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Harvest Natural Resources (HNR)
Q3 2012 Earnings Call
November 09, 2012 11:00 am ET
Keith L. Head – Vice President, General Counsel & Corporate Secretary
James A. Edmiston – President, Chief Executive Officer & Director
Stephen C. Haynes – Chief Financial Officer, Vice President – Finance & Treasurer
John Thomas Malone – Global Hunter Securities, LLC
Jason Wangler – Wunderlich Securities, Inc.
Anish Kapadia – Tudor, Pickering, Holt & Co.
Roger Harris – Newland Capital Management, LLC
Previous Statements by HNR
» Harvest Natural Resources CEO Discusses Q2 Results - Earnings Transcript
» Harvest Natural Resources, Inc. Q4 2008 Earnings Call Transcript
» Harvest Natural Resources Inc. Q2 2008 Earnings Call Transcript
Now I will turn the conference over to the Vice President and General Counsel for Harvest Natural Resources, Mr. Keith Head. Please go ahead, Mr. Head.
Keith L. Head
Thank you. Good morning and welcome to Harvest natural Resources 2012 third quarter results conference call. This morning our press release was broadcasted 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 replay of today’s call will be available in the Investor Relations portion of our website at www.harvestnr.com. Additionally, the telephonic replay will be available this afternoon by dialing 719-457-0820, pass code 6817420.
This conference call will contain various forward-looking statements and information including management’s expectations regarding financial, operating and other results. These statements are based on management’s beliefs, as well as assumptions made by and information currently available to the management.
Although the company believes that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove 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. Additional 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 and disclosure regarding our reserves. Investors are urged to consider closely the disclosure in our Form 10-K, which is available from the SEC or on our website.
At this time, I would like to turn the call over to James Edmiston, Harvest Natural Resources President and Chief Executive Officer.
James A. Edmiston
Thanks Keith and thanks for joining us today. I hope we got a chance to review the earnings release this morning. I’ll go over a brief operations summary, and then I’ll ask Steve to discuss the third quarter financials. And as usual after that we’ll open up for questions.
Starting in Venezuela, operationally Petrodelta delivered 3.5 million barrels of oil or about 38,000 barrels of oil per day to PDVSA during the third quarter compared to 3 million barrels or 32,800 barrels of oil per day in the same period a year ago to an increase of about 16% year-on-year.
As in the press release stated, current productions around 39,000 barrels a day. Admittedly, those numbers are below our expectations for the quarter and as such, we reduced our forecast average for the year accordingly as noted in the press release.
During the quarter, Petrodelta operated two drilling rigs and that continues today. The third rig, which was expected to commence operations in September, has not yet begun operations and it still undergoing some preoperational work and testing. We’re hopeful that that rig will begin drilling later this month in the Isleno field.
Also during the quarter Petrodelta received another new build rig, which is rigging up in the El Salto field that for commissioning and testing hopefully by year end. The knock on effect the delay in operations on the additional rigs as a reduction to our projected production forecast for the year.
Furthermore, during the quarter delays and infrastructure work at Temblador and El Salto coupled with downtime in excess of forecast due to electric system and pipeline outages, all these things contributed to reducing the overall production in sales volumes during the quarter. Simply put and in spite of sequential growth, production operations fell well short of our expectations for the quarter.
Moving on to exploration programs in Gabon, we believe we are days away from beginning operations on a [Tortue] well. The rig is set to set sail from Port Noire of Congo to the site as soon the BOP test and certifications are completed, which should be in the next few days. The rig Saipem Scarabeo 3 has undergone significant refurbishment and testing over the last few months. We look forward to getting underway around mid-month.
As discussed before, the Tortue prospects respective in three targets; the Gamba, Madiela and the Dentale and is the key well for us as we seek to build critical mass and reserves requited to move forward with development and production on the block. Assuming that the rig arrives on-site by mid-month, we should have some results to report by year-end. But as I said before, we are currently in BOP testing operations. We should have that complete this week assuming the BOPs test fine and are certified. Again, we’ll set tail in a couple of days. In the event that they do not test, we’ll be forced to delay a bit longer and have some replacements brought in.