 EnerCom’s The Oil and Gas Conference 2012
EnerCom’s The Oil and Gas Conference 2012
August 13, 2012
August 13, 2012
Exhibit 99.1 |
 Forward Looking Statements
Forward Looking Statements
NYSE: HNR
www.harvestnr.com
1
Cautionary
Statements:
Certain
statements
in
this
presentation
are
forward-looking
and
are
based
upon
Harvest’s
current belief as to the outcome and timing of future events. All statements
other than statements of historical facts including
planned
capital
expenditures,
increases
in
oil
and
gas
production,
Harvest’s
outlook
on
oil
and
gas
prices,
estimates of oil and gas reserves, business strategy and other plans, estimates,
projections, and objectives for future operations,
are
forward-looking
statements
within
the
meaning
of
the
“safe
harbor”
provisions
of
the
Private
Securities
Litigation Reform Act of 1995. Important factors that could cause actual
results to differ materially from those in the forward-looking
statements herein include Harvest’s concentration of assets in Venezuela; timing and extent of changes
in commodity prices for oil and gas; political and economic risks associated with
international operations; and other risk factors as described in
Harvest’s Annual Report on Form 10-K and other public filings. Should one or more of these
risks or uncertainties occur, or should underlying assumptions prove incorrect,
Harvest’s actual results and plans could differ materially from those
expressed in the forward-looking statements. Harvest undertakes no obligation to publicly
update or revise any forward-looking statements.
Harvest may use certain terms such as resource base, contingent resources,
prospective resources, probable reserves, possible reserves, non-proved
reserves or other descriptions of volumes of reserves. These estimates are by their
nature more speculative than estimates of proved reserves and accordingly, are
subject to substantially greater risk of being actually realized by the
Company. Investors are urged to consider closely the disclosure in our 2011 Annual
Report on Form 10-K and other public filings available from Harvest at 1177
Enclave Parkway, Houston, Texas, 77077 or
from
the
SEC’s
website
at
www.sec.gov.
Contingent resources are resources that are potentially recoverable but not yet
considered mature enough for commercial
development
due
to
technological
or
business
hurdles.
Prospective
resources
are
those
quantities
of
hydrocarbons which are estimated, as of a given date, to be potentially recoverable
from undiscovered accumulations by application of future development
projects. They indicate exploration opportunities and development potential in the
event a discovery is made and should not be construed as contingent resources or
reserves. The contingent and prospective resources included in this
presentation were internally developed by Harvest Natural Resources. |
 About
Harvest About Harvest
NYSE: HNR
www.harvestnr.com
2
Market Data
Exchange/Ticker
NYSE: HNR
Market Capitalization *
$ 335 MM
Enterprise Value
$ 322 MM
Cash (06/30/2012)
$ 29 MM
Debt (06/30/2012)
$ 16 MM
Shares Outstanding
37.4 MM
Institutional Ownership
75%
*
As of August 09, 2012 |
 Highlights
Highlights
NYSE: HNR
www.harvestnr.com
3
Increased gross production in Venezuela to 39,000 BOPD, an
increase of 25% over average 2011
Q2 2012 oil production of 36,418 BOPD, 19% above Q2 2011
Production increases driven by drilling and infrastructure buildout
Exploration program:
Appraised Ruche oil discovery on Dussafu Block in Gabon
Acquired new 3D survey on Dussafu Block shallow water
October 2012 spud of Tortue exploration well in Dussafu Block
Indonesia and Oman prospects being matured for 2013 drilling
Reduced debt to $15.5 million in March 2012, down from
$81.2 million at year-end 2009 |
 2012
Outlook 2012 Outlook
NYSE: HNR
www.harvestnr.com
4
Petrodelta growing production, cash flow and EBITDA:
Q2 2012 vs. Q2 2011:
Oil Production:
Increased 19%
EBITDA:
Increased 19%
Cash From Operations:
Increased 32%
Estimated 40,300 BOPD average for 2012
Exploration drilling in Gabon:
Spud of Tortue exploration well in October 2012
Multiple targets with 62 MMBO mean unrisked reserve potential
If successful, will add to the already discovered resources of 23 MMBO
Consolidated development scenarios under evaluation
Sale of Venezuela interests:
On June 21, 2012, signed a Share Purchase Agreement (SPA) with PT Pertamina
(Persero),
the
national
oil
company
of
Indonesia,
to
sell
all
of
the
Company's
interests in Venezuela to Pertamina
$725.0 million transaction
$525.0 million net proceeds from the sale estimated after deductions for
transaction related costs and US taxes
|
 NYSE: HNR
www.harvestnr.com
5
Venezuela -
Venezuela -
Petrodelta
Petrodelta
32% equity interest in Petrodelta
Six fields, 9.9 billion barrels of gross oil-
in-place after 2012 remapping
Growth underway
Current production rate of 39,000
BOPD, 25% above 2011 average
Isleño producing 1900 BOPD from two
horizontal wells
El Salto producing 16,000 BOPD
including a new 3,500 BOPD producer
in Lower Morichal reservoir
Infrastructure build underway
Capital program funded 100% by
Petrodelta internal cash flow
Operations generating solid financial
performance
June 2012 CFO of $133 million (gross)
$84 million in dividends (net to HNR)
received since 2008
$9.8 million (net to HNR) in dividends
declared and receivable, still
outstanding
Cash
surplus
Jan
2010
–
June
2012:
$87 million net to HNR 32% interest
NYSE: HNR
www.harvestnr.com
5 |
 Petrodelta Production
Petrodelta Production
NYSE: HNR
www.harvestnr.com
6
2012 Outlook
40,300 BOPD average full year
37,300 BOPD average July 2012
$300 million capex for 2012
New fields infrastructure
5 rigs for development wells
22 new oil wells
Current
39.0 MBOPD
Average July
2012 37.3
MBOPD
0
10
20
30
40
50
60
70
0
1
2
3
4
5
6
7
8
9
Conversion Process
# of Drilling Rigs
Production Outlook
2004
2005
2006
2008
2009
2010
2011
2012
2007 |
 El
Salto Field El Salto Field
Planned central processing facility layout
NYSE: HNR
www.harvestnr.com
7
Petrodelta New Facilities
Petrodelta New Facilities
Phase 1 –
to 50 MBOPD
Phase 2 –
to 100 MBOPD
Phase 3 -
> 100 MBOPD |
 NYSE: HNR
www.harvestnr.com
8
Petrodelta New Facilities
Petrodelta New Facilities
El Salto Field
El Salto Field
Three phase separator being installed as part of facility expansion
|
 NYSE: HNR
www.harvestnr.com
9
Petrodelta New Facilities
Petrodelta New Facilities
El Salto Field
El Salto Field
Heater treater installation underway as part of facility expansion
|
 NYSE: HNR
www.harvestnr.com
10
Petrodelta New Facilities
Petrodelta New Facilities
Temblador Field
Temblador Field
Free-water knockout and treater operational with capacity of
15 MBOPD |
 Petrodelta Reserves Valuation
Petrodelta Reserves Valuation
NYSE: HNR
www.harvestnr.com
11
Ryder Scott reserve report @ 12/31/2011
WTI =
$96.2/BBL, Petrodelta oil price = $98.4/BBL
(Net to Harvest Natural Resources 32% Interest)
Net Resource Base*
Proved Probable Oil, MMBBL
38.7
53.5
101.9
Gas, BCF
27.8
41.9
29.5
Total, MMBOE
43.3
60.5
106.8
Proved
2P
3P
Reserves (MMBOE) *
43.3
103.8
210.5
After –
Tax PV10 ($MM):
As of 12/31/2011:
543
1,053
1,918
Per BOE
(1)
$12.5
$10.1
$9.1
* Net to HNR after 33.33% royalty.
(1)
Includes
the
new
Windfall
Profit
Tax.
The
impact
of
the
Windfall
Profit
Tax
change
has
been
calculated based on HNR’s current understanding of the new legislation. The
Venezuelan authorities have
yet
to
clarify
some
issues
related
to
the
implementation
of
the
tax.
Net HNR reserves at December 31, 2011
103.8 million BOE Proved and Probable
210.5 million BOE Proved, Probable and Possible
2012 drilling program at El Salto, Temblador and Isleño fields will continue to
drive reserve additions
Petrodelta Reserves Value
(After Tax
(2)
-
Net to HNR 32% Interest
)
(2)
After Venezuelan Income Taxes but before U.S. Income Taxes
0
500
1,000
1,500
2,000
2,500
NPV10…
NPV10…
NPV10…
Possible
Probable
Proved
Possible |
 Gabon
- Gabon -
Dussafu
Dussafu
NYSE: HNR
www.harvestnr.com
12
680,000 acre PSC, Offshore
Gabon
66.667% operated interest
23 MMBO Discovered resources
3 Exploration Period
4 year Period to May 27, 2016
Work commitment –
1 well and 3D
reprocessing
2012 Activity
4 Qtr spud of Tortue Prospect
Stacked targets, post-salt Madiela
and pre-salt Gamba and Dentale
Ruche Discovery (2011)
Commercial and Development
Studies
3D processing & reprocessing
Central 3D PSTM complete 3 Qtr
PSDM & inboard 3D reprocessing
commenced 2 Qtr
HNR PROPERTIES
GAMBA PROSPECTS/LEADS
OTHER PROSPECTS/LEADS
OIL FIELDS
GAS DISCOVERY
GABON
CONGO
ATLANTIC OCEAN
GABON
CONGO
Lucina
Etame
Yombo
Loango
Ruche
Walt
Whitman
Moubenga
GMC-1X
M’Bya
Tortue
Prospect
rd
th
rd
nd |
 Dussafu -
Dussafu -
Tortue Marine-A
Tortue Marine-A
NYSE: HNR
www.harvestnr.com
13
Post & pre-salt plays with stacked targets
4-way closure at pre-salt Gamba and Dentale
levels
Gamba –
top structure at 9120 ft subsea
Middle
Dentale
–
top
structure
at
9990
ft
subsea
Mean unrisked resource potential 62 MMBO
Consolidated chance of success 56%
Tortue Marine-A
SE
NW
Unrisked
Prospective
Resources
(MMBBL)
Mean
P10
P90
Risk
Madiela
16
32
4
8%
Gamba
22
38
9
29%
Middle
Dentale
24
50
5
35%
Red contour is P90 closure
Blue contour is P50 closure
Tortue Marine-A
Gamba
Structure
Dentale
Structure |
 Dussafu -
Dussafu -
Potential Value
Potential Value
NYSE: HNR
www.harvestnr.com
14
Visualisation of
Gamba structure with
Discoveries (green) and
Prospects (yellow)
Ruche
Walt
Whitman
N
Moubenga
Tortue
Unrisked Resources
(MMBBL)
Mean
Contingent Resource
23
Prospects (12)
235
Leads (12)
170
TOTAL
428
EMV Buildup of Dussafu Prospectivity
(net to HNR)
Incr. EMV,
$MM
Cum. EMV,
$MM
Tortue Prospect (2012) Plus Discovered
121
121
Next 3 Prospects
181
302
Remaining Prospects and Leads
222
524 |
 Indonesia -
Indonesia -
Budong-Budong
Budong-Budong
NYSE: HNR
www.harvestnr.com
15
747,862 acre PSC, onshore West Sulawesi,
Indonesia
64.4% interest
License commitments fulfilled
Favorable fiscal terms
Two major sub-basins
Extensive oil and gas seeps
Oil & gas encountered by LG-1 & KD-1 wells
Mature source demonstrated
Undrilled structures on seismic and surface anticlines
Proven trap system
Seals proven by LG-1 & KD-1 wells
Large-scale opportunity
Unrisked Prospective Resources (MMBBL)
Mean
Prospects (14)
767
Leads (10)
un-quantified
TOTAL
767 |
 Oman
- Oman -
Block 64
Block 64
NYSE: HNR
www.harvestnr.com
16
956,000 acre EPSA, onshore Oman
80% operated interest (Oman Oil has a 20%
interest)
Large Paleozoic gas and condensate play in
Ghaba Basin beneath shallow oil fields
Proximal to infrastructure for domestic and
LNG markets with offtake guaranteed by the
Omani Government
Mean Gross Unrisked Prospective
Resources
Condensate
(MMBBL)
Prospects (12)
261
6,491
Initial period current to May 2013
Work commitment fulfilled
Post-well
studies
–
post-mortem
PI
revision
–
based
on
results
of
MFS-1
and
AGN-1
Review potential for a pre-salt unconventional shale play on the
eastern portion of Block 64
G&G Studies for Ghaba Flank & Ghaba East
200 km 2D seismic acquisition
Reprocess 100 km2 of existing 3D seismic data
1 exploration well to Haima Supergroup
2012 Activity
Second
phase
–
May
2013
to
May
2016
Ghaba
East
Ghaba
Flank
MFS 1
AGN 1
Gas (BCF) |
 Asset Portfolio
Asset Portfolio
After Tax Expected Mean Value
After Tax Expected Mean Value
NYSE: HNR
www.harvestnr.com
17
Net EMV Dussafu and Exploration Upside: @10%, Based on Mean Resources and $80 /bbl WTI
Net EMV (US$ MM)
$525
$524
$420
After Tax Petrodelta
Transaction Value
Dussafu
Exploration Upside
The Expected Monetary Value (EMV) is a function of the dry hole cost of
the well, the NPV of the prospect/lead in the event of discovery and the chance of making a discovery. The value of the assets
presented in this chart is estimated by arithmetically adding the EMV10
of each of the prospects and leads for which a chance of success is available. Only prospects and leads with positive EMV are
included. The NPV of a discovery has been estimated using the mean
prospective resources of the prospect/lead. When applicable, the estimated value of the contingent resources is also included. There
can be no assurance that the estimates presented or the underlying
assumptions will be realized and that actual results of operations or future events will not be materially different from the estimates
presented. These estimates have been internally developed by Harvest
Natural Resources. |
 2012
Program 2012 Program
NYSE: HNR
www.harvestnr.com
18 |
 Why
Invest in Harvest? Why Invest in Harvest?
NYSE: HNR
www.harvestnr.com
19
Demonstrated ability to generate value through exploration
with exposure to high-potential exploration prospects in
Indonesia, Gabon and Oman
Building pipeline of future oil-focused plays
Strong balance sheet and organization
Significant valuation gap
Petrodelta CFO funding strong growth in production
Significant weight towards oil relative to our peers
Portfolio provides for significant value relative to stock price
Petrodelta transaction value of over $12/share after tax
|