Harvest Natural Resources, Inc. announced the Venezuelan National Assembly has approved the formation of mixed company Petrodelta, S.A. and the direct award of three additional fields to Petrodelta.
Harvest President and Chief Executive Officer, James A. Edmiston, said, "National Assembly approval of the formation of Petrodelta and the direct award of the three fields to Petrodelta is a key event to finalizing the conversion process. The new fields, Isleno, Temblador and El Salto, awarded Petrodelta will allow us to apply, on a much broader scale, the same technologies we used in developing the South Monagas Unit (SMU fields) which resulted in materially improved oil recovery." The new fields and the SMU fields will be developed under a 20-year grant from the Venezuelan government.
An 80 percent owned Harvest affiliate will own 40 percent of Petrodelta and Corporacion Venezolana del Petroleo S.A. (CVP) will own the remaining 60 percent.
National Assembly approval clears the way for the formation of Petrodelta and receipt of the transfer decree, after which an economic adjustment will be made to obtain the same economic result as if the conversion had been completed on April 1, 2006. For the period of April 1, 2006 through March 31, 2007, on a 100 percent basis, 6.7 million barrels of oil and 14.8 billion cubic feet of natural gas were delivered to Petroleos de Venezuela S.A. (PDVSA).
The price for oil delivered to PDVSA is based on a formula which reflects the world market price for crude oil of this quality. Historically, this price has averaged 70 percent of the price for West Texas Intermediate crude oil, or approximately $47 per barrel for the April 1, 2006 to March 31, 2007 period. The natural gas sales price is $1.54 per thousand cubic feet.After a one-third royalty, Petrodelta revenue for oil and gas deliveries during this period is estimated to be about $225 million while cash operating, capital and administrative costs were $46 million. Petrodelta is expected to retain a portion of its net proceeds to fund income tax payments and field development and pay the balance to Petrodelta's shareholders.
Via: Scandinavian Oil & Gas
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