2010-08-10-2010-08-10-2010-08-10

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Close Date
Estimated Price
374MM
Description

Acquired 100% WI & operatorship in BlackGold, gaining 259 MMBOE 2P.

Calgary-based Harvest Operations Corp. (Toronto: HTE) has acquired the BlackGold oil-sands project in Alberta from its parent company Korea National Oil Corp., or KNOC, for C$374 million.

The asset includes a 100% working interest and operatorship in BlackGold, which consists of proved plus probable reserves of 259 million barrels of oil equivalent, with an incremental 30 million barrels of best estimate contingent resources, as of year-end 2009.

The first phase of development has been approved and will produce approximately 10,000 barrels per day. The operator has also made an application for the second phase of development, which would increase production to 30,000 barrels per day. The project will utilize steam assisted gravity drainage.

Harvest financed the acquisition by issuing additional shares to KNOC.

Project costs for the first phase of the project from 2010 to 2012 are estimated between C$450- to C$500 million. The steam generation and fluid processing facility has been committed to at a fixed cost of C$312 million.

Harvest's upstream capital budget for 2010 will increase to C$415 million to allow for the 2010 development costs of the project. KNOC has agreed to inject additional capital in Harvest to fund the project costs.

Harvest and KNOC have agreed to the issuance of 4.7 million shares, at a price of C$10.00 per share, to KNOC for total cash consideration of C$47 million to fund the company's capital increase. Funding is expected to take place on Aug. 20.