Independent energy company,
Harvest Natural Resources Inc.
), has entered into exclusive talks to sell its outstanding
shares to Pluspetrol Venezuela S.A. for a consideration of
approximately $373 million.
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The deal is an outcome of the company's inability to keep up with
the struggles of financing its exploration activities. The
consideration would include the company's long-term debt of $76.1
million (as of Jun 30) as well as other obligations.
Argentina's Pluspetrol is expected to hold onto Harvest's 32%
stake at Petrodelta S.A., a joint venture between Harvest and
state-owned Petroleos de Venezuela SA. The remaining
non-Venezuelan assets would be spun-off to form a new company,
SpinCo, subject to approval from the government and Harvest
SpinCo will comprise the company's assets in Gabon, Indonesia,
Colombia, and China and will be governed by the company's current
management. While the stake at Petrodelta has not been fruitful
for Harvest, its interests at Utah, Gabon and Indonesia have been
Post announcement, shares of Harvest were up 26.5% to $5.25 when
the market closed on Sep 11.
The financials look bleak with Harvest reporting second quarter
loss of 11 cents per share wider than the Zacks Consensus
Estimate of a loss of 7 cents per share. The company also
reported a net loss of $4.5 million with loss from operations
increasing 31.8% y-o-y.
However, the company's global exploration portfolio is a
positive. Moreover, management plans to generate sufficient funds
for its current projects and enhance the value of its assets to
Harvest is an exploration and production company (E&P) that
has its principal operations in Venezuela and Russia. The
company's main focus rests on exploration, acquisition and
development of oil and gas fields.
Harvest currently retains a Zacks Rank #3 (Hold), implying that
it is expected to perform in line with the broader U.S. equity
market over the next 1 to 3 months.
Meanwhile, one can consider other energy explorers such as
Range Resources Corporation
Matador Resources Company
Carrizo Oil & Gas Inc.
) as good investment opportunities. All these stocks currently
sport a Zacks Rank #1 (Strong Buy).