Harvest Natural Resources Provides Guidance for 2003 and 2004 - Press Release Source: Harvest Natural Resources, Inc.

biz.yahoo.com biz.yahoo.com Thursday February 27, 6:00 am ET

HOUSTON, Feb. 27 /PRNewswire-FirstCall/ -- Harvest Natural Resources, Inc. (NYSE: HNR - News) today provided guidance for certain financial and operating assumptions for 2003 and 2004.

Oil production from Venezuela during 2003 is estimated at 21,000 to 23,000 barrels of oil per day (Bopd) assuming no further interruptions in production and a return to full production capability. The lower level of estimated production is the result of first quarter 2003 production curtailments and the Company's previously announced plans to defer the infill drilling program to 2004. Natural gas production and sales are expected to begin in the fourth quarter of this year resulting in projected combined 2003 oil and gas production of 22,000 to 25,000 barrels of oil equivalent per day (Boepd) compared with 26,600 barrels of oil per day in 2002. Combined oil and natural gas production is projected to increase in 2004 to between 31,000 to 36,000 Boepd.

Harvest President and Chief Executive Officer, Dr. Peter J. Hill, said, "The first quarter curtailments of production in Venezuela will reduce our 2003 annual oil production rates by 3,000 to 4,000 Bopd. This year will be a transition year for Harvest as we transform our production profile to include first production of natural gas. We plan to drill three oil wells in the West Bombal Field, which is a field that we have not previously developed. The opportunity to exploit sizeable natural gas reserves makes it more cost effective to complete future Uracoa Field oil wells just below the natural gas cap to maximize both oil and gas production in 2004 and beyond. As a result, additional drilling in the Uracoa Field will be delayed until 2004 after we begin producing natural gas."

Benton-Vinccler, C.A., our 80 percent owned Venezuelan company, has hedged a portion of its 2003 oil production by purchasing a West Texas Intermediate "put" to protect its 2003 cash flow. The put is for 10,000 Bopd for the period of March 1, 2003 through December 31, 2003. Due to the pricing structure for the Company's Venezuela oil, the put has the economic effect of hedging approximately 20,000 Bopd. The put has a strike price of $30.00 per barrel. The cost was $2.50 per barrel, or approximately $7.7 million.

Operating costs are expected to rise slightly to between $3.75 to 4.25 per barrel of oil equivalent (Boe) from $3.50 in 2002 due to increased water handling and workover expense before falling in 2004 to between $3.25 to $3.75 per Boe as production increases. As a result, net income is expected to be $4.0 million to $6.0 million and discretionary cash flow is projected to be between $30 million to $35 million.

Capital expenditures for 2003 are projected to be $45.0 to $50.0 million dollars compared with 2002 capital expenditures of $43.3 million. To partially fund the 2003 capital program, Benton-Vinccler borrowed $15.5 million in October 2002 to fund construction of the pipeline to deliver natural gas to Petroleos de Venezuela, S.A.

Harvest Natural Resources, Inc. headquartered in Houston, Texas, is an independent oil and gas exploration and development company with principal operations in Venezuela and Russia. For more information visit the Company's website at www.harvestnr.com.

                            Actual 2002    2003 Guidance    2004 Guidance
Production
Oil (Bopd)                       26,600  21,000 - 23,000  23,000 - 27,000
Natural Gas (MMcfpd)                 --           5 - 10          45 - 55
Boe per day                      26,600  22,000 - 25,000  31,000 - 36,000

Price
Oil ($/Bbl)                      $13.08  $12.00 - $12.50
Natural Gas ($/Mcf)                                $1.03

Costs per Boe
Operating                         $3.50    $3.75 - $4.25    $3.25 - $3.75
G & A                             $1.70    $1.60 - $1.75    $1.50 - $1.75

Income (loss) from Geoilbent ($MM) $1.6      $1.5 - $2.5

Net income ($MM)                 $100.4      $4.0 - $6.0
Diluted earnings per share        $2.78    $0.11 - $0.17

Discretionary cash flow *         $59.3    $30.0 - $35.0

Capital Expenditures ($MM)        $43.3    $45.0 - $50.0    $30.0 - $35.0

* Discretionary cash flow is defined as cash flows from operating
  activities before changes in operating assets and liabilities.

GAAP vs Non-GAAP Reconciliation:
Net cash provided by
 operating activities             $42.6    $28.0 - $30.0
Estimated total changes in
 operating assets & liabilities   $16.7      $2.0 - $5.0
Discretionary cash flow           $59.3    $30.0 - $35.0

This press release may contain "Forward-Looking Statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts included in this release may constitute forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it 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 schedules, oil and gas demands and prices, and other technical and economic factors.

Source: Harvest Natural Resources, Inc.