Harvest Natural Resources Plans To Sell Venezuelan Assets

Transaction Type
Announce Date
Post Date
Estimated Price
373MM
Description

(Agreement announced terminated on Jan. 5) To purchase the outstanding shares of Harvest, including 32% interest in Petrodelta S.A.

Harvest Natural Resources Announces Termination Of Agreement To Sell Venezuela Interests

Harvest Natural Resources Inc. (NYSE: HNR) has entered into exclusive negotiations with Pluspetrol Venezuela S.A., an entity belonging to one of the leading exploration and production companies in Latin America, to sell the outstanding shares of Harvest for $373 million.

Under the proposed transaction, at closing Pluspetrol would retain Harvest's 32% interest in Petrodelta S.A., while Harvest's non-Venezuelan assets would be contributed to a new company, SpinCo, that would be spun off to Harvest's shareholders. SpinCo will be managed by Harvest's current management team.

The total consideration for the proposed transaction with Pluspetrol is $373 million. This consideration for the proposed transaction includes the assumption of the company's long-term debt and certain other obligations of the company. The proposed transaction would be subject to customary working capital adjustments upon closing.

The remaining assets to be spun-off will include Harvest's interest in Gabon, Indonesia, Colombia, and China, as Harvest continues its current process to maximize the value of these assets for its shareholders.

Harvest has agreed to negotiate exclusively with Pluspetrol for a specified period to reach a definitive merger agreement. There can be no assurance that these negotiations will result in the proposed transaction or any other transaction for the sale of Harvest or any of its assets.

The closing of the proposed transaction would be subject to, among other things, approval by the Government of the Bolivarian Republic of Venezuela and the shareholders of Harvest, as well as any applicable consents necessary to effect the proposed transaction and the spin-off of any remaining assets.

While negotiations of the proposed transaction with Pluspetrol move forward, Harvest will continue to explore interim capital raising opportunities to obtain sufficient financing to fund its current projects and other corporate expenses.

"In spite of the consistent, profitable growth of Petrodelta, Harvest has not received the corresponding dividends from free cash flow required to fund our diversification strategy. So, while our exploration programs have yielded significant success in Utah, Gabon and Indonesia, our uncompetitive cost of capital has placed our future growth possibilities at a distinct disadvantage. This proposed sale and spin-off affords the Company and its shareholders the ability to reap the benefits of our exceptional portfolio in the near term," James A. Edmiston, Harvest president and CEO, said in the release.

Harvest Natural Resources Inc. is an independent energy company engaged in the acquisition, exploration, development, production, and disposition of oil and natural gas properties. The company is headquartered in Houston.