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Harvest Natural Resources Inc. (HNR)
Q2 2008 Earnings Call
August 7, 2008 11:00 am ET
James Edmiston - President and Chief Executive Officer
Stephen Haynes - Chief Financial Officer, Vice President, Treasurer
Keith Head - Vice President and General Counsel
Bryan Frank - Cumberland Associates
Subash Chandra - Jefferies & Co.
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Good morning and welcome to Harvest Natural Resources 2008 second quarter results conference call. This morning our press release was broadcast in the company’s fax and email list. If you would like to be on one of those lists or you did not receive yours due to a technical difficulty please call our office at 281-899-5700. In a few hours a reply of today’s call will be available in the Investor Relations portion of our website www.harvestnr.com. Additionally a telephonic reply will be available this afternoon by dialing 402-220-2661.
This conference call will contain various forward-looking statements and information including management’s expectations regarding financial, operating and results. These statements are based on management’s beliefs as well as assumptions made by and information currently available to management.
Although the company believes that the expectations reflected in such forward-looking statements are reasonable we can give no assurance to such expectations will proved to have been correct. Actual results may differ materially from the company’s expectations due to changes in operating performance, project or drilling schedules, oil and gas prices as well as other technical, political and economic factors.
Additionally detailed information concerning a number of factors that could cause actual results to differ materially from today’s information is readily available in the company’s SEC filings under the heading Risk Factors. The SEC permits oil and gas companies to disclose their filings with the SEC only proved reserves that a company is demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions.
We may use certain terms in this call such as resource potential, probable reserves, possible reserves, prospective resources and similar terms which the SECs guidelines generally prohibit us from including in our filings. Investors are urged to consider closely the discloser in our form 10K which is available from the SEC on our website. At this time I would like to turn the call over to James Edmiston, Harvest Natural Resource’s President and Chief Executive Officer.
Thank you Keith and thanks for joining us today on the call. Hopefully you’ve all had a chance to review our earnings release. I’ll make a few comments regarding our Venezuela business and our exploration portfolio and then Steve Hynes will discuss our second quarter financial results. Finally I’ll wrap up and then we’ll open up for questions.
Let’s start with Petrodelta in Venezuela. Operationally Petrodelta delivered 1.2 million barrels of oil or 13,600 barrels a day during the second quarter compared with 1.3 million barrels or 14,700 barrels per day in the same period one year ago. Oil production was up slightly over the first quarter production of 13,300 barrels per day and on target with guidance for the quarter. Sequentially production by month for the quarter was 12,200 barrels per day for April which was affected by a maintenance turnaround at the plant, 13,500 barrels per day for May and 15,100 barrels per day average for June.
During the second quarter 3.1 billion cubic feet of gas or 34 million cubic feet of gas per day was delivered compared with 3.4 billion cubic feet last year. As we said before one of the key objectives of Petrodelta’s business plan is to grow production rapidly with an early focus on development and proved reserve base.
Petrodelta currently has one work over rig which began normal well maintenance and the conversion of wells from gas lift to an electric submersible pump in November of last year. The work over maintenance program essentially arrested decline for the fields with both the first and second quarter 2008 production exceeding the fourth quarter of 2007. These conversations will continue both in the Uracoa fields and the Temblador fields over the coming months.
Petrodelta has the second work over rig under contract which is expected to begin work in the Petrodelta fields later this year. The first drilling rig was finally mobilized in the Uracoa field in April and spuded its first well UM 164 on April 21. Well UM 164 began production on May 29 with the initial rates exceeding 1,600 barrels of oil per day.
Similarly our UM 165 was placed on production at an initial rate of 1,500 barrels per day on July 3. Basically during the second quarter production reflects new production volumes for only one well, UM 164 and for only one month of the quarter. June production volumes with one new well producing for the month averaged both in excess of 15,000 barrels per day as I said before.
Preliminarily July production which includes both the 164 and 165 wells averaged about 15,800 barrels of oil per day. Current production in the field is running about 16,500 barrels per day with the latest well the UM 166 having just been completed but not yet accounted for in those numbers.