fields will allow us to apply, on a much broader scale, the same technologies we used in developing the SMU fields which resulted in materially improved oil recovery. The New Fields and the SMU fields will be developed under a 20-year grant from the Venezuelan government.

     Venezuela National Assembly approval clears the way for execution of the Contract of Conversion (the “Conversion Contract”) followed by the formation of Petrodelta and receipt of a transfer decree formally transferring to Petrodelta the rights to the SMU fields and the New Fields. Upon completion of these steps, an economic adjustment will be made to obtain the same economic result as if the conversion had been completed on April 1, 2006.

     As a part of the Conversion Contract, Harvest Vinccler and CVP have agreed upon a business plan that is expected to maximize the value of Petrodelta’s hydrocarbon resources by: 1) increasing oil and gas production, 2) converting unproved reserves to proved reserves through targeted drilling, and 3) adding additional discovered reserves through exploration. Petrodelta is expected to begin implementation of the business plan as soon as possible after it is formed and receives the transfer decree. Harvest Vinccler and CVP initiated a bidding and selection process during the second quarter for three drilling rigs, two workover rigs, long-lead drilling and workover materials and acquisition of seismic over the Isleño field and a portion of the El Salto field. Harvest Vinccler and CVP have selected one drilling rig and one workover rig. Long-lead drilling and workover materials have been ordered. In addition, Harvest Vinccler has begun to increase staff to support the drilling programs.

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Petrodelta’s cash flow from operations is expected to fund operating and capital expenditure requirements as well as periodic dividends to its shareholders.

     For a more complete description of the Conversion Contract, our interest in Petrodelta and the fields to be developed by Petrodelta, see Item 1 Business in our Annual Report on Form 10-K for the year ended 2006.

     We had a loss of $13.4 million, or $0.36 per diluted share, for the six months ended June 30, 2007. The loss is due to the continued inability to recognize equity earnings for the producing operations in Venezuela. As we described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 and in our Annual Report on Form 10-K for the year ended 2006, we will not be able to report the results of our Venezuelan operations in our consolidated financial statements until the conversion to Petrodelta is completed or there is a contractual means recognized by the government of Venezuela to address revenues, costs and expenses. The economic adjustment to obtain the same economic result as if the conversion had been completed on April 1, 2006 will not occur until the conversion is completed. Based on our ongoing discussions with Venezuelan officials and the recent action by the Venezuela National Assembly, we believe the conversion will be completed, but we cannot provide assurance when or if it will occur.

     Through July 2007, we have been reimbursed $13.9 million by PDVSA for advances to fund operations during the first quarter of 2007.

     Certain operating statistics for the three and fifteen month periods ended June 30, 2007 for the SMU fields operated by Harvest Vinccler are set forth below. This information is provided at 100 percent, without reduction for our interest under the OSA or our ownership interest in Petrodelta. While we believe this information to be accurate, no representation is made with respect to what will be reflected in our consolidated financial statements after completing the conversion to Petrodelta. This information may not be representative of future results.

	Three Months Ended		Fifteen Months Ended
	June 30, 2007		June 30, 2007
Oil production (million barrels)		1.3		8.0
Natural gas production (billion cubic feet)		3.4		18.2
Barrels of oil equivalent (million barrels)		1.9		11.0
Cash operating costs ($millions)		11.5		53.8
Capital expenditures ($millions)		0.5		4.2

     Crude oil delivered from the SMU fields to PDVSA will be priced with reference to Merey 16 published prices, weighted for different markets and adjusted for variations in gravity and sulphur content, commercialization costs and distortions that may occur given the reference price and prevailing market conditions. Crude oil prices that would be paid for the oil production if the Conversion Contract were in place cannot yet be calculated as an element of the pricing formula has not been set. Market prices for crude oil of the type produced in the fields operated by Harvest Vinccler averaged approximately $54.30 and $48.53 a barrel for the three and fifteen months ended June 30, 2007, respectively. The price for natural gas that would be paid under the Conversion Contract is $1.54 per thousand cubic feet.

     See the notes accompanying the financial statements in Item 1 Financial Statements of this Quarterly Report of Form 10-Q, and Item 1 Business, Item 1A Risk Factors and Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended 2006 for a complete description of the situation in Venezuela and other matters.

Business Strategy

     Our strategy is to identify, access and integrate hydrocarbon assets in countries where the broad perception of political risk constrains investment. Political risk can be inefficiently priced compared with geologic, production and other types of risk and is best managed by creating a diversified international portfolio focused on organic growth of undeveloped and underdeveloped fields, field redevelopments and exploration. Exploration will become a larger part of our overall portfolio with the acquisition of prospects in proven active hydrocarbon systems that are technically driven with a low entry cost and high resource potential. Acquisitions of producing properties remain very competitive.

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Management Changes

     Effective May 17, 2007, Keith L. Head was elected Vice President, General Counsel and Corporate Secretary. The election is due to the retirement of former Senior Vice President, General Counsel and Corporate Secretary, Kerry R. Brittain.

Capital Resources and Liquidity

     Debt. We have semi-annual principal obligations of $9.8 million and $9.3 million on the Harvest Vinccler loans. We have no other debt obligations.

     Working Capital. Our capital resources and liquidity are affected by the conversion to Petrodelta and the ability of Petrodelta to declare dividends.

     The net funds raised and/or used in each of the operating, investing and financing activities are summarized in the following table and discussed in further detail below:

	Six Months Ended June 30,
	2007			2006
	(in thousands)
Net cash provided by (used in) operating activities	$	(12,035	)	$	67,014
Net cash provided by (used in) investing activities		8,712			(1,281	)
Net cash used in financing activities		(9,051	)		(2,035	)
Net increase (decrease) in cash	$	(12,374	)	$	63,698

     At June 30, 2007, we had current assets of $191.4 million and current liabilities of $87.2 million, resulting in working capital of $104.2 million and a current ratio of 2.2:1. This compares with a working capital of $117.6 million and a current ratio of 2.4:1 at December 31, 2006. The decrease in working capital of $13.4 million was primarily due to payment of debt.

     Cash Flow from Operating Activities. During the six months ended June 30, 2007, net cash used in operating activities was approximately $12.0 million. During the six months ended June 30, 2006, net cash provided by operating activities was $67.0 million. The $79.0 million decrease was primarily due to our inability to recognize results of operations from producing properties in Venezuela since April 1, 2006.

     Cash Flow from Investing Activities. During the six months ended June 30, 2007 and 2006, we had limited production-related capital expenditures. In January 2007, we purchased a 45 percent interest in Fusion Geophysical, L.L.C. for $4.6 million. Restricted cash of $13.6 million was released and returned to us during the six months ended June 30, 2007. During the six months ended June 30, 2006, we had workover and production-related expenditures of approximately $0.3 million. The reduction in capital expenditures is due to the continued suspension of our drilling program and the fact that the conversion of the OSA to Petrodelta has not been finalized. We continue to advance funds during the period prior to the conversion for maintenance of the existing wells. After the conversion to Petrodelta, our capital commitments will be determined by the business plan provided for in the Conversion Contract and the annual budget approved by the Petrodelta Board of Directors to implement the business plan. Outside of Venezuela, our capital commitments support our business development efforts and are substantially at our discretion.

     Cash Flow from Financing Activities. During the six months ended June 30, 2007, Harvest Vinccler repaid 20.0 billion Bolivars (approximately $9.3 million) of its Bolivar denominated debt. During the six months ended June 30, 2006, Harvest Vinccler repaid $2.9 million of its U. S. Dollar debt (comprised of one payment of $0.3 million and two payments of $1.3 million on the variable rate loans).

     Stock Purchase Plan. In June 2007, we announced that our Board of Directors had authorized the purchase of up to $50 million of our common stock from time to time through open market transactions. We believe the June 2007 Venezuela National Assembly approval of the formation of Petrodelta and the direct award of

16

the New Fields to Petrodelta eliminated much of the uncertainty surrounding the conversion of our OSA to Petrodelta. We also believe that Harvest stock remains undervalued and that the investment in the shares of our Company represents an attractive alternative to holding cash in excess of our near-term needs. Given our cash balances and the expectation Petrodelta will internally fund its activities, we have sufficient cash to undertake this buyback program as well as to fund an active development and exploration program in other countries. As of June 30, 2007, no stock had been purchased under the program.

Results of Operations

     You should read the following discussion of the results of operations for the three and six months ended June 30, 2007 and 2006 and the financial condition as of June 30, 2007 and December 31, 2006 in conjunction with our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended 2006.

Three Months Ended June 30, 2007 Compared with Three Months Ended June 30, 2006

     We reported a net loss of $6.9 million, or $0.18 diluted earnings per share, for the three months ended June 30, 2007 compared with a net loss of $50.3 million, or $1.35 diluted earnings per share, for the three months ended June 30, 2006.

Total expenses and other non-operating (income) expense (in millions):

	Three Months Ended
	June 30,						Increase
	2007			2006			(Decrease)
General and administrative	$	7.6		$	6.9		$	0.7
Taxes other than on income		0.2			0.2			—
Investment earnings and other		(2.8	)		(2.3	)		(0.5	)
Interest expense		2.5			15.7			(13.2	)
	$	7.5		$	20.5		$	(13.0	)

     General and administrative expenses increased due to the $1.1 million settlement of a labor dispute in Venezuela. Investment earnings and other increased due to higher interest rates earned on cash balances. Interest expense decreased due to the payment of Harvest Vinccler’s tax assessments in the three months ended June 30, 2006 offset by higher average outstanding debt balances in the three months ended June 30, 2007.

     Income tax expense decreased due to lower taxable income as a result of our inability to recognize the results of our Venezuelan operations in the three months ended June 30, 2007 and the payment of Harvest Vinccler’s tax assessments in the three months ended June 30, 2006.

Six Months Ended June 30, 2007 Compared with Six Months Ended June 30, 2006

     We reported a net loss of $13.4 million, or $0.36 diluted earnings per share, in the six months ended June 30, 2007 compared with a net loss of $36.4 million, or $0.98 diluted earnings per share, in the six months ended June 30, 2006.

     Total expenses and other non-operating (income) expense (in millions):

	Six Months Ended
	June 30,						Increase
	2007			2006			(Decrease)
General and administrative	$	14.0		$	13.7		$	0.3
Taxes other than on income		0.4			2.6			(2.2	)
Investment earnings and other		(5.2	)		(4.4	)		(0.8	)
Interest expense		4.9			15.9			(11.0	)
	$	14.1		$	27.8		$	(13.7	)

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     General and administrative expenses increased due to the $1.1 million settlement of a labor dispute in Venezuela offset by lower business development costs. Taxes other than on income decreased due to the elimination of municipal taxes which were based on oil deliveries under the OSA.

     Investment earnings and other increased due to higher interest rates earned on cash balances. Interest expense decreased due to the payment of Harvest Vinccler’s tax assessments in the three months ended June 30, 2006 offset by higher average outstanding debt balances in the three months ended June 30, 2007.

     Income tax expense decreased due to lower taxable income as a result of our inability to recognize the results of our Venezuelan operations in the three months ended June 30, 2007 and the payment of Harvest Vinccler’s tax assessments in the three months ended June 30, 2006.

Effects of Changing Prices, Foreign Exchange Rates and Inflation

     Our results of operations and cash flow can be affected by changing oil prices. Fluctuations in oil prices may affect our total planned development activities and capital expenditure program.

     Venezuela imposed currency exchange restrictions in February 2003, and adjusted the official exchange rate in February 2004 and again in March 2005. We do not expect the currency conversion restrictions or the adjustment in the exchange rate to have a material impact on us at this time. Within the United States, inflation has had a minimal effect on us, but it is potentially an important factor with respect to results of operations in Venezuela.

     During the six months ended June 30, 2007, our net foreign exchange gains attributable to our international operations were minimal. The U.S. Dollar and Bolivar exchange rates have not been adjusted since March 2005. However, there are many factors affecting foreign exchange rates and resulting exchange gains and losses, most of which are beyond our control. We have recognized significant exchange gains and losses in the past, resulting from fluctuations in the relationship of the Venezuelan currency to the U.S. Dollar. It is not possible for us to predict the extent to which we may be affected by future changes in exchange rates and exchange controls.

Off-Balance Sheet Arrangements

     We have no material off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     We are exposed to market risk from the adverse changes of the situation in Venezuela, and adverse changes in oil prices, interest rates, foreign exchange and political risk, as discussed in our Annual Report on Form 10-K for the year ended 2006. The information about market risk for the six months ended June 30, 2007 does not differ materially from that discussed in the Annual Report on Form 10-K for the year ended 2006.

Item 4. Controls and Procedures

     The Securities and Exchange Commission adopted rules requiring, among other things, that reporting companies maintain disclosure controls and procedures to provide reasonable assurance that a registrant is able to record, process, summarize and report the information required in the registrant’s quarterly and annual reports under the Securities Exchange Act of 1934 (the “Exchange Act”). While we believe that our existing disclosure controls and procedures have been effective to accomplish these objectives, we intend to continue to examine, refine and formalize our disclosure controls and procedures and to monitor ongoing developments in this area. There have not been any changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) or 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

     Evaluation of Disclosure Controls and Procedures. We have established disclosure controls and procedures to ensure that material information relating to us, including our consolidated subsidiaries, is made

18

known to the officers who certify our financial reports and to other members of senior management and the Board of Directors.

     Based on their evaluation as of June 30, 2007, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) are effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is 1) recorded, processed, summarized and reported within the time periods as specified in the Securities and Exchange Commission’s rules and forms and 2) accumulated and communicated to our management, including our principal executive and principal financial officers, to allow timely decisions regarding required disclosure.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

     Excel Enterprises L.L.C. vs. Benton Oil & Gas Company, now known as Harvest Natural Resources, Inc., Chemex, Inc., Harvest Vinccler, C.A., Gale Campbell and Sheila Campbell in the District Court for Harris County, Texas. This suit was brought in May 2003 by Excel alleging, among other things, breach of a consulting agreement between Excel and us, misappropriation of proprietary information and trade secrets, and fraud. Excel seeks actual and exemplary damages, injunctive relief and attorneys’ fees. In October 2003, the Court abated the suit pending final judgment of a case pending in Louisiana to which we are not a party. In April 2007, the Court lifted the abatement and recently set the case for trial. We dispute Excel’s claims and plan to vigorously defend against them. We are unable to estimate the amount or range of any possible loss.

     Libertador Municipality Tax Assessments. Harvest Vinccler has received five assessments from a tax inspector for the Libertador municipality in which part of the SMU fields are located as follows:

• One claim was filed in April 2005 alleging the failure to pay taxes at a new rate set by the Municipality. Harvest Vinccler has filed a motion to enjoin and dismiss the claim with the Tax Court in Barcelona, Venezuela.

• Two claims were filed in July 2004. One claim relates to the period 2003 through 2006 and seeks to impose a tax on interest paid by PDVSA under the Operating Services Agreement. The second claim alleges a failure to pay taxes on estimated revenues for the third and fourth quarters of 2006. Harvest Vinccler has filed a motion to enjoin and dismiss the claims with the Tax Court in Barcelona, Venezuela.

• Two claims were filed in July 2007 seeking to impose penalties on tax assessments filed and settled in 2004. Harvest Vinccler has filed a motion to enjoin and dismiss the claims with the Tax Court in Barcelona.

Harvest Vinccler disputes the Libertador allegations set forth in the assessments and believes it has a substantial basis for its position. Harvest Vinccler is unable to estimate the amount or range of any possible loss. As a result of the SENIAT’s interpretation of the tax code as it applies to operating service agreements, Harvest Vinccler has filed claims against the Libertador Municipality in the Tax Court in Caracas for the refund of all municipal taxes paid since 2002.

     In June 2007, the SENIAT issued an assessment in the amount of $0.4 million for Harvest Vinccler’s failure to withhold valued added tax (“VAT”) from vendors during 2005. The SENIAT has recognized a payment made by Harvest Vinccler in 2006 for the under withheld VAT and has partially confirmed that some of the affected vendors have remitted the under withheld VAT. Harvest Vinccler has received credit, less penalties and interest, from the SENIAT for the VAT remitted by the vendors. Harvest Vinccler has filed claims against the SENIAT for the portion of VAT not recognized by the SENIAT and believes it has a substantial basis for its position.

     See our Annual Report on Form 10-K for the year ended 2006 and our Quarterly Report on Form 10-Q for the period ended March 31, 2007, for a description of certain other legal proceedings. There have been no material developments in such legal proceedings since the filing of such Annual Report.

Item 1A. Risk Factors

     In June 2007, the Venezuelan National Assembly approved the formation of Petrodelta and the direct award of the New Fields to Petrodelta. We believe this event significantly lessens the risk that

20

conversion will not be completed. Once Venezuela Assembly approval was granted, the other operating service agreements completed the conversion to a mixed company in an orderly fashion.

     We are adding an exploration component to diversify our overall portfolio. In many international locations we may be required to post performance bonds in support of a work program. Exploration drilling for oil and gas involves numerous risks, including the risk that we will not encounter commercially productive oil or gas reservoirs. The costs of drilling, completing and operating wells are often uncertain, and drilling operations may be curtailed, delayed or canceled as a result of a variety of factors including, but not limited to, unexpected drilling conditions, pressure or irregularities in formations, equipment failures or accidents, fires, explosions, blowouts and surface cratering and shortages or delays in the delivery of equipment. Certain future drilling activities may not be successful and, if unsuccessful, this failure could have an adverse effect on our future results of operations and financial condition. While all drilling, whether developmental or exploratory, involves these risks, exploratory drilling involves greater risks of dry holes or failure to find commercial quantities of hydrocarbons.

     There have been no other material changes during the six months ended June 30, 2007 to our risk factors as set forth in our Annual Report. See our Annual Report on Form 10-K for the year ended 2006 under Item 1A Risk Factors for a description of other risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

At our Annual Meeting of Stockholders held on May 17, 2007, the following items were voted on by the Stockholders:

1. To approve the Election of Directors:

	Votes in Favor		Votes Against/Withheld
Stephen D. Chesebro’		34,215,317		886,035
John U. Clarke		34,001,755		1,099,597
James A. Edmiston		34,754,310		347,042
H. H. Hardee		34,213,757		887,595
Patrick M. Murray		34,755,159		346,193
J. Michael Stinson		34,135,256		966,096

2. To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the year ended December 31, 2007:

		Abstentions/Broker
Votes in Favor	Against/Withheld Votes	Non-Votes
34,884,196	106,579	110,577

Item 5. Other Information

There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors since our Schedule 14A filed on April 3, 2007.

Item 6. Exhibits

(a) Exhibits

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3.1	Amended and Restated Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1(i) to our Form 10-Q filed on August 13, 2002, File No. 1-10762.)
3.2	Restated Bylaws as of May 17, 2007. (Incorporated by reference to Exhibit 3.1 to our Form 8-K filed on April 23, 2007, File No. 1-10762.)
4.1	Form of Common Stock Certificate. (Incorporated by reference to the exhibits to our Registration Statement Form S-1 (Registration No. 33-26333).)
4.2	Certificate of Designation, Rights and Preferences of the Series B. Preferred Stock of Benton Oil and Gas Company, filed May 12, 1995. (Incorporated by reference to Exhibit 4.1 to our Form 10-Q filed on May 13, 2002, File No. 1-10762.)
4.3	Second Amended and Restated Rights Agreement, dated as of April 15, 2005, between Harvest Natural Resources, Inc. and Wells Fargo Bank, N.A. (Incorporated by reference to Exhibit 4.3 to our Form 10-Q filed on April 29, 2005, File No. 1-10762).
10.1	Employment Agreement dated May 7, 2007 between Harvest Natural Resources, Inc. and Keith L. Head.
10.2	Stock Option Agreement dated May 7, 2007 between Harvest Natural Resources, Inc. and Keith L. Head.
10.3	Employee Restricted Stock Agreement dated May 7, 2007 between Harvest Natural Resources, Inc. and Keith L. Head.
10.4	Separation Agreement dated July 16, 2007 between Harvest Natural Resources, Inc. and Kerry R. Brittain.
10.5	Consulting Agreement dated July 16, 2007 between Harvest Natural Resources, Inc. and Kerry R. Brittain.
31.1	Certification of the principal executive officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the principal executive officer accompanying the quarter report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the principal financial officer accompanying the quarter report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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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 thereunto duly authorized.

	HARVEST NATURAL RESOURCES, INC.
Dated: July 25, 2007	By:	/s/James A. Edmiston
		James A. Edmiston
		President and Chief Executive Officer
Dated: July 25, 2007	By:	/s/Steven W. Tholen
		Steven W. Tholen
		Senior Vice President - Finance, Chief Financial Officer and Treasurer

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Exhibit Index

Exhibit
Number		Description
	3.1	Amended and Restated Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1(i) to our Form 10-Q filed on August 13, 2002, File No. 1-10762.)
	3.2	Restated Bylaws as of May 17, 2007. (Incorporated by reference to Exhibit 3.1 to our Form 8-K filed on April 23, 2007, File No. 1-10762.)
	4.1	Form of Common Stock Certificate. (Incorporated by reference to the exhibits to our Registration Statement Form S-1 (Registration No. 33-26333).)
	4.2	Certificate of Designation, Rights and Preferences of the Series B. Preferred Stock of Benton Oil and Gas Company, filed May 12, 1995. (Incorporated by reference to Exhibit 4.1 to our Form 10-Q filed on May 13, 2002, File No. 1-10762.)
	4.3	Second Amended and Restated Rights Agreement, dated as of April 15, 2005, between Harvest Natural Resources, Inc. and Wells Fargo Bank, N.A. (Incorporated by reference to Exhibit 4.3 to our Form 10-Q filed on April 29, 2005, File No. 1-10762).
	10.1	Employment Agreement dated May 7, 2007 between Harvest Natural Resources, Inc. and Keith L. Head.
	10.2	Stock Option Agreement dated May 7, 2007 between Harvest Natural Resources, Inc. and Keith L. Head.
	10.3	Employee Restricted Stock Agreement dated May 7, 2007 between Harvest Natural Resources, Inc. and Keith L. Head.
	10.4	Separation Agreement dated July 16, 2007 between Harvest Natural Resources, Inc. and Kerry R. Brittain.
	10.5	Consulting Agreement dated July 16, 2007 between Harvest Natural Resources, Inc. and Kerry R. Brittain.
	31.1	Certification of the principal executive officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	Certification of the principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	Certification of the principal executive officer accompanying the quarter report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2	Certification of the principal financial officer accompanying the quarter report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Employment Agreement”), effective May 7, 2007, is between Harvest Natural Resources, Inc. (the “Company”) and Keith L. Head, a resident of Texas, (“Employee”), the terms and conditions of which are as follows:

     WHEREAS, the Company wishes to provide Employee with certain additional benefits and the Company and Employee wish to change the benefits described in the Amended Employment Agreement provided to Employee in the event of a Change of Control;

     WHEREAS, the Company and Employee acknowledge that if Employee’s employment with the Company terminates for any reason, Employee may inevitably disclose trade secrets of, and other proprietary and confidential information about, the Company’s business, operations and prospects; and

     WHEREAS, Employee wishes to enter into this Employment Agreement to receive the benefit of the provisions contained in it.

     NOW THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are acknowledged, the Company and Employee agree as follows:

1. TERM OF EMPLOYMENT.

     Subject to the terms and conditions set forth in this Employment Agreement, the Company agrees to employ Employee and Employee agrees to be employed by the Company for the term which started on May 7, 2007, and ends on May 31, 2008. On May 31, 2008, and on each anniversary thereafter (an “Extension Date”) the term of this Employment Agreement shall automatically be extended for a one-year period unless and until either party has given written notice to the other at least one year before any Extension Date that it or he wishes to terminate this Employment Agreement as of such Extension Date.

2. POSITION AND DUTIES.

     (a) Position. Subject to annual election by the Company’s Board of Directors, Employee’s position shall be Vice President, General Counsel and Corporate Secretary of Harvest Natural Resources, Inc.

     (b) Duties and Responsibilities. Employee’s duties and responsibilities initially shall be those normally associated with Employee’s position, plus any additional duties and responsibilities the Company initially may assign orally or in writing to Employee. Employee shall undertake to perform all Employee’s duties and responsibilities for the Company and its affiliates in good faith and on a full-time basis and shall at all times act in the course of Employee’s employment under this Employment Agreement in the best interest of the Company and the Company’s affiliates.

     (c) The Company’s Right to Change Position or Duties. Subject to the terms of this Employment Agreement, the Company shall have the right, to the extent the Company from time

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to time reasonably deems necessary or appropriate, to change Employee’s position, or to expand or reduce Employee’s duties and responsibilities.

3. COMPENSATION AND BENEFITS.

     (a) Base Salary. During the term of this Employment Agreement, Employee’s yearly base salary shall be not less than $230,000 US, which yearly base salary shall be payable from the Company’s Houston offices to Employee in accordance with the Company’s standard payroll practices and policies, and shall be subject to such withholdings as required by U.S. Federal law and the State of Texas or as otherwise permissible under such practices or policies. The Company shall annually review Employee’s base salary.

     (b) Annual Bonus. Employee shall be eligible for such annual bonus as may be determined by the Human Resources Committee of the Company’s Board of Directors and the Company’s Board of Directors, which bonus shall be based on Employee’s performance under the guidelines adopted by the Company, the Company’s overall performance and any special circumstances the Human Resources Committee and the Company’s Board of Directors deem appropriate. Any such bonus is to be determined at the discretion of the Company’s Human Resources Committee and the Company’s Board of Directors. Employee acknowledges that the Company is not obligated to award him any bonus in any year.

     (c) Employee Benefit Plans. Employee shall be eligible to participate in the employee benefit plans, programs and policies maintained by the Company for similarly situated employees in accordance with the terms and conditions to participate in such plans, programs, and policies as in effect from time to time.

     (d) Stock Options and Restricted Stock. Previously Employee has been granted certain stock options and restricted stock pursuant to the Company’s long-term incentive plans. Except as provided in Section 4(a), this Employment Agreement neither increases nor decreases the number of stock options and shares of restricted stock previously granted, nor does it change the terms under which they were granted.

     (e) Vacation. Employee shall be entitled to four (4) weeks annual vacation.

     (f) Expenses. The Company shall pay or reimburse Employee for all reasonable expenses actually incurred or paid by Employee in the performance of his services hereunder upon the presentation of expense statements or vouchers or such other supporting information as the Company may reasonably require of Employee.

     (g) Office Facilities and Services. Employee shall be accorded such benefits and support services, including without limitation, office facilities, administrative assistant, communications, and such other perquisites as would normally be accorded by a corporation of the size and at the stage of development in the industry in which the Company is, to its Vice President, General Counsel and Corporate Secretary.

     (h) Indemnification. Employee shall be entitled to the benefit of the indemnification provisions contained in the bylaws of the Company, as the same may be amended.

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4. TERMINATION OF EMPLOYMENT.

     (a) Termination By The Company Other Than For Cause Or By Employee For Good Reason.

          (1) The Company shall have the right to terminate Employee’s employment other than for Cause at any time and Employee shall have the right to quit or resign for Good Reason at any time.

          (2) If (a) the Company or its successors terminate Employee’s employment with the Company other than (i) for Cause or (ii) pursuant to a notice of termination delivered in accordance with Section 1 of this Employment Agreement or (b) Employee resigns for Good Reason, then (v) the Company shall pay to Employee within thirty (30) days after the termination or resignation an amount equal to twenty-four months of Employee’s base salary as in effect immediately before Employee’s termination of employment or resignation, (w) the Company shall pay to Employee within thirty (30) days after the termination or resignation an amount equal to twenty-four months of the maximum contribution the Company may make for Employee under the Company’s 401(k) profit sharing plan as in effect immediately before Employee’s termination of employment or resignation, (x) any outstanding stock option(s) granted by the Company to Employee shall become fully vested and shall remain exercisable for twelve (12) months following Employee’s termination pursuant to this Section 4(a)(2), or the tenth anniversary of the date(s) of the grant(s) specified in the relevant option agreement(s), whichever is the shorter period, (y) the restriction period on restricted shares of stock granted by the Company to Employee will lapse and a certificate(s) representing such shares will be delivered to Employee within thirty (30) days after the termination or resignation, and (z) Employee shall be reimbursed for up to $20,000 of outplacement services with an outplacement service approved by the Company.

          (3) If the termination or resignation described in Section 4(a)(2) occurs within 730 days after or 240 days before a Change of Control, then (s) the Company shall pay to Employee, within thirty (30) days after the termination of employment or resignation an amount equal to twenty-four months of Employee’s base salary as in effect immediately before Employee’s termination of employment or resignation, (t) the Company shall pay to Employee, within thirty (30) days after the later to occur of the termination, resignation or Change of Control, the Bonus Amount, (u) the Company shall pay to Employee within thirty (30) days after the termination or resignation an amount equal to twenty-four months of the maximum contribution the Company may make for Employee under the Company’s 401(k) profit sharing plan as in effect immediately before Employee’s termination of employment or resignation, (v) any outstanding stock option(s) granted by the Company to Employee shall become fully vested and shall remain exercisable for twelve (12) months following Employee’s termination or resignation, or the tenth anniversary of the date(s) of the grant(s) specified in the relevant option agreement(s), whichever is the shorter period, (w) the restriction period on restricted shares of stock granted by the Company to Employee will lapse and a certificate(s) representing such shares will be delivered to Employee within thirty (30) days after the end of the termination or resignation, (x) Employee shall be reimbursed for up to $20,000 of outplacement services with an outplacement service approved by the Company, (y) for a period of twenty-four months following the later to occur of the termination, resignation or Change of Control, the Company

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shall continue to provide Employee and Employee’s dependents with the same level of life, disability, accident, dental and health insurance benefits Employee and Employee’s dependents were receiving immediately before Employee’s termination or resignation, and (z) the Company will pay Employee, within thirty (30) days after the later to occur of the termination, resignation or Change of Control, an additional amount such that the net amount retained by Employee pursuant to the benefits described in this Section 4(a)(3) after any excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended from time to time, shall be equal to the amount that Employee would have received pursuant to those benefits before payment of any such excise tax.

          (4) If the Company or its successors terminate Employee’s employment with the Company pursuant to a notice of termination delivered in accordance with Section 1 of this Employment Agreement within 730 days after or 240 days before a Change of Control, then (s) the Company shall pay to Employee, within thirty (30) days after the later to occur of the termination or Change of Control an amount equal to twenty-four months of Employee’s base salary as in effect immediately before Employee’s termination of employment, (t) the Company shall pay to Employee, within thirty (30) days after the later to occur of the termination or Change of Control, the Bonus Amount, (u) the Company shall pay to Employee within thirty (30) days after the later to occur of the termination or Change of Control, an amount equal to twenty-four months of the maximum contribution the Company may make for Employee under the Company’s 401(k) profit sharing plan as in effect immediately before Employee’s termination of employment, (v) any outstanding stock option(s) granted by the Company to Employee shall become fully vested and shall remain exercisable for twelve (12) months following the later to occur of Employee’s termination or Change of Control, or the tenth anniversary of the date(s) of the grant(s) specified in the relevant option agreement(s), whichever is the shorter period, (w) the restriction period on restricted shares of stock granted by the Company to Employee will lapse and a certificate(s) representing such shares will be delivered to Employee within thirty (30) days after the end of the later to occur of the termination or Change of Control, (x) Employee shall be reimbursed for up to $20,000 of outplacement services with an outplacement service approved by the Company, (y) for a period of twenty-four months following the later to occur of Employee’s termination or Change of Control, the Company shall continue to provide Employee and Employee’s dependents with the same level of life, disability, accident, dental and health insurance benefits Employee and Employee’s dependents were receiving immediately before Employee’s termination, and (z) the Company shall pay to Employee, within thirty (30) days after the later to occur of the termination or Change of Control, an additional amount such that the net amount retained by Employee pursuant to the benefits described in this Section 4(a)(4) after any excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended from time to time, shall be equal to the amount that Employee would have received pursuant to such benefits before payment of any such excise tax.

     (b) Termination By The Company For Cause Or By Employee Other Than For Good Reason.

          (1) The Company shall have the right to terminate Employee’s employment at any time for Cause, and Employee shall have the right to quit or resign at any time other than for Good Reason.

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          (2) If the Company terminates Employee’s employment for Cause or pursuant to a notice of termination delivered in accordance with Section 1 of this Employment Agreement that is not delivered within 730 days after or 240 days before a Change of Control, or Employee quits or resigns other than for Good Reason, the Company’s only obligation to Employee under this Employment Agreement shall be to pay Employee’s base salary (including accrued vacation) actually earned up to the date Employee’s employment terminates.

     (c) Termination for Disability or Death.

          (1) The Company shall have the right to terminate Employee’s employment on or after the date Employee has a Disability, and Employee’s employment shall terminate at Employee’s death.

          (2) If Employee’s employment terminates under this Section 4(c), the Company shall pay Employee or, if Employee dies, Employee’s estate the amount provided for under Section 4(a)(2)(v) and, in addition, Employee or, if Employee dies, Employee’s estate shall be entitled to the provisions of Sections 4(a)(2)(w), (x) and (y) with respect to the Company’s 401(k) profit sharing plan, Employee’s stock options and Employee’s restricted stock.

     (d) Bonus Amount. The term “Bonus Amount” means twice the amount of the higher of (i) the highest annual bonus earned by Employee for the last three fiscal years ending prior to the termination date, and (ii) (A) the target bonus percentage as established by the Company’s Board of Directors for the fiscal year in which the Change of Control occurs, multiplied by (B) Employee’s annual base salary for that fiscal year (whether or not paid or accrued for the full year at the time of Employee’s termination or resignation).

     (e) Cause. The term “Cause” shall mean (1) Employee’s final conviction of a felony by a trial court, (2) Employee’s material breach of this Employment Agreement or (3) Employee’s material violation of any policy or code of conduct of the Company, all as reasonably determined by the Company.

     (f) Good Reason. The term “Good Reason” shall mean any of the following, unless Employee shall have given his express written consent thereto: (1) a material breach of the terms and conditions of this Employment Agreement by the Company which remains uncorrected for thirty (30) days after Employee delivers written notice of such breach to the Company; (2) failure to maintain or reelect Employee to the position described in Section 2(a); (3) a significant reduction of Employee’s duties, position or responsibilities relative to Employee’s duties, position or responsibilities in effect immediately prior to such reduction, unless Employee is provided with comparable duties and responsibilities; (4) a substantial reduction, without good business reasons, of the facilities and perquisites available to Employee immediately prior to such reduction; (5) a reduction by the Company of Employee’s monthly base salary in effect immediately prior to such reduction; (6) the Company fails to continue Employee’ s participation in any bonus, incentive, profit sharing, performance, savings, retirement or pension policy, plan, program or arrangement on substantially the same or better basis, both in terms of the amount of benefits provided to Employee and the level of Employee’ s participation, relative to other participants; (7) the relocation of Employee more than fifty (50) miles from the location of the

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Company’s principal office on the date hereof; or (8) the failure of the Company to obtain a satisfactory agreement from a successor to assume and agree to perform this Employment Agreement as contemplated by Section 6(d).

     (g) Disability. Employee shall have a “disability” under this Employment Agreement on the date the Company receives written notice from a physician selected by the Company that Employee no longer can perform one or more of the essential functions of Employee’s job even with reasonable accommodation.

     (h) Change of Control. A “Change of Control” means the occurrence of any of the following:

          (1) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) (a “Covered Person”) of beneficial ownership (within the meaning of rule 13d-3 promulgated under the Securities Exchange Act of 1934) of 50 percent or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Voting Securities”); provided, however, that for purposes of this subsection (1) of this Section 4(g) the following acquisitions shall not constitute a Change of Control: (i) any acquisition by the Company, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (iii) any acquisition by any entity pursuant to a transaction which complied with clauses (i), (ii) and (iii) of subsection (3) of this Section 4(g); or

          (2) individuals who, as of the date of this Employment Agreement, constitute the board of directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the board of directors of the Company; provided, however, that any individual becoming a director after the date of this Employment Agreement whose election, or nomination for election, by the Company’s stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors; or

          (3) the consummation of a reorganization, merger or consolidation or sale of the Company, or a disposition of at least 50 percent of the assets of the Company, together with its subsidiaries, including goodwill (a “Business Combination”), provided, however, that for purposes of this subsection (3), a Business Combination will not constitute a change of control if the following three requirements are satisfied:

following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Company’s voting securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50 percent of the ownership interests of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction

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owns the Company or all or substantially all of the assets of the Company, together with its subsidiaries, either directly or through one or more subsidiaries or other affiliated entities) in substantially the same proportions as their ownership immediately prior to such Business Combination, (ii) no Covered Person (excluding any employee benefit plan (or related trust) of the Company or its subsidiaries or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 50 percent or more of, respectively, the ownership interests in the entity resulting from such Business Combination, except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the board of directors of the Company, providing for such Business Combination. For this purpose any individual who becomes a director after the date of this Employment Agreement, and whose election, or nomination for election, by the Company’s stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors.

     (i) Benefits. Employee shall have the right to receive any benefits payable under the Company’s employee benefits plans, programs and policies (other than the Company’s Policy for Termination and Separation of Employment (the “Severance Plan”)) which Employee otherwise has a non-forfeitable right to receive under the terms of such plans, programs and policies (other than severance benefits) independent of Employee’s rights under this Employment Agreement upon a termination of employment in addition to any other benefits under this Section 4 without regard to the reason for such termination of employment. Employee acknowledges and agrees that until the termination of this Employment Agreement, he shall not be entitled to participate in the Severance Plan.

     (j) Notice of Termination. Any termination by the Company or by Employee for any reason shall be communicated by a notice of termination to the other party hereto and shall be given in accordance with Section 6(a). Such notice shall state the specific termination provision in this Employment Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated.

     (k) No Mitigation. Employee shall not be required to mitigate the amount of any severance payment contemplated by this Employment Agreement, nor shall any such payment be reduced by any earnings that Employee may receive from any other source.

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     (l) Stock Award Agreements. In the event of a conflict adverse to Employee between the terms of this Employment Agreement and the terms of any agreement granting Employee stock options or restricted stock, the terms of this Employment Agreement shall govern.

5. COVENANTS BY EMPLOYEE

     (a) Property of the Company.

          (1) Employee covenants and agrees that upon the termination of Employee’s employment for any reason or, if earlier, upon the Company’s request Employee shall promptly return all Property which had been entrusted or made available to Employee by the Company or any of its subsidiaries.

          (2) The term “Property” shall mean all records, files, memoranda, reports, price lists, drawing, plans, sketches, keys, codes, computer hardware and software and other property of any kind or description prepared, used or possessed by Employee during Employee’s employment by the Company (and any duplicates of any such property) together with any and all information, ideas, concepts, discoveries, and inventions and the like conceived, made, developed or acquired at any time by Employee individually or with others during Employee’s employment which relate to the business, products or services of the Company or any of its subsidiaries.

     (b) Trade Secrets.

          (1) In consideration for the promises made in Section 5(d) of this Employment Agreement, the Company promises that it shall provide and make available to Employee certain confidential, proprietary information and trade secrets.

          (2) Employee covenants and agrees that Employee shall hold in a fiduciary capacity for the benefit of the Company and each of its affiliates, and shall not directly or indirectly use or disclose, any Trade Secret that Employee may have acquired pursuant to Section 5(b)(1) above during the term of Employee’s employment by the Company for so long as such information remains a trade secret.

          (3) The term “Trade Secret” shall mean information, including, but not limited to, technical or non-technical data, a formula, a patent, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, or that (a) derives economic value, actual or potential, from not being generally known to, and not being generally readily ascertainable by proper means by other persons who can obtain economic value from its disclosures or use and (b) is the subject of reasonable efforts by the Company and its affiliates to maintain its secrecy.

          (4) This Section 5(b) is intended to provide rights to the Company and its subsidiaries which are in addition to those rights the Company and its subsidiaries have under the common law or applicable statutes for the protection of trade secrets.

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     (c) Confidential Information.

          (1) Employee covenants and agrees while employed under this Employment Agreement and thereafter during the Restricted Period he shall hold in a fiduciary capacity for the benefit of the Company and each of its affiliates, and shall not directly or indirectly use or disclose, any of the Company’s or the Company’s affiliates’ Confidential or Proprietary Information that Employee may have acquired (whether or not developed or compiled by Employee and whether or not Employee is authorized to have access to such information) during the term of, and in the course of, or as a result of Employee’s employment by the Company or its affiliates.

          (2) The term “Confidential or Proprietary Information” shall mean any secret, confidential or proprietary information of the Company or an affiliate (not otherwise included in the definition of a Trade Secret under this Employment Agreement) that has not become generally available to the public by the act of one who has the right to disclose such information without violation of any right of the Company or its affiliates.

     (d) Non-Competition. During the period of Employee’s employment with the Company and thereafter during the Restricted Period, Employee covenants and agrees that, in connection with the business operations and prospective interests of the Company on the date of Employee’s termination as an employee of the Company, which prospective interests are disclosed to Employee prior to or on the date of Employee’s termination as an employee of the Company, he shall not, directly or indirectly, own any interest in, manage, control, participate in, consult with, render services for, or in any manner engage in any businesses in competition with the Company or materially adverse to the Company (unless the Company’s Board of Directors shall have authorized such activity and the Company shall have consented thereto in writing). Investments in less than 5% of the outstanding securities of any class of the Company subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended, shall not be prohibited by this section. For purposes of this Section 5(d), the term “Company” shall include Harvest Natural Resources, Inc. and any of its affiliates or subsidiaries or any company in which it is a minority shareholder or a joint venture partner. For purposes of this Section 5(d), the term “businesses” shall mean any enterprise, commercial venture, or project involving oil and gas exploration or production activities in the same geographic areas as the Company’s activities during the period of Employee’s employment.

     Further, during the period of Employee’s employment with the Company and thereafter during the Restricted Period, Employee covenants and agrees that he will not directly or indirectly through another entity induce or otherwise attempt to influence any employee of the Company to leave the Company’s employment or in any way interfere with the relationship between the Company and any employee thereof. Further, Employee will not induce or attempt to induce any customer, supplier, licensee, joint venture partner, shareholder, licensor or other business relation of the Company to cease doing business with the Company or in any way interfere with the relationship between any such customer, supplier, licensee, joint venture partner, shareholder, licensor or business relation of the Company.

     If (i) pursuant to the arbitration process described in Section 6(c) of this Employment Agreement (or such other process as to which the Company and Employee may agree upon in

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writing), it is determined that Employee has violated the provisions of this Section 5(d), and (ii) Employee has received a payment from the Company pursuant to Section 4(a)(2)(v), Section 4(a)(3)(s), Section 4(a)(3)(t), Section 4(a)(4)(s) or Section 4(a)(4)(t) of this Employment Agreement (the “Lump Sum Severance Amount”), then, in addition to any other remedies that the Company may have, Employee shall be obligated, and hereby agrees, to pay the Company, as liquidated damages, an amount (but not less than zero) equal to the product of (x) the Lump Sum Severance Amount and (y) a fraction whose numerator is the excess of twenty-four (24) over the number of calendar months that have elapsed since the last day of Employee’s termination of employment under Section 4 of this Employment Agreement and whose denominator is twenty-four (24).

     (e) Employment Restriction — Conflict of Interest. Employee covenants and agrees that he will not receive and has not received any payments, gifts or promises and Employee will not engage in any employment or business enterprises that in any way conflict with his service and the interests of the Company or its affiliates. In addition, Employee agrees to comply with the laws or regulations of any country, including, without limitation, the United States of America, having jurisdiction over Employee, the Company or any of the Company’s subsidiaries.

     Employee shall not make any payments, loans, gifts or promises or offers of payments, loans or gifts, directly or indirectly, to or for the use or benefit of any official or employee of any government or to any other person if Employee knows, or has reason to believe, that any part of such payments, loans or gifts, or promise or offer, would violate the laws or regulations of any country, including, without limitation, the United States of America, having jurisdiction over Employee, the Company or any of the Company’s subsidiaries.

     By signing this Employment Agreement, Employee acknowledges that he has not made and will not make any payments, loans, gifts, promises of payments, loans or gifts to or for the use or benefit of any official or employee of any government or to any other person which would violate the laws or regulations of any country, including, without limitation, the United States of America, having jurisdiction over Employee, the Company or any of the Company’s subsidiaries.

     (f) Restricted Period. The term “Restricted Period” shall mean the two-year period which starts on the date Employee’s employment terminates with the Company without regard to whether such termination comes before or after the end of the term of this Employment Agreement.

     (g) Reasonable and Continuing Obligations. Employee agrees that Employee’s obligations under this Section 5 are obligations which will continue beyond the date Employee’s employment terminates and that such obligations are reasonable and necessary to protect the Company’s legitimate business interests. The Company additionally shall have the right to take such other action as the Company deems necessary or appropriate to compel compliance with the provisions of this Section 5.

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6. MISCELLANEOUS.

     (a) Notices. Notices and all other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail. Notices to the Company shall be sent to 1177 Enclave Parkway, Suite 300, Houston, Texas 77077. Notices and communications to Employee shall be sent to Employee’s home address as indicated by the records of the Company.

     (b) No Waiver. Except for the notice described in Section 4(f), no failure by either the Company or Employee at any time to give notice of any breach by the other of, or to require compliance with, any condition or provision of this Employment Agreement shall be deemed a waiver of any provisions or condition of this Employment Agreement.

     (c) Arbitration and Governing Law. ANY UNRESOLVED DISPUTE OR CONTROVERSY BETWEEN EMPLOYEE AND THE COMPANY ARISING UNDER OR IN CONNECTION WITH THIS EMPLOYMENT AGREEMENT SHALL BE SETTLED EXCLUSIVELY BY ARBITRATION, CONDUCTED IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT. THE COMPANY WILL BEAR THE ADMINISTRATIVE COSTS OF ANY ARBITRATION UNDER THIS EMPLOYMENT AGREEMENT, INCLUDING THE ARBITRATOR’S FEES. THE ARBITRATOR SHALL NOT HAVE THE AUTHORITY TO ADD TO, DETRACT FROM, OR MODIFY ANY PROVISION HEREOF. THE ARBITRATOR SHALL HAVE THE AUTHORITY TO ORDER REMEDIES WHICH EMPLOYEE COULD OBTAIN IN A COURT OF COMPETENT JURISDICTION. A DECISION BY THE ARBITRATOR SHALL BE IN WRITING AND WILL BE FINAL AND BINDING. JUDGMENT MAY BE ENTERED ON THE ARBITRATOR’S AWARD IN ANY COURT HAVING JURISDICTION. THE ARBITRATION PROCEEDING SHALL BE HELD IN HOUSTON, TEXAS, UNITED STATES OF AMERICA. NOTWITHSTANDING THE FOREGOING, THE COMPANY SHALL BE ENTITLED TO SEEK INJUNCTIVE OR OTHER EQUITABLE RELIEF FROM ANY COURT OF COMPETENT JURISDICTION, WITHOUT THE NEED TO RESORT TO ARBITRATION IN THE EVENT THAT EMPLOYEE VIOLATES SECTIONS 5(b), 5(c), 5(d) OR 5(e) OF THIS EMPLOYMENT AGREEMENT. THIS EMPLOYMENT AGREEMENT SHALL IN ALL RESPECTS BE CONSTRUED ACCORDING TO THE LAWS OF THE STATE OF TEXAS.

     (d) Assignment by the Company; Meaning of “Company”. This Employment Agreement shall be binding upon and inure to the benefit of the Company and any successor to all or substantially all of the business or assets of the Company. The Company may assign this Employment Agreement to any affiliate or successor, and no such assignment shall be treated as a termination of Employee’s employment under this Employment Agreement; provided, however, that in the case of an assignment to an affiliate, the Company shall not be relieved of its obligations under this Employment Agreement. The Company will require any successor corporation (whether direct or indirect, and whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company to expressly assume and to agree to perform this Employment Agreement in the same manner and to the same extent as the Company, as if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a

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material breach of this Employment Agreement. As used in this Employment Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business or assets as aforesaid which assumes and agrees to perform this Employment Agreement by operation of law, or otherwise.

     (e) Assignment by Employee. Employee’s rights and obligations under this Employment Agreement are personal, and they shall not be assigned or transferred without the Company’s prior written consent.

     (f) Other Agreements. With the exception of the Company’s stock option plans (and related agreements), restricted stock plan (and related agreements) and incentive plans, and the guidelines referred to in Section 3(b), this Employment Agreement replaces and merges any and all previous agreements and understandings regarding all the terms and conditions of Employee’s employment relationship with the Company, and this Employment Agreement constitutes the entire agreement of the Company and Employee with respect to such terms and conditions.

     (g) Amendment. No amendment to this Employment Agreement shall be effective unless it is in writing and signed by the Company and by Employee.

     (h) Invalidity. If any provision of this Employment Agreement is held to be invalid, illegal or otherwise unenforceable, the remaining provisions shall be unaffected and shall continue in full force and effect, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.

     (i) Enforceability by Beneficiaries. This Employment Agreement shall inure to the benefit of and be enforceable by the parties hereto and their respective heirs, legal or personal representatives and successors and if Employee should die while any amount would still be payable to him hereunder if he had continued to live, all such amounts shall be paid in accordance with the terms of this Employment Agreement to Employee’s devisee, legatee or other designee or, if there is no such designee, to his estate.

     (j) Reimbursement of Certain Expenses. To the extent Employee shall prevail in any arbitration proceeding pursuant to Section 6(c) to resolve any dispute or controversy between Employee and the Company arising under or in connection with this Employment Agreement, then the Company shall reimburse Employee, or pay on Employee’s behalf, all of Employee’s reasonable expenses, including without limitation attorneys’ fees, incurred by Employee in connection with the arbitration.

IN WITNESS WHEREOF, the Company and Employee have executed this Employment Agreement in multiple originals to be effective as set out above.

HARVEST NATURAL RESOURCES, INC.	KEITH L. HEAD
/s/ James A. Edmiston	/s/ Keith L. Head
James A. Edmiston President and Chief Executive Officer

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EX-10.2

Exhibit 10.2

HARVEST NATURAL RESOURCES

Stock Option Agreement

          Agreement (this “Agreement”) made at Houston, Texas, USA, as of May 7, 2007, by and between HARVEST NATURAL RESOURCES, INC. (the “Company”) and Keith L. Head (the “Optionee”).

     1.  Definitions:

(a)	“BOARD” OR “BOARD OF DIRECTORS” shall mean the Board of Directors of the Company.
(b)	“CODE” shall mean the Internal Revenue Code of 1986, as amended from time to time.
(c)	“COMMITTEE” shall mean the Human Resources Committee of the Board of Directors, or, if there is no Human Resources Committee, the committee designated by the non-employee members of the Board of Directors to administer the Company’s long-term incentive plans.
(d)	“FAIR MARKET VALUE” of Stock shall mean the average of the highest price and the lowest price at which Stock shall have been sold on the applicable date as reported by the New York Stock Exchange Composite Transactions. In the event that the applicable date is a date on which there were no such sales of Stock, the Fair Market Value of Stock on such date shall be the mean of the average of the highest price and the lowest price at which Stock shall have been sold on the last trading day preceding such date.
(e)	“STOCK” shall mean the common stock of the Company.
(f)	“SUBSIDIARY” shall mean any corporation or similar legal entity (other than the Company) in which the Company or a Subsidiary of the Company owns fifty percent (50%) or more of the total combined voting power of all classes of stock, or such lesser amount of ownership determined by the Committee.
(g)	“TOTAL DISABILITY” and “TOTALLY DISABLED” shall normally have such meaning as that defined under the Company’s group insurance plan covering total disability and determinations of Total Disability normally shall be made by the insurance company providing such coverage on the date on which the Employee, whether or not eligible for benefits under such insurance plan, becomes Totally Disabled. In the absence of such insurance plan or in the event the individual is a Director or Consultant, the Committee shall make such determination.

     It is hereby agreed as follows:

2. Grant of Option; Consideration. The Company hereby grants to the Optionee on May 7, 2007, a nonqualified stock option to purchase up to 50,000 shares of the Company’s Common Stock, par value $0.01 per share (the “Shares”), at an exercise price of $10.065 per share (the “Option”). The Option granted hereunder is not intended to constitute an incentive stock option within the meaning of Section 422 of the Code. The terms of the Option are subject to adjustment in certain circumstances, as provided in this Agreement.

The Optionee shall be required to pay no consideration for the grant of the Option, except for his agreement to serve as an employee of the Company or any Subsidiary and other agreements set forth herein.

3.

Vesting. Subject to all of the terms and conditions of this Agreement, including acceleration of vesting in the event of a Change of Control or Total Disability, the Optionee may purchase up to 16,667 Shares upon exercise of this Option on or after May 6, 2008, an additional 16,667 Shares upon exercise of this Option on or after May 6, 2009, and the remaining 16,666 Shares upon exercise of this Option on or after May 6, 2010.

4.

Term and Termination of Service. This Option, to the extent it has not been previously exercised, shall expire at 5:00 p.m. (Central Time) on May 6, 2014 or, if earlier, at 5:00 p.m. (Central Time):

(i)	on the date 3 months after the Optionee ceases to be an employee of the Company or any Subsidiary for any reason other than a Change of Control, Total Disability or death;
(ii)	on the date 12 months after the Optionee ceases to be an employee of the Company or any Subsidiary by reason of Total Disability;
(iii)	on the date 12 months after the date of the Optionee’s death while in the employ of the Company or a Subsidiary or within 3 months after the termination of such employment; or
(iv)	on the date 12 months after the Optionee’s termination of employment or service if such employment or service is terminated within 730 days after the effective date of a Change of Control.

Except in the case of a termination subject to (ii) above, the Option shall be exercisable after the date of such termination of Optionee’s service or employment only to the extent the Option was exercisable at the date of such termination. In the case of termination subject to (ii) above, any Options that are not exercisable shall become exercisable effective as of Optionee’s termination date.

Notwithstanding anything to the contrary in the Agreement, if and for so long as Optionee is subject to an Employment Agreement with the Company, then the terms of the Employment Agreement will govern the early expiration of the Option including,

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without limitation, vesting and expiration dates. In the event of any conflict between the Employment Agreement and this Agreement, the terms of the Employment Agreement shall govern.

5.	Option Exercise. The Option may be exercised in whole or in part (to the extent then exercisable) by contacting the Company’s designated agent for processing Option exercises. An Option exercise must be accompanied by payment in full of the exercise price (i) in cash, (ii) through the withholding of shares of Stock (which would otherwise be delivered to the Optionee) with an aggregate Fair Market Value on the exercise date equal to the aggregate exercise price of the Option, (iii) a combination of a cash payment and such surrender of shares, (iv) by means of a broker-assisted cashless exercise to the extent then permitted under rules and regulations adopted by the Committee, or (v) in such other manner as may then be permitted under rules and regulations adopted by the Committee. As soon as practicable after the valid exercise of the Option, the Company shall deliver to the Optionee one or more stock certificates representing the Shares so purchased, with any requisite legend affixed.
6.	Non-Transferability. No right or interest of the Optionee in the Option shall be pledged, encumbered, or hypothecated to or in favor of any third party or shall be subject to any lien, obligation, or liability of the Optionee to any third party. The Option shall not be transferable to any third party by the Optionee otherwise than (i) by will or the laws of descent and distribution, (ii) pursuant to a qualified domestic relations order as defined under the Code or Title I of the Employee Retirement Income Security Act of 1974 to an immediate family member, or (iii) to the extent authorized by the Committee, to an immediate family member of the Optionee who acquires the options from the Optionee through a gift.
7.	Compliance with Laws and Regulations. The obligation of the Company to deliver Shares upon the exercise of this Option is conditioned upon compliance by the Optionee and by the Company with all applicable laws and regulations, including regulations of federal and state agencies. If requested by the Company, the Optionee shall provide to the Company, as a condition to the valid exercise of this Option and the delivery of any certificates representing Shares, appropriate evidence, satisfactory in form and substance to the Company, that he is acquiring the Shares for investment and not with a view to the distribution of the Shares or any interest in the Shares, and a representation to the effect that the Optionee shall make no sale or other disposition of the Shares unless (i) the Company shall have received an opinion of counsel satisfactory to it in form and substance that such sale or other disposition may be made without compliance with registration or other applicable requirements of federal and state laws and regulations, and (ii) all steps required to comply with such laws and regulations in connection with the sale or other disposition of the Shares have been taken and all necessary approvals have been received. The certificates representing the Shares may bear an appropriate legend giving notice that the shares have not been registered under the Securities Act of 1933 (the “Act”) and are “Restricted Securities” as that term is defined in Rule 144 under the Act and, further, giving notice of the foregoing restrictions on transfer of the Shares, and any other restrictive legend deemed necessary or appropriate by the Committee.

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8.

Tax Withholding. Whenever Shares are to be delivered upon exercise of the Option, the Company shall be entitled to require as a condition of delivery or payment that the Optionee remit or, in appropriate cases, agree to remit when due an amount sufficient to satisfy all federal, state, and local withholding tax requirements relating thereto. The Optionee will be entitled to elect to have the Company withhold from the Shares to be delivered upon the exercise of the Option, a sufficient number of such shares to satisfy the Optionee’s federal, state, and local withholding tax obligations relating to the Option exercise to the extent then permitted under rules and regulations adopted by the Committee and in effect at the time of the exercise of the Option. In such case, the Shares withheld or the shares surrendered will be valued at the Fair Market Value at the time of the exercise of the Option.

9.

Administration.

(i)	The Committee. This Agreement shall be administered by the Committee. Subject to such approvals and other authority as the Board may reserve to itself from time to time, the Committee shall, consistent with the provisions of the Agreement, from time to time establish such rules and regulations and appoint such agents as it deems appropriate for the proper administration of this Agreement, and make such determinations under, and such interpretations of, and take such steps in connection with this Agreement as it deems necessary or advisable.
(ii)	Authority of the Committee. Subject to the provisions herein, the Committee shall have the full power to construe and interpret this Agreement and to amend the terms and conditions of this Agreement to the extent such terms and conditions are within the sole discretion of the Committee; provided, however, that no amendments shall, without the consent of the Optionee, alter or impact any rights or obligations under this Agreement.
(iii)	Decisions Binding. All determinations and decisions of the Committee as to any disputed question arising under this Agreement, including questions of construction and interpretation, shall be final, binding and conclusive upon all parties. The Optionee hereby agrees to be bound by all decisions and determinations of the Committee.

10. Adjustment Upon Changes in Stock. The number of shares of Stock covered by this Agreement and the Option exercise price per share shall be adjusted proportionately, and any other appropriate adjustments shall be made, for any increase or decrease in the total number of issued and outstanding Stock (or change in kind) resulting from any change in the Stock or Options through a merger, consolidation, reorganization, recapitalization, subdivision or consolidation of shares or other capital adjustment or the payment of a stock dividend or other increase or decrease (or change in kind) in such shares. In the event of any such adjustment, fractional shares shall be eliminated.

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11. Change in Control. Notwithstanding anything to the contrary in this Agreement, in the event of a Change in Control, any outstanding Options that are not exercisable shall become exercisable effective as of the date of a Change in Control. If an Optionee’s employment is terminated within 730 days after the effective date of a Change in Control, to the extent that any Option was exercisable at the time of the Optionee’s termination of employment, such Option may be exercised within twelve months following the date of termination of employment.

For purposes of this Agreement, a “Change in Control” means the occurrence of any of the following:

(i)	The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) (a “Covered Person”) of beneficial ownership (within the meaning of rule 13d-3 promulgated under the Securities Exchange Act of 1934) of 50 percent or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Voting Securities”); provided, however, that for purposes of this subsection (a) of this Article X the following acquisitions shall not constitute a Change in Control: (i) any acquisition by the Company, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (iii) any acquisition by any entity pursuant to a transaction which complied with clauses (i), (ii) and (iii) of subsection (c) of this Article X; or
(ii)	Individuals who, as of the date of this Agreement, constitute the board of directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the board of directors of the Company; provided, however, that any individual becoming a director after the date of this Agreement whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors; or
(iii)	The consummation of a reorganization, merger or consolidation or sale of the Company, or a disposition of at least 50 percent of the assets of the Company including goodwill (a “Business Combination”), provided, however, that for purposes of this subsection (c), a Business Combination will not constitute a change in control if the following three requirements are satisfied:

following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Company’s voting securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50 percent of the ownership interests of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of

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such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries or other affiliated entities) in substantially the same proportions as their ownership immediately prior to such Business Combination, (ii) no Covered Person (excluding any employee benefit plan [or related trust] of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 50 percent or more of, respectively, the ownership interests in the entity resulting from such Business Combination, except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the board of directors of the Company, providing for such Business Combination. For this purpose any individual who becomes a director after the date of this Agreement, and whose election or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors.

12.	Transfer of Employment. Transfer of employment between the Company and a Subsidiary shall not constitute termination of employment or service for the purpose of this Agreement. Whether any leave of absence shall constitute termination of employment for the purposes of this Agreement shall be determined in each case by the Committee.
13.	Governing Law. This Agreement shall be governed and construed in accordance with the laws of Texas, except to the extent that federal law applies.
14.	Binding Effect: Integration: No Other Rights Created. This Agreement shall be binding upon the heirs, executors, administrators and successors of the parties. This Agreement constitutes the entire agreement between the parties with respect to the Option, and supersedes any prior agreements or documents with respect to the Option. No amendment, alteration, suspension, discontinuation or termination of this Agreement which may impose any additional obligation upon the Company or impair the rights of the Optionee with respect to the Option shall be valid unless in each instance such amendment, alteration, suspension, discontinuation or termination is expressed in a written instrument duly executed in the name and on behalf of the Company and by the Optionee. Neither this Agreement nor the grant of the Option shall constitute an employment agreement, nor shall either confer upon the Optionee any right with respect to his continued status with the Company.

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HARVEST NATURAL RESOURCES, INC.
BY:	/s/ James A. Edmiston
	James A. Edmiston
	TITLE: President and CEO
OPTIONEE:
/s/ Keith L. Head
Keith L. Head
DATE: June 6, 2007

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EX-10.3

Exhibit 10.3

HARVEST NATURAL RESOURCES

Employee Restricted Stock Agreement

          Agreement (the “Agreement”) made at Houston, Texas, USA, as of May 7, 2007, by and between HARVEST NATURAL RESOURCES, INC. (the “Company”) and Keith L. Head (the “Grantee”).

     1.  Definitions:

(a)	“AWARD” means, individually or collectively, a grant under this Agreement of Restricted Stock, subject to the terms and provisions of this Agreement.
(b)	“BOARD” OR “BOARD OF DIRECTORS” shall mean the Board of Directors of the Company.
(c)	“CODE” shall mean the Internal Revenue Code of 1986, as amended from time to time.
(d)	“COMMITTEE” shall mean the Human Resources Committee of the Board of Directors, or, if there is no Human Resources Committee, the committee designated by the non-employee members of the Board of Directors to administer the Company’s long-term incentive plans.
(e)	“EMPLOYEE” shall mean any person employed by the Company or a Subsidiary on a full-time salaried basis. The term “Employee” shall not include a person hired as an independent contractor, leased employee, consultant or a person otherwise designated by the Company at the time of hire as not eligible to participate in this Agreement.
(f)	“RESTRICTED STOCK” shall mean Stock which is issued pursuant to Paragraph 2. of this Agreement.
(g)	“STOCK” shall mean the common stock of the Company.
(h)	“SUBSIDIARY” shall mean any corporation or similar legal entity (other than the Company) in which the Company or a Subsidiary of the Company owns fifty percent (50%) or more of the total combined voting power of all classes of stock, or such lesser amount of ownership determined by the Committee.
(i)	“TOTAL DISABILITY” and “TOTALLY DISABLED” shall normally have such meaning as that defined under the Company’s group insurance plan covering total disability and determinations of Total Disability normally shall be made by the insurance company providing such coverage on the date on which the Employee, whether or not eligible for benefits under such insurance plan, becomes Totally Disabled. In the absence of such insurance plan or in the event the individual is a Director or Consultant, the Committee shall make such determination.

     It is hereby agreed as follows:

2. Grant of Stock; Consideration. The Company hereby grants (the “Grant”) the Grantee 20,000 shares of Stock of the Company’s Common Stock, par value $0.01 per share (the “Restricted Shares”). The Grant granted hereunder is not intended to constitute “performance based compensation” as that term is used in Section 162(m) of the Code.

The Grantee shall be required to pay no consideration for the Grant, except for his agreement to serve as an employee of the Company or any Subsidiary and other agreements set forth herein.

3.	Incorporation of Agreement. Notwithstanding anything to the contrary in this Agreement, if and for so long as Grantee is subject to an Employment Agreement with the Company, then the terms of the Employment Agreement will govern the early expiration of the Grant including, without limitation, vesting and expiration dates. In the event of any conflict between the Employment Agreement and this Agreement, the terms of the Employment Agreement shall govern.
4.	Restriction Period. Subject to all of the terms and conditions of this Agreement, including the lapse of restrictions in the event of a Change of Control, the period during which the restrictions set forth in this Agreement shall apply to the Restricted Shares shall commence on May 7, 2007 and end on May 6, 2010 (the “Restriction Period”). At the end of the Restriction Period, all restrictions under this Agreement applicable to the Restricted Stock shall lapse, and, subject to paragraph 7 of this Agreement, a stock certificate for the number of shares of Common Stock equal to the number of Restricted Shares shall be delivered to the Grantee, the Grantee’s beneficiary or the Grantee’s estate, whichever is applicable at the time of delivery.
5.	Restrictions. The Restricted Stock will be represented by a Stock certificate registered in the name of the Grantee. Such certificate, accompanied by a separate duly-endorsed stock power, shall be deposited with the Company. The Grantee shall be entitled to receive dividends during the Restriction Period and shall have the right to vote such Restricted Stock and all other stockholder’s rights, with the exception that (i) the Grantee will not be entitled to delivery of the Stock certificate during the Restriction Period, (ii) the Company will retain custody of the Restricted Stock during the Restriction Period, (iii) none of the Restricted Stock may be sold, transferred, assigned, pledged or otherwise encumbered or disposed of during the Restriction Period and (iv) all of the Restricted Stock shall be forfeited and all of the Grantee’s rights to such Restricted Stock shall terminate without further obligation on the part of the Company unless the Grantee remains in the continuous employ of the Company or a Subsidiary during the Restriction Period.

If, prior to the date on which the Restriction Period ends and applicable restrictions lapse, the Grantee’s employment with the Company is terminated for any reason except Total Disability, death, and layoff with benefits under a Company severance plan, any

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Restricted Stock shall be canceled and all rights there under shall cease. If reason for termination is Total Disability, death, or layoff with severance benefits, the Restriction Period will continue and applicable restrictions will lapse as if the Employee had continued employment with the Company.

6.	Non-Transferability. The Grant shall not be transferable to any third party by the Grantee otherwise than by will or the laws of descent and distribution.
7.	Compliance with Laws and Regulations. The obligation of the Company to deliver Restricted Shares is conditioned upon compliance by the Grantee and by the Company with all applicable laws and regulations, including regulations of federal and state agencies. If requested by the Company, the Grantee shall provide to the Company, as a condition to the delivery of any certificates representing Restricted Shares, appropriate evidence, satisfactory in form and substance to the Company, that he is acquiring the Restricted Shares for investment and not with a view to the distribution of the Restricted Shares or any interest in the Restricted Shares, and a representation to the effect that the Grantee shall make no sale or other disposition of the Restricted Shares unless (i) the Company shall have received an opinion of counsel satisfactory to it in form and substance that such sale or other disposition may be made without compliance with registration or other applicable requirements of federal and state laws and regulations, and (ii) all steps required to comply with such laws and regulations in connection with the sale or other disposition of the Restricted Shares have been taken and all necessary approvals have been received. The certificates representing the Restricted Shares may bear an appropriate legend giving notice that the Shares have not been registered under the Securities Act of 1933 (the “Act”) and are “Restricted Securities” as that term is defined in Rule 144 under the Act and, further, giving notice of the foregoing restrictions on transfer of the Restricted Shares, and any other restrictive legend deemed necessary or appropriate by the Committee.
8.	Tax Withholding. Upon lapse of the restrictions applicable to the Restricted Stock (or if you make the election under Section 83 (b) of the Code to be taxed immediately upon the award of such shares), you must arrange for the payment to the Company of applicable withholding taxes promptly after you have been notified of the amount due by the Company. If no election is made under Section 83 (b) of the Code, you must pay such withholding taxes or have Restricted Stock withheld to pay such withholding taxes upon the lapse of restrictions applicable to the Restricted Stock.
9.	Administration.

a. The Committee. This Agreement shall be administered by the Committee. Subject to such approvals and other authority as the Board may reserve to itself from time to time, the Committee shall, consistent with the provisions of the Agreement, from time to time establish such rules and regulations and appoint such agents as it deems appropriate for the proper administration of this Agreement, and make such determinations under, and such interpretations of, and

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	take such steps in connection with this Agreement as it deems necessary or advisable.
b.	Authority of the Committee. Subject to the provisions herein, the Committee shall have the full power to construe and interpret this Agreement and to amend the terms and conditions of this Agreement to the extent such terms and conditions are within the sole discretion of the Committee; provided, however, that no amendments shall, without the consent of the Grantee, alter or impact any rights or obligations under this Agreement.
c.	Decisions Binding. All determinations and decisions of the Committee as to any disputed question arising under this Agreement, including questions of construction and interpretation, shall be final, binding and conclusive upon all parties. The Grantee hereby agrees to be bound by all decisions and determinations of the Committee.

10.

Adjustment Upon Changes In Stock. The number of shares granted as Restricted Stock, shall be adjusted proportionately, and any other appropriate adjustments shall be made, for any increase or decrease in the total number of issued and outstanding Stock (or change in kind) resulting from any change in the Stock through a merger, consolidation, reorganization, recapitalization, subdivision or consolidation of shares or other capital adjustment or the payment of a stock dividend or other increase or decrease (or change in kind) in such shares. In the event of any such adjustment, fractional shares shall be eliminated.

11.

Change in Control. Notwithstanding anything to the contrary in this Agreement, in the event of a Change in Control, during the Restriction Period, all restrictions imposed hereunder on such Restricted Stock shall lapse effective as of the date of the Change in Control.

For purposes of this Agreement, a “Change in Control” means the occurrence of any of the following:

a. The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) (a “Covered Person”) of beneficial ownership (within the meaning of rule 13d-3 promulgated under the Securities Exchange Act of 1934) of 50 percent or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Voting Securities”); provided, however, that for purposes of this subsection (i) of this Paragraph 11 the following acquisitions shall not constitute a Change in Control: (i) any acquisition by the Company, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (iii) any acquisition by any entity pursuant to a transaction which complied with clauses (i), (ii) and (iii) of subsection (c) of this Paragraph 11; or

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b.

Individuals who, as of the date of this Agreement, constitute the board of directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the board of directors of the Company; provided, however, that any individual becoming a director after the date of this Agreement whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors; or

c.

The consummation of a reorganization, merger or consolidation or sale of the Company, or a disposition of at least 50 percent of the assets of the Company including goodwill (a “Business Combination”), provided, however, that for purposes of this subsection (c), a Business Combination will not constitute a change in control if the following three requirements are satisfied:

following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Company’s voting securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50 percent of the ownership interests of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries or other affiliated entities) in substantially the same proportions as their ownership immediately prior to such Business Combination, (ii) no Covered Person (excluding any employee benefit plan [or related trust] of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 50 percent or more of, respectively, the ownership interests in the entity resulting from such Business Combination, except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the board of directors of the Company, providing for such Business Combination. For this purpose any individual who becomes a director after the date of the Plan, and whose election or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of

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an actual or threatened election contest with respect to the election or removal of directors.

12.	Transfer of Employment. Transfer of employment between the Company and a Subsidiary shall not constitute termination of employment or service for the purpose of this Agreement. Whether any leave of absence shall constitute termination of employment for the purposes of this Agreement shall be determined in each case by the Committee.
13.	Governing Law. This Agreement shall be governed and construed in accordance with the laws of Texas, except to the extent that federal law applies.
14.	Grantee Bound by this Agreement. The Grantee hereby acknowledges receipt of this Agreement and agrees to be bound by all the terms and provisions thereof (as presently in effect or hereafter amended), and by all decisions and determinations of the Committee.
15.	Binding Effect: Integration: No Other Rights Created. This Agreement shall be binding upon the heirs, executors, administrators and successors of the parties. This Agreement constitutes the entire agreement between the parties with respect to the Grant, and supersedes any prior agreements or documents with respect to the Grant. No amendment, alteration, suspension, discontinuation or termination of this Agreement which may impose any additional obligation upon the Company or impair the rights of the Grantee with respect to the Grant shall be valid unless in each instance such amendment, alteration, suspension, discontinuation or termination is expressed in a written instrument duly executed in the name and on behalf of the Company and by the Grantee. Neither this Agreement nor the grant of the Grant shall constitute an employment agreement, nor shall either confer upon the Grantee any right with respect to his continued status with the Company.

(Signature page follows)

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HARVEST NATURAL RESOURCES, INC.
BY:	/s/ James A. Edmiston
	James A. Edmiston
	TITLE: President and CEO
GRANTEE:
/s/ Keith L. Head
Keith L. Head
DATE: June 6, 2007

ELECTION (FOR U.S. CITIZENS ONLY):

As permitted under Section 83 (b) of the Internal Revenue Code of 1986, as amended, I intend to make the following irrevocable election:

o  I intend to make the election permitted under Section 83 (b) of the Internal Revenue Code of 1986, as amended, to be taxed immediately on the award of the Restricted Shares. I understand the consequences and procedures for making this election, and I understand that it is my responsibility to file the election with the Internal Revenue Service.

þ  I do not intend to make the election permitted under Section 83 (b) of the Internal Revenue Code of 1986, as amended, and will be taxed upon the lapse of restrictions applicable to the Restricted Shares.

/s/ Keith L. Head  

Keith L. Head 

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EX-10.4

Exhibit 10.4

SEPARATION AGREEMENT

     This Separation Agreement (this “Agreement”) is between Harvest Natural Resources, Inc. a Delaware corporation (the “Company”), and Kerry R. Brittain (“Employee”) and is dated as of the latest date set forth beside the signatures of the parties at the end of this Agreement.

     WHEREAS, Employee and the Company are parties to an Amended and Restated Employment Agreement effective as of September 12, 2005 (the “Employment Agreement”);

     WHEREAS, Employee’s employment with the Company will end on July 15, 2007; and

     WHEREAS, the Company and Employee desire to reach agreement as to the terms of Employee’s separation from employment;

     NOW, THEREFORE, in consideration for the payments and benefits provided to Employee and the agreement and covenants of Employee and the Company as provided below this Agreement is made.

1. Separation Date. Employee’s separation date from the Company shall be July 15, 2007 (the “Separation Date”). Employee and the Company waive any requirement of a termination notice under the Employment Agreement. Under Section 1 of the Employment Agreement, the term of Employee’s employment with the Company shall be renewed as of May 31, 2007, until and including the Separation Date. Employee’s employment with the Company shall terminate on the close of business on the Separation Date.

2. Termination of Employment Agreement; Continuation of Covenants. Employee and the Company agree that Employee’s employment with the Company shall terminate on the Separation Date. This termination of employment is by mutual agreement of Employee and the Company, and Sections 4(a), 4(b), 4(c) and 4(j) of the Employment Agreement shall not apply with respect to Employee’s termination of employment on the Separation Date. Employee acknowledges, agrees and affirms that the covenants of Employee in Section 5 of the Employment Agreement including, without limitation, in respect of property of the Company, trade secrets, confidential information and non-competition continue to apply after the Separation Date in accordance with the terms of the Employment Agreement. Employee further acknowledges and agrees that the benefits provided to Employee in this Separation Agreement provide additional and sufficient consideration for such covenants.

3. Consulting Agreement. Upon execution of this Agreement, the Company and Employee shall execute and deliver a Consulting Agreement substantially in the form as set forth in Exhibit A hereto.

4. Bonus. The Company shall make lump sum bonus payment to Employee of $245,000 on the date that is six months following the date of Employee’s Separation From Service. For purposes of this Agreement “Separation From Service” has the meaning ascribed to that term in section 409A of the Internal Revenue Code of

1986, as amended (the “Code”) and the rules and regulations issued thereunder by the Department of Treasury and the Internal Revenue Service.

5. Stock Options. Employee has been granted the stock options listed in Exhibit B attached hereto (the “Options”). Notwithstanding any provision in the Employment Agreement or the stock option agreements pertaining to the Options to the contrary, after the termination of his employment on the Separation Date, Employee shall have until the tenth anniversary of the dates of the grants of the Options to exercise his rights with respect to all Options which are vested or become vested during this period. Following the Separation Date the Options shall continue to vest just as if Employee had continued in the employ of the Company. Except as modified by this Separation Agreement, all exercises of the Options must be in accordance with and pursuant to the terms of the applicable option plans and option agreements. The Company shall take any and all further actions necessary or reasonably requested by Employee to effect the foregoing, and to confirm Employee’s ability to exercise the Options in accordance with the provisions of this paragraph 5, without regard to the termination of his position as an employee of the Company. Nothing contained in this Separation Agreement shall be deemed to accelerate or otherwise alter the vesting schedule for the Options.

6. Restricted Stock. Employee has been awarded the restricted stock listed in Exhibit B attached hereto (the “Restricted Stock”). Notwithstanding any provision in the Employment Agreement or the restricted stock agreements pertaining to the Restricted Stock to the contrary, the Restriction Period (as defined in the applicable long term incentive plans) will lapse on the Separation Date, and a certificate or certificates for the Restricted Stock, less any shares retained to meet withholding requirements, will be delivered to Employee within 30 days after the Separation Date. The Company shall take any and all further actions necessary or reasonably requested by Employee to permit the Restricted Stock to vest in accordance with the provisions of this paragraph 6, without regard to the termination of his position as an employee of the Company.

7. Continuation Benefits. After Employee’s termination of employment on the Separation Date, the Company will pay the premiums through April 20, 2009 for term life insurance on Employee providing coverage of not less than $1,550,000 under similar terms and conditions to the term life insurance provided executives of the Company. Except for those welfare benefits expressly provided to Employee under this paragraph 7, except as specified in paragraph 9, from and after the Separation Date Employee shall have no right to any other welfare benefits including, without limitation, short term disability, long term disability and accidental death and dismemberment.

8. Other Compensation and Benefits. After Employee’s termination of employment on the Separation Date, Employee shall have no further rights under Section 3 of the Employment Agreement, other than Section 3(g) (regarding reimbursement of expenses in the performance of services under the Employment Agreement) and

2

Section 3(i) regarding the right to indemnification under the Company’s bylaws). Without limiting the generality of the foregoing sentence, after Employee’s termination of employment on the Separation Date, (a) Employee shall not be entitled to the payment of any bonus based on the Company’s performance contract guidelines and (b) Employee shall be paid for any accrued and unused vacation time as of the Separation Date in accordance with the Company’s standard policy.

9. Change of Control Benefits.

     a. If a Change of Control occurs prior to the Separation Date or within 240 days after the Separation Date, then, in addition to the benefits accruing to Employee under this Separation Agreement and notwithstanding any other provision in this Separation Agreement, (i) on the later of the date of the Change of Control or the date that is six months following the date of Employee’s Separation From Service, the Company shall pay to Employee the Bonus Amount, (ii) until the second anniversary of the date of the Change of Control, the Company shall continue to provide Employee and Employee’s dependents with the same level of life, disability, accident, dental and health insurance coverages Employee and Employee’s dependents were receiving immediately before the Separation Date, (iii) on the later of the date of the Change of Control or the date that is six months following the date of Employee’s Separation From Service, the Company shall pay to Employee, an amount equal to $490,000, (iv) any outstanding Options shall become fully vested and exercisable, and the restriction period on the Restricted Stock will continue and will lapse as if Employee remained in the employ of the Company, and (v) the Company will pay Employee, an additional amount such that the net amount retained by Employee pursuant to the benefits described in clauses (i), (iii) and (iv) of this paragraph 9(a), after any excise tax imposed under Section 4999 of the Code shall be equal to the amount that Employee would have received pursuant to those benefits before payment of such excise tax.

     b. For purposes of this Agreement, the term “Bonus Amount” means twice the amount of the higher of (i) the highest annual bonus earned by Employee for the last three fiscal years ending prior to the Separation Date and (ii) (A) the target bonus percentage, if any, as established by the Company’s Board of Directors for the fiscal year in which the Change of Control occurs multiplied by (B) $245,000.

     c. For purposes of this Agreement, a “Change of Control” means the occurrence of any of the following:

     (1) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934) (a “Covered Person”) of beneficial ownership (within the meaning of rule 13d-3 promulgated under the Securities Exchange Act of 1934) of 50 percent or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Voting Securities”); provided, however, that for purposes of this subsection (1) of this paragraph 9(c) the following acquisitions shall not constitute a Change of Control:

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(i) any acquisition by the Company, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (iii) any acquisition by any entity pursuant to a transaction which complied with clauses (i), (ii) and (iii) of subsection (3) of this paragraph 9(c); or

     (2) individuals who, as of the date of this Agreement, constitute the board of directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the board of directors of the Company; provided, however, that any individual becoming a director after the date of this Separation Agreement whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors; or

     (3) the consummation of a reorganization, merger or consolidation or sale of the Company, or a disposition of at least 50 percent of the assets of the Company including goodwill (a “Business Combination”), provided, however, that for purposes of this subsection (3) of this paragraph 9(c), a Business Combination will not constitute a change of control if, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Company’s voting securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50 percent of the ownership interests of the entity resulting from such Business Combination (including without limitation an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries or other affiliated entities) in substantially the same proportions as their ownership immediately prior to such Business Combination, (ii) no Covered Person (excluding any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 50 percent or more of, respectively, the ownership interests in the entity resulting from such Business Combination, except to the extent that such ownership existed prior to the Business Combination, and (iii) at least a majority of the members of the board of directors of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the board of directors of the Company, providing for such Business Combination. For this purpose any individual who becomes a director after the date of this Agreement, and whose election or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election

4

	contest with respect to the election or removal of directors.
d.	If the dental, accident or health insurance benefits specified in paragraph 9(a) are not provided through an arrangement that is fully insured by a third party the following provisions shall apply to the reimbursement of such benefits. The benefits eligible for reimbursement shall be the benefits that were available to Employee and his dependents under the provisions of the Company’s group medical, accident and dental benefits plans as in effect immediately prior to the earlier of the Separation Date or the date on which the Change of Control occurs. Employee shall be eligible for reimbursement for covered medical, accident and dental expenses incurred during the period commencing on the date of the Change of Control and ending on the second anniversary of the date of the Change of Control. The amount of medical, accident and dental expenses eligible for reimbursement provided during Employee’s taxable year will not affect the expenses eligible for reimbursement in any other taxable year (with the exception of applicable lifetime maximums specified in the plans). The Company shall reimburse an eligible medical, accident or dental expense on or before the last day of Employee’s taxable year following the taxable year in which the expense was incurred. Employee’s right to reimbursement is not subject to liquidation or exchange for another benefit.
e.	Any tax gross-up payment due pursuant to paragraph 9(a) shall be made by the Company by April 15 of Employee’s taxable year next following Employee’s taxable year in which Employee remits the related taxes to the Internal Revenue Service.

10. General.

     a. All applicable withholding, including but not limited to federal, state and Social Security taxes, and any applicable garnishment, liens or other attachments, shall be deducted from all amounts payable or stock distributable to Employee.

     B. Employee shall comply with applicable securities laws, as they relate to securities of the Company owned by him, from and after the Separation Date.

11. Effect on Other Agreements. The Employment Agreement shall not terminate and shall govern the terms of Employee’s employment with the Company until the Separation Date. To the extent (and only to the extent) applicable, this Agreement shall be deemed to be an amendment and novation to the Employment Agreement. Employee acknowledges the value of the matters described in this Agreement and agrees that those matters are adequate consideration for such amendment and novation. After the Separation Date, to the extent (and only to the extent) there is a conflict between this Agreement and the Employment Agreement, the provisions of this Agreement shall govern. Provisions of the Employment Agreement that do not conflict with the provisions of this Agreement shall continue in full force and effect. Without limiting the foregoing provisions of this paragraph 11, the miscellaneous provisions contained in Section

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6 of the Employment Agreement shall apply to this Agreement. If Employee’s employment with the Company is terminated before the Separation Date, the provisions of the Employment Agreement shall prevail, without giving effect to the provisions of this Agreement, and this Agreement shall terminate upon any such termination of employment. The Indemnification Agreement between the Company and Employee shall not terminate on the Separation Date and shall continue to be effective as to all periods during which Employee has served as an officer of the Company.

12. Release.

     a. Employee hereby releases any and all claims of any kind that he may have against the Company and its subsidiaries, affiliates, and any of its or their directors, officers, employees, or agents (in this paragraph 12, collectively “the Company”) that arise from any events occurring on or before the date on which this Agreement is executed by Employee. Employee waives any and all rights that he might have to bring any suit, charge, or demand of any kind against the Company for claims that he is releasing. The claims that Employee is releasing include, but are not limited to (i) all claims arising under federal, state, or local laws prohibiting discrimination based upon age, race, sex, religion, disability, national origin, or any other basis; (ii) any claims for “wrongful discharge”, breach of contract, or other legal restrictions on the Company’s right to control or terminate the employment of its employees; (iii) all claims under any tort or contract theory, including but not limited to infliction of emotional distress, harassment, libel, slander, fraud, misrepresentation, or invasion of privacy; (iv) all claims, including but not limited to claims for retaliation, arising under common law or any federal, state, or local statute, including but not limited to federal laws prohibiting discrimination based upon age, race, sex, religion, disability, national origin or any other basis, such as those arising under the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Equal Pay Act of 1963, the 1978 Pregnancy Discrimination, the Rehabilitation Act of 1973, or any state counterparts to such acts; and (v) all claims for discharge, demotion, suspension, threats, harassment or discrimination under the Sarbanes-Oxley Act of 2002. The release contained in this paragraph 12 does not waive claims arising under this Agreement for indemnification for acts within the scope of employment as a result of Employee being a director, officer, employee or agent of the Company or of any other corporation or any partnership, joint venture, trust or other enterprise for which Employee served as such at the request of the Company.

     b. Employee understands that the release contained in this paragraph 12(b) specifically waives all claims arising under any statute, regulation or contract, or under common law, which are based on events occurring at any time before the signing of this Agreement; (ii) does not waive rights or claims based on events occurring after the signing of this Agreement; (iii) includes the future consequences of events that occurred before the signing of this Separation Agreement; and (iv) includes all possible claims, including without limitation those of which Employee is not currently aware or that Employee does not now suspect to exist.

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13. Miscellaneous.

     a. Successors; Binding Agreement. In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

     b. Enforceability by Beneficiaries. This Agreement shall inure to the benefit of and be enforceable by Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Employee shall die while any amount is payable to the Employee hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Employee’s estate.

     c. Amendment. No amendment to this Separation Agreement shall be effective unless it is in writing and signed by the Company and by Employee.

     d. Invalidity. If any part of this Agreement is held by a court of competent jurisdiction to be invalid or otherwise unenforceable, the remaining part shall be unaffected and shall continue in full force and effect, and the invalid or otherwise unenforceable part shall be deemed not to be part of this Agreement.

     e. Governing Law. This Separation Agreement shall be construed in accordance with the laws of the State of Texas.

Date:                     , 2007	HARVEST NATURAL RESOURCES, INC.
	By:
	Title:
Date:                     , 2007
	KERRY R. BRITTAIN

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EXHIBIT A TO SEPARATION AGREEMENT
BETWEEN HARVEST NATURAL RESOURCES,
INC. AND KERRY R. BRITTAIN

EXHIBIT B TO SEPARATION AGREEMENT
BETWEEN HARVEST NATURAL RESOURCES,
INC. AND KERRY R. BRITTAIN

Options:

	Grant		Exercise		Number		Expiration
Plan	Date		Price		of Options		Date
2001		7-15-02	$	4.800		75,000		7-15-12
2001		2-20-03		6.100		40,000		2-20-13
2004		5-26-04		13.010		19,500		5-26-14
2004		3-4-05		12.795		35,000		3-4-15
2004		3-2-06		9.605		70,000		3-2-16

Restricted Stock:

	Grant		Number
Plan	Date		of Shares
2004		5-26-04	4,800
2004		3-4-05	3,500
2004		3-2-06	5,000

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EX-10.5

Exhibit 10.5

CONSULTING AGREEMENT

     This Consulting Agreement (this Agreement”) is between Harvest Natural Resources, Inc., a Delaware corporation (the “Company”), and Kerry R. Brittain, with a residence at 2403 Hidden Shore Drive, Katy, Texas 75450 (“Consultant”), and is dated on the latest date set forth beside the signatures of the parties at the end of this Agreement.

RECITALS:

     A. The Company desires to engage Consultant to render consulting services;

     B. The Company and Consultant wish to memorialize the terms and conditions upon which Consultant is engaged to provide consulting services to the Company; and

     C. The Company and Consultant anticipate that the level of services Consultant will perform for the Company after July 15, 2007 will permanently decrease to no more than 20 percent of the average level of services performed by Consultant for the Company over the 36-month period immediately preceding July 16, 2007.

     NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

1. SERVICES AND NATURE OF RELATIONSHIP

     1.1 Engagement. The Company hereby retains Consultant and Consultant hereby accepts such appointment and agrees to perform the services covered by this Agreement with all due skill and care on the terms and conditions set forth in this Agreement. Consultant’s services shall be provided in connection with such assignments as the Company may make from time to time within the area of Consultant’s expertise.

     1.2 Reporting Relationship and Assignment. Consultant shall report to the President and Chief Executive Officer of the Company or his or the Company’s designees.

     1.3 Method of Performing Services. Consultant, as an independent contractor, shall determine the method, details, and means of performing any services furnished pursuant to this Agreement, but the services contemplated herein shall meet the approval of the Company. Consultant will devote sufficient time, attention and energies to the business and interests of the Company and diligently and to the best of his ability perform such duties incident to this Agreement, and perform such other duties as requested commensurate with the terms of this Agreement.

     1.4 Compliance With Law and Company Policy. Consultant represents that he is familiar with the safety and health rules of the Company and its subsidiaries. Consultant shall comply with all applicable safety and health rules, and policies, procedures and codes of conduct of the Company and its subsidiaries, together with all

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applicable federal, state or local safety and health laws, rules, regulations or orders in which the Company and its subsidiaries do business.

     Consultant acknowledges that he has been provided copies of, and has read and understands the Company’s Code of Business Conduct and Ethics (the “Code”) and the Company’s Compliance Manual, and Consultant agrees:

               (a) to comply with all policies of the Company and its subsidiaries, including, without limitation, the Code and the Compliance Manual;

               (b) to comply with all applicable laws and regulations, including, without limitation, the laws and regulations of the United States and Venezuela; and

               (c) to promptly report as provided in the Code any violation or suspected violation of any law, regulation or Company policy.

     This clause will not require the Company to police Consultant’s compliance with the Code, laws, regulations or company policies and shall not impose any obligation on the part of the Company or its affiliates under such laws, regulations or Company policies. Nothing contained in this provision shall be interpreted as enlarging the legal duty of the Company or its affiliates to Consultant or alter the status of Consultant as set forth in this Agreement.

     The preceding paragraphs of this provision are agreed to by both the Company and Consultant to be of the highest importance. A breach or violation of any of the terms of this provision by Consultant will be considered to be a material breach of this Agreement.

     1.5 No Authority to Bind. Consultant shall have no authority to obligate the Company in any manner whatsoever in the absence of specific prior written authority from the President and Chief Executive Officer of the Company permitting Consultant to do so, including without limitation incurring expenses or entering into contracts.

     1.6 Status as Independent Consultant. Consultant acknowledges and agrees that, in performing services pursuant to this Agreement, Consultant shall be serving as an independent contractor. Consultant agrees that Consultant is not and will not become an employee of the Company or any of its subsidiaries while this Agreement is in effect. Consultant agrees that the provision of services pursuant to this Agreement will not entitle Consultant to any rights or benefits afforded to the employees of the Company and its subsidiaries, including such benefits as worker’s compensation insurance, health insurance, sick leave, retirement benefits or any other employment benefit. Consultant agrees that the indemnification provisions of Section 5.1 shall apply to any claims relating to the subject matter of this Section 1.5.

     1.7 Payment of Taxes. Consultant agrees that he is solely responsible for paying when due all income taxes, including estimated taxes, as a result of or in connection with the compensation paid by the Company to Consultant for services

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rendered under this Agreement. The Company shall issue applicable U.S. or other tax forms or reports to Consultant with respect to the compensation paid pursuant to this Agreement. Consultant hereby indemnifies, and undertakes to defend the Company and hold it free and harmless from and against any demands or claims for any taxes, interest or penalties assessed by any taxing authority with respect to sums paid to Consultant pursuant to this Agreement.

2. TERM AND TERMINATION

     2.1 Term. This Agreement shall become effective on July 16, 2007. The term of this Agreement shall commence on July 16, 2007, and shall continue through June 30, 2008 (the “Term”).

     2.2 Termination. This Agreement may be terminated by either party at any time for material breach by the other party, upon ten (10) days written notice, if the breaching party has failed to remedy the breach leading to the termination during that ten (10) day period.

3. FEES AND EXPENSES

     The Company shall compensate Consultant for services rendered pursuant to this Agreement as follows:

     3.1 Rates. The Company agrees to compensate Consultant for services provided pursuant to this Agreement at the rate of $200 per hour of service rendered under this Agreement, except when providing services requiring travel outside of Houston, in which case the rate will be $2,000 per day including travel time.

     3.2 Expense Reimbursements. The Company agrees to reimburse Consultant for reasonable business expenses incurred by Consultant in performing services pursuant to this Agreement; provided, however, that Consultant shall have furnished the Company promptly with receipts or other documentation concerning any reimbursable business expenses.

     3.3 Timing of Payments. Consultant shall provide the Company with a statement describing his services and indicating the number of hours (or, in the case of travel outside of Houston, the number of days) of service he has provided under this Agreement in each calendar month within ten (10) days after the end of that calendar month. The Company shall pay Consultant the amount shown on any such statement within thirty (30) days after receipt. Payments to Consultant for reimbursement for expenses incurred shall be made within thirty (30) days after the Company’s receipt of an expense statement.

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4. ADDITIONAL COVENANTS BY CONSULTANT

     4.1 Property of the Company.

          4.1.1 Consultant covenants and agrees that upon the termination of this Agreement for any reason or, if earlier, upon the Company’s request, he shall promptly return all Property which had been entrusted or made available to Consultant by the Company.

          4.1.2 The term “Property” shall mean all records, files, memoranda, reports, price lists, drawing, plans, sketches, keys, codes, computer hardware and software and other property of any kind or description prepared, used or possessed by Consultant during the term of this Agreement relating to the Company or its business, operations or prospects (and any duplicates of any such property) together with any and all information, ideas, concepts, discoveries, and inventions and the like conceived, made, developed or acquired at any time by Consultant individually or with others during the term of this Agreement relating to the Company or its business, operations or prospects.

     4.2 Confidential Information. Except as required in the performance of Consultant’s obligations hereunder, or otherwise specifically required by law, or with the prior written consent of the Company on a case-by-case basis, Consultant shall hold confidential and shall not in any manner disclose, use for personal benefit, or directly or indirectly use for the benefit of any other person, Confidential Information (defined below) that has come or shall hereafter come into Consultant’s possession. Consultant recognizes the importance to the Company of protecting its Confidential Information without regard to the passage of time, and further recognizes that this restriction shall continue in full force and effect during the Term of this Agreement and for a period of five (5) years after the end of the Term, except as to Confidential Information which constitutes a trade secret, in which case the restriction shall continue so long as such information remains a trade secret. No later than the end of the Term of this Agreement, Consultant shall return to the Company, without making and retaining copies thereof, all documents, records, computer information, maps and charts and other repositories containing Confidential Information. Consultant shall also return Confidential Information to the Company promptly following its usefulness in performing its consulting services. As used in this Agreement, the term “Confidential Information” shall mean all information of a confidential or non-public nature concerning the Company or any of its affiliates existing or proposed business activities, including without limitation, geological, geophysical and seismic data and interpretations, computer analysis, maps, charts, reports, results of operations, proposed methods of operation, gas plant designs, specifications or processes, financial information, information with respect to parties with whom the Company or its affiliates has or intends to have business relationships and similar information.

     4.3 Ownership. Consultant agrees that all processes, technologies, computer analysis, discoveries and inventions whether new or enhanced and expanded, whether patentable or not, conceived, developed, invented or made by Consultant during the Term

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of this Agreement which grew out of Consultant’s work for the Company shall belong to the Company and not to Consultant. Consultant shall not contribute or publish articles based upon the results of the services performed under this Agreement unless such articles are approved in advance by the Company.

     4.4 Conflict of Interest and FCPA. Consultant covenants and agrees that Consultant and his personnel and their immediate family will not receive and has not received any payments, gifts or promises and Consultant will not engage in any employment or business enterprises that in any way conflict with its ability to provide services for, or conflict with the interests of, the Company or its affiliates under this Agreement. Consultant shall make all reasonable efforts consistent with the terms of this Agreement to prevent occurrences of and eliminate conditions which could result in a conflict with the best interest of the Company and its affiliates. Consultant shall make all reasonable efforts to prevent conflicts of interest from arising out of relationships between Consultant, his agents or his employees, on the one hand, and agents or employees of the Company or its affiliates, on the other hand.

     Consultant shall not make any payments, loans, gifts or of anything of value or promises or offers of payments, loans, gifts or of anything of value, directly or indirectly, to or for the use or benefit of any official or employee of any government, political party or candidate for political office or to any other person for the purpose of obtaining or retaining business, or if Consultant knows, or has reason to believe, that any part of such payments, loans or gifts, or promise or offer, would violate the laws or regulations of any country, including, without limitation, Venezuela and the United States, having jurisdiction over Consultant or the Company or its affiliates.

     By signing this Agreement, Consultant acknowledges that he has not made any payments, loans, gifts or of anything of value, or promises of payments, loans, gifts or of anything of value to or for the use or benefit of any official or employee of any government, political party or candidate for political office or to any other person for the purpose of obtaining or retaining business, or which would violate the laws or regulations of any country, including, without limitation, Venezuela and the United States, having jurisdiction over Consultant or the Company or its affiliates.

     4.5 Reasonable and Continuing Obligations. Consultant agrees that Consultant’s obligations under Section 4 are obligations which will continue beyond the date this Agreement terminates and that such obligations are reasonable and necessary to protect the Company’s legitimate business interests. The Company additionally shall have the right to take such other action as the Company deems necessary or appropriate to compel compliance with the provisions of this Section 4 (including, without limitation, seeking a court order for specific performance).

5. GENERAL PROVISIONS

     5.1 Indemnities. CONSULTANT RECOGNIZES THAT INTERNATIONAL ACTIVITIES, INCLUDING ON-SITE WORK AND TRAVEL INVOLVE A HIGH DEGREE OF RISK, WHICH RISK CONSULTANT ALONE

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ASSUMES AS PART OF THE CONSIDERATION FOR HIS COMPENSATION. CONSULTANT HEREBY AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD THE COMPANY AND ITS AFFILIATES, CONTRACTORS AND SUBCONTRACTORS AND ALL OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, LICENSEES AND INVITEES (HEREINAFTER REFERRED TO COLLECTIVELY AS THE “COMPANY GROUP”) HARMLESS FROM AND AGAINST ANY AND ALL LOSS, COST, DAMAGE OR EXPENSE OF EVERY KIND AND NATURE (INCLUDING, WITHOUT LIMITATION, FINES, PENALTIES, REMEDIAL OBLIGATIONS, TAXES, COURT COSTS AND EXPENSES AND REASONABLE ATTORNEYS’ FEES INCLUDING ATTORNEYS’ FEES INCURRED IN THE ENFORCEMENT OF THIS INDEMNITY CLAUSE) (HEREINAFTER REFERRED COLLECTIVELY AS “INDEMNIFIABLE CLAIMS”) ARISING OUT OF BODILY INJURY (INCLUDING, WITHOUT LIMITATION, SICKNESS TO OR DEATH OF PERSONS AND LOSSES THEREFROM TO RELATIVES OR DEPENDENTS) TO CONSULTANT, LOSS OR DESTRUCTION OF PROPERTY OR INTERESTS IN PROPERTY OF CONSULTANT, OR IN ANY MANNER CAUSED BY, RESULTING FROM, INCIDENT TO, CONNECTED WITH OR ARISING OUT OF PERFORMANCE OF THE SERVICES HEREUNDER WHETHER OR NOT RESULTING IN WHOLE OR IN PART FROM THE SOLE, CONCURRENT, OR COMPARATIVE NEGLIGENCE, OR STRICT LIABILITY OF THE COMPANY GROUP, OR DEFECT IN THE PREMISES, EQUIPMENT, OR TOOLS OWNED, OPERATED OR CONTROLLED BY THE COMPANY GROUP. THIS INDEMNIFICATION AND RELEASE SHALL BE BINDING UPON THE HEIRS, NEXT OF KIN, BENEFICIARIES, ASSIGNS, EXECUTORS AND ADMINISTRATORS OR OTHER PERSONAL REPRESENTATIVES OF CONSULTANT. THE COMPANY HEREBY AGREES TO RELEASE, DEFEND, INDEMNIFY AND HOLD THE CONSULTANT HARMLESS FROM AND AGAINST ANY AND ALL INDEMNIFIABLE CLAIMS ARISING OUT OF BODILY INJURY (INCLUDING SICKNESS TO OR DEATH OF PERSONS AND LOSSES THEREFROM TO RELATIVES OR DEPENDENTS) TO THE COMPANY GROUP, OR LOSS OR DESTRUCTION OF PROPERTY OR INTERESTS IN PROPERTY OF THE COMPANY GROUP, IN ANY MANNER CAUSED BY, RESULTING FROM, INCIDENT TO, CONNECTED WITH OR ARISING OUT OF PERFORMANCE OF THE SERVICES HEREUNDER WHETHER OR NOT RESULTING IN WHOLE OR IN PART FROM THE SOLE, CONCURRENT, OR COMPARATIVE NEGLIGENCE, OR STRICT LIABILITY OF THE CONSULTANT, OR DEFECT IN THE PREMISES, EQUIPMENT, OR TOOLS OWNED, OPERATED OR CONTROLLED BY THE CONSULTANT.

     5.2 Notice. Notices and all other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail. Notices to the Company shall be sent to 1177 Enclave Parkway, Suite 300, Houston, Texas 77077. Notices and communications to Consultant shall be sent to the Consultant’s address provided above. Either party may change its/his address by providing notice to the other party consistent with the terms of this section.

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     5.3 Assignment/Subcontracting. This Agreement, and all duties and obligations hereunder are personal in nature, and Consultant shall not assign this Agreement, or any portion hereof, voluntarily or involuntarily by operation of law, or enter into any subcontract for the performance of any services under this Agreement, or any portion thereof, without the Company’s prior written approval. If the Company consents to a subcontract hereunder, Consultant shall assume full responsibility for the acts or omissions of subcontractors. The Company may assign this Agreement (1) to any affiliate of the Company, (2) to any person who agrees in writing to be bound by the terms of this Agreement or (3) upon written notice to and written consent by Consultant, which written consent shall not be unreasonably withheld.

     5.4 Audit. The Company, or its designated representative, shall have the right to inspect and audit Consultant’s books, records and all associated documents to ensure compliance with the terms and conditions of this Agreement. Consultant agrees to maintain such books, records and associated documents for a period of two (2) years from the end of the calendar year in which such costs were invoiced and to make such books, records and associated documents available to the Company at all reasonable times within such period and for so long thereafter as any dispute existing as of the expiration of such period remains unresolved. The Company may photocopy or reproduce any such books and records.

     5.5 Governing Law. This Agreement and all matters relating to the meaning, validity or enforceability thereof and the performance of the services hereunder shall be governed by the laws of the State of Texas, exclusive of its conflict of laws rule.

     5.6 Arbitration. SUBJECT TO THE PROVISIONS OF SECTION 4.5 OF THIS AGREEMENT, ANY UNRESOLVED DISPUTE OR CONTROVERSY BETWEEN CONSULTANT AND THE COMPANY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT SHALL BE SETTLED EXCLUSIVELY BY ARBITRATION, CONDUCTED BEFORE A SINGLE ARBITRATOR IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT. THE ARBITRATOR SHALL NOT HAVE THE AUTHORITY TO ADD TO, DETRACT FROM, OR MODIFY ANY PROVISION HEREOF. A DECISION BY THE ARBITRATOR SHALL BE IN WRITING AND WILL BE FINAL AND BINDING. JUDGMENT MAY BE ENTERED ON THE ARBITRATOR’S AWARD IN ANY COURT HAVING JURISDICTION. THE ARBITRATION PROCEEDING SHALL BE HELD IN HOUSTON, TEXAS.

     5.7 Drugs, Deadly Weapons and Searches. Consultant shall abide by the following Company policy regarding drugs, deadly weapons and alcohol:

               (a) Using, possessing, or being under the influence of alcoholic beverages, illegal drugs, narcotics, or other controlled substances, and unauthorized drugs for which a person does not have a current prescription, while on the Company’s Premises, is prohibited. Possession of deadly weapons or explosives while on the Company’s Premises is prohibited.

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               (b) The term “the Company’s Premises” is used in its broadest sense to include all work locations, buildings, structures and all other facilities owned or controlled by the Company or one of its affiliated companies or otherwise being utilized for the business of the Company or any of its affiliates.

               (c) Violation of this Company policy will be cause for immediate removal from the Company’s Premises, and termination as a material breach under this Agreement.

     5.8 Computer Facilities. If required for Consultant to perform services under this Agreement, Consultant will have access to certain parts of the computer facilities and programs of the Company and its affiliates. Consultant agrees that such access shall be subject to the following conditions:

               (a) Access to computers of the Company and its affiliates shall be made only in the manner prescribed by a Company representative. Access shall be made using only terminals owned or controlled by the Company and its affiliates and only by Consultant.

               (b) Any user identification code provided by the Company or its affiliates shall be used solely for access to the computers for conduct of the services for the Company or its affiliates and only by Consultant.

               (c) Consultant shall not access software or data on the computer system of the Company and its affiliates other than Consultant’s software or data without the Company’s prior written consent.

               (d) If Consultant should accidentally or inadvertently access any software of the Company and its affiliates or data which Consultant is not authorized to access, then Consultant shall immediately inform the Company and shall deliver to the Company or destroy as the Company may advise any tangible materials (and all copies thereof) resulting from such improper access.

               (e) The Company or its affiliates may copy, use, disclose, distribute, dispose of or destroy anything placed on computer systems of the Company or any of its affiliates by Consultant.

     5.9 Entire Agreement and Modification. This Agreement supersedes any and all agreements, either oral or written, between the parties with respect to the rendering of consulting services by Consultant for the Company, and contains all representations, covenants and agreements between the parties with respect to the rendering of such services by Consultant. Any modification of this Agreement will be effective only if it is in writing and signed by the party to be charged.

     5.10 Severability. If any term, provision, covenant or condition of this Agreement shall be or become illegal, null, void or against public policy, or shall be held by an arbitrator to be illegal, null or void or against public policy, the remaining provisions of this Agreement shall remain in full force and effect and shall not be

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affected, impaired or invalidated thereby. The term, provision, covenant or condition that is so invalidated, voided or held to be unenforceable shall be modified or changed by the parties to the extent possible to carry out the intentions and directives set forth in this Agreement.

     5.11 Successors and Assigns. Except as restricted herein, this Agreement shall be binding on and shall inure to the benefit of the parties and their respective heirs, legal representatives, successors and permitted assigns.

     5.12 Waiver. No waiver of any provision or consent to any action shall constitute a waiver of any other provision or consent to any other action, whether or not similar. No waiver or consent shall constitute a continuing waiver or consent or commit a party to provide a waiver in the future except to the extent specifically set forth in writing. Any waiver given by a party shall be null and void if the party requesting such waiver has not provided a full and complete disclosure of all material facts relevant to the waiver requested. No waiver shall be binding unless executed in writing by the party making the waiver.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date(s) set forth below.

Date:                     , 2007	HARVEST NATURAL RESOURCES, INC.
	By
	Title:
Date:                     , 2007	KERRY R. BRITTAIN

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EX-31.1

Exhibit 31.1

I, James A. Edmiston, certify that:

1.	I have reviewed this report on Form 10-Q of Harvest Natural Resources, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) or 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) or 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 25, 2007

/s/ James A. Edmiston  

James A. Edmiston 

President and Chief Executive Officer 

EX-31.2

Exhibit 31.2

I, Steven W. Tholen, certify that:

1.	I have reviewed this report on Form 10-Q of Harvest Natural Resources, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) or 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) or 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 25, 2007

/s/ Steven W. Tholen  

Steven W. Tholen 

Senior Vice President - Finance, Chief Financial Officer and Treasurer 

EX-32.1

Exhibit 32.1

Accompanying Certificate

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

     The undersigned Chief Executive Officer of Harvest Natural Resources, Inc. (the “Company”) does hereby certify as follows:

     This report on Form 10-Q of Harvest Natural Resources, Inc. for the period ended June 30, 2007 and filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: July 25, 2007	By:	/s/ James A. Edmiston
		James A. Edmiston
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Accompanying Certificate

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

     The undersigned Chief Financial Officer of Harvest Natural Resources, Inc. (the “Company”) does hereby certify as follows:

     This report on Form 10-Q of Harvest Natural Resources, Inc. for the period ended June 30, 2007 and filed with the Securities and Exchange Commission on the date hereof (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: July 25, 2007	By:	/s/ Steven W. Tholen
		Steven W. Tholen
		Senior Vice President - Finance, Chief Financial Officer and Treasurer