Welcome!

News Feed Item

Harvest Announces 2013 Year End Results and Reserves Information

CALGARY, ALBERTA -- (Marketwired) -- 03/07/14 -- Harvest Operations Corp. (Harvest or the Company) announces its financial and operating results for the fourth quarter and full year ended December 31, 2013.

This press release is an overview of the quarterly and full year results for 2013 and should be read with the audited consolidated financial statements and Management's Discussion and Analysis (MD&A) for the year ended December 31, 2013 available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.

All financial data has been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board except where otherwise noted. All figures reported herein are in Canadian dollars unless otherwise stated.

2013 HIGHLIGHTS:


--  Net loss was $781.9 million, an increase of $60.9 million primarily due
    to the decreased cash contributions as noted below, offset by lower
    amount of depletion, depreciation and amortization (DD&A) and impairment
    losses recognized in 2013. Impairment losses of $458.9 million ($2012 -
    $535.5 million) and $24.1 million (2012 - $21.8 million) were recorded
    against the Downstream's and Upstream's property, plant and equipment
    (PP&E), respectively.
--  Cash contribution totaled $365.8 million for the year, a $174.4 million
    decrease from 2012. Cash contribution decreased $63.7 million in the
    Upstream operations mainly due to lower sales volumes, and cash
    deficiency increased by $110.7 million in the Downstream operations
    mainly due to lower average gross margins per bbl.
--  Upstream production averaged 52,473 boe/d for the year, a decrease of
    6,854 boe/d primarily due to natural declines, smaller 2012 and 2013
    capital drilling programs and dispositions of certain non-core producing
    properties.
--  Upstream capital additions of $322.3 million for the year were 28% lower
    compared to 2012. Upstream capital spending included the drilling of
    96.0 gross (84.1 net) wells with a success rate of approximately 98%.
--  During 2013 Harvest sold certain non-core oil and gas assets with
    approximately 2,500 boe/d of annualized production for cash proceeds of
    $173.9 million.
--  As at December 31, 2013, Harvest's total proved plus probable (P+P)
    reserves base was 464 MMBoe, a 6% decrease from 2012 due to downward
    technical revisions, non-core asset sales and lower production
    replacement due to smaller capital programs.
--  Capital additions for Phase 1 of the BlackGold oil sands project
    (BlackGold) totaled $444.5 million for the year reflecting a $280.4
    million increase from 2012 mainly allocated to construction of the
    central processing facility. At the end of 2013, Phase 1 the BlackGold
    project was approximately 92% complete.
--  Throughput in our Downstream operations averaged 98,081 bbl/d for the
    year, a decrease of 5,274 bbl/d compared to 2012, mainly due to
    operational outages including a two week planned outage in the second
    half of 2013. The gross refining margin averaged US$1.07/bbl for the
    year, a 78% decrease reflecting lower product crack spreads and poorer
    yield mix.
--  Downstream 2013 capital spending was $53.2 million for the year,
    comparable to 2012.
--  During the year Harvest successfully early redeemed its remaining 7.25%
    and 7.50% convertible debentures for a total amount of $627.2 million
    and in its place issued US$630 million of 2.125 % senior unsecured notes
    due 2018 that were guaranteed by Korea National Oil Corporation (KNOC).

FOURTH QUARTER HIGHLIGHTS:


--  Net loss was $517.8 million, a decrease of $18.8 million primarily due
    to decreased DD&A and impairment charges, partially offset by lower cash
    contributions in 2013. The main drivers to the net losses in the fourth
    quarters of 2013 and 2012 were the Downstream's PP&E impairment as noted
    above.
--  Upstream production volumes averaged 49,154 boe/d in the fourth quarter,
    a 16% decrease compared to the fourth quarter of 2012 due to natural
    declines, smaller 2012 and 2013 capital drilling programs and
    dispositions of certain non-core producing properties.
--  Operating netbacks prior to hedging for the quarter averaged $26.10/boe,
    a decrease from $30.61/boe for the same period in 2012 due to higher
    operating expense and royalties per boe, partially offset by higher
    average realized prices.
--  During the fourth quarter of 2013, Harvest sold certain non-core oil and
    gas assets with approximately 600 boe/d of production in Alberta.
--  Phase 2 of the BlackGold project, targeted to increase production
    capacity to 30,000 bbl/d from 10,000 bbl/d, received approval from
    Alberta Environment in December.
--  Fourth quarter gross refining margins averaged US$2.50/bbl compared to
    US$6.43/bbl in the same quarter of 2012 due to lower realized product
    crack spreads, lower sales volumes, and lower distillates yield as
    compared to 2012.
--  Refinery throughput volume averaged 92,339 bbl/d in the fourth quarter,
    a decrease of 21,726 bbl/d compared to the same period in 2012 due to
    the planned two-week shutdown to complete a partial change-out of
    catalyst and the unplanned one-week shutdown of the crude unit to repair
    an exchanger leak.
--  On October 18, 2013, the borrowing capacity of Harvest's credit facility
    was increased from $800 million to $1.0 billion.
--  In December, Harvest entered into a five year $200 million subordinated
    loan agreement with KNOC. As at March 6, 2014 Harvest has borrowed $160
    million under the loan agreement.

FINANCIAL & OPERATING HIGHLIGHTS:


                                  Three Months Ended        Year Ended
                                      December 31           December 31
                                --------------------------------------------
                                      2013       2012       2013       2012
----------------------------------------------------------------------------
UPSTREAM OPERATIONS
Daily sales volumes (boe/d)         49,154     58,228     52,473     59,327
Average realized price
  Oil and NGLs ($/bbl)(2)            70.68      68.50      75.49      72.39
  Gas ($/mcf)(2)                      3.86       3.44       3.46       2.58
Operating netback prior to
 hedging ($/boe)(1)                  26.10      30.61      29.31      28.46
Operating income (loss)                2.3       36.1      (16.6)     (12.7)
Cash contribution from
 operations(1)                       119.5      160.4      518.2      581.9

Capital asset additions
 (excluding acquisitions)            108.5       88.2      322.3      447.5
Property and business
 acquisitions (dispositions),
 net                                 (27.5)     (80.8)    (155.6)     (84.3)

Net wells drilled                     22.2       12.8       84.1      100.9
Net undeveloped land additions
 (acres)(3)                         18,595     39,543     50,651    131,394

BLACKGOLD OIL SANDS
Capital asset additions              128.1       44.4      444.5      164.1
Net wells drilled                        -        4.0          -       30.0

DOWNSTREAM OPERATIONS
Average daily throughput (bbl/d)    92,339    114,065     98,081    103,355
Average refining gross margin
 (loss) (US$/bbl)(1)                  2.50       6.43       1.07       4.87
Operating loss                      (506.4)    (566.0)    (691.1)    (680.2)
Cash deficiency from
 operations(1)                       (32.3)      (3.0)    (152.4)     (41.7)

Capital asset additions               18.1       21.5       53.2       54.2

NET LOSS(4)                         (517.8)    (536.6)    (781.9)    (721.0)
----------------------------------------------------------------------------
(1) This is a non-GAAP measure; please refer to "Non-GAAP Measures" the
    MD&A.
(2) Excludes the effect of risk management contracts designated as hedges.
(3) Includes lands acquired in business combinations.
(4) Net loss includes the consolidated operating results of Harvest's
    operating segments.

RESERVES SUMMARY:

Harvest's reserves for the year ended December 31, 2013 were evaluated in accordance with National Instrument 51-101 (NI 51-101) by the independent reserve evaluators GLJ Petroleum Consultants Ltd. (GLJ). The complete reserves disclosure required under NI 51-101 will be filed on SEDAR (www.sedar.com) on or before March 30, 2014.

The following table is a summary, as at December 31, 2013, of Harvest's petroleum and natural gas reserves as evaluated by GLJ. These estimates are subject to positive and negative revisions as additional reservoir and production information becomes available. These reserves attributed to Harvest are based on judgments regarding future events therefore actual results will vary and the variations may be material. Reserves information may not add due to rounding.


                    Summary of Oil & Gas Reserves (Gross)
             Forecast Prices and Costs - As of December 31, 2013

                     Light
                      and                                 Natural
                     Medium Heavy   Bitumen                 Gas   Total Oil
Reserves Category     Oil    Oil  (BlackGold) Natural Gas Liquids Equivalent
                    (MMbbl)(MMbbl)  (MMbbl)      (Bcf)    (MMbbl)  (MMboe)
----------------------------------------------------------------------------
Proved
 Developed Producing   27.8   36.4          0       201.4     8.9      106.6
 Developed Non-
  Producing             1.7    1.0          0        14.0     0.6        5.6
 Undeveloped            1.7    7.2       96.0        73.3     3.3      120.4
----------------------------------------------------------------------------
Total Proved           31.2   44.5       96.0       288.7    12.8      232.6
----------------------------------------------------------------------------
Probable               14.3   20.3      163.5       140.4    10.0      231.5
----------------------------------------------------------------------------
Total Proved +
 Probable              45.5   64.8      259.5       429.1    22.8      464.1
----------------------------------------------------------------------------

As of December 31, 2013, Harvest's total P+P reserves base was 464.1 MMBoe, a 6% decrease from 2012 mainly due to downward technical revisions, non-core asset sales and lower production replacement due to smaller capital programs. Based on 2013 average production, Harvest has a P+P reserve life index of 24.2 years.

OUTLOOK:

The following guidance is provided as general information for stakeholders regarding management's expectations for 2014 for the Upstream, BlackGold and Downstream business segments. The guidance information provided is consistent with Harvest's most recent budget information. Readers are cautioned that the guidance information provided within this Outlook may not be appropriate for other purposes and the actual results may differ materially from those anticipated.

Harvest's capital expenditure budget for 2014 is $620 million, comprised of $350 million for Upstream oil & gas operations, $131 million for the BlackGold oil sands project, and $139 million for the Downstream refining and marketing business.

Upstream

Production volume is targeted at approximately 48,800 boe/d for 2014 reflecting natural declines and assets dispositions during 2013 and the 2014 operating costs are expected to average $17.80/boe.

Harvest has not budgeted for asset acquisitions or dispositions. The Company has identified non-core properties for disposition representing approximately 2,400 boe/d of production. Proceeds from dispositions would be used to manage Harvest's liquidity, fund development of core assets and for the acquisition of strategic assets.

BlackGold

Due to extreme winter conditions the project scaled back construction activities during the first quarter of 2014. Harvest anticipates resuming full construction activities in the second quarter of 2014 and has revised the project schedule accordingly.

Harvest anticipates construction completion of the 10,000 bbl/d Phase 1 Central Processing Facility in the second half of 2014 with first steam expected in the fourth quarter of 2014.

Downstream

A turnaround is scheduled for the second half of 2014 and will utilize approximately 60% of the capital budget with the remainder allocated to sustainability and reliability improvement projects.

For the full year 2014, throughput is anticipated to average approximately 92,500 bbl/d, with operating costs and purchased energy costs aggregating to approximately $8.00/bbl.

Harvest continues to evaluate various business opportunities pertaining to the Downstream business including, but not limited to introduction of joint venture partners, disposition in whole or in part as well as multiple economic scenarios for future operations. An outcome or recommendation arising out of this review has not been determined to date.

CONFERENCE CALL:

Harvest will be holding a conference call to discuss our 2013 results at 9:00 a.m. Mountain Standard Time (11:00 a.m. Eastern Standard Time) on March 13, 2014. Callers may dial 1-866-226-1793 (international callers or Toronto local dial 416-340-2218) a few minutes prior to start and request the Harvest conference call. The call will be available for replay by dialing 1-800-408-3053 (international callers or Toronto local dial 905-694-9451) and entering the passcode 8345928.

HARVEST PROFILE:

Harvest is a wholly-owned, subsidiary of KNOC. Harvest is a significant operator in Canada's energy industry offering stakeholders exposure to exploration, development and production of crude oil and natural gas (Upstream), an oil sands project under construction and development in northern Alberta (BlackGold) and refining and marketing of distillate, gasoline and fuel oil (Downstream) segments.

KNOC is a state owned oil and gas company engaged in the exploration and production of oil and gas along with storing petroleum resources. KNOC will fully establish itself as a global government-run petroleum company by applying ethical, sustainable and environment-friendly management and by taking corporate social responsibility seriously at all times. For more information on KNOC, please visit their website at www.knoc.co.kr/ENG/main.jsp.

ADVISORY:

Certain information in this press release, including management's assessment of future plans and operations, contains forward-looking information that involves risk and uncertainty. Please also refer to "Forward-Looking information" in the MD&A and "Risk Factors" in the Annual Information Form for detailed discussion on these risks.

Forward-looking statements in this press release may include, but are not limited to, the forward looking statements made throughout this press release with reference to the following items to future periods: production volumes, refinery throughput volumes, operating costs, acquisitions and dispositions, capital spending and allocation of such to various projects, reserve estimates, commerciality of Harvest's capital projects, the ability to achieve the maximum capacity from the BlackGold central processing facilities, access and ability to raise capital, cash from operating activities, regulatory approval and development projects and regulatory changes. For this purpose, any statements that are contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements often contain terms such as "may", "will", "should", "anticipate", "expect", "target", "plan", "potential", "intend", and similar expressions.

The forward-looking information in the press release is provided with the objective to share with stakeholder's management's expectations for 2014 operating levels, key expenses in the Upstream and Downstream segments and major cash outflows in 2014. The guidance information provided is consistent with the Company's current budget information. Readers are cautioned that the forward-looking information may not be appropriate for other purposes and the actual results may differ materially from those anticipated. Although management believes that the forward-looking information is reasonable based on information available on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity and achievements. Therefore, readers are cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. Although we consider such information reasonable at the time of preparation, it may prove to be incorrect and actual results may differ materially from those anticipated. Harvest assumes no obligation to update forward-looking statements should circumstances, estimates or opinions change, except as required by law. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

ADDITIONAL INFORMATION:

Further information about us can be accessed under our public filings found on SEDAR at www.sedar.com or at www.harvestenergy.ca. Information can also be found by contacting our Investor Relations department at (403) 265-1178 or at 1-866-666-1178.

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Information technology (IT) advances are transforming the way we innovate in business, thereby disrupting the old guard and their predictable status-quo. It’s creating global market turbulence. Industries are converging, and new opportunities and threats are emerging, like never before. So, how are savvy chief information officers (CIOs) leading this transition? Back in 2015, the IBM Institute for Business Value conducted a market study that included the findings from over 1,800 CIO interviews ...
Virtualization over the past years has become a key strategy for IT to acquire multi-tenancy, increase utilization, develop elasticity and improve security. And virtual machines (VMs) are quickly becoming a main vehicle for developing and deploying applications. The introduction of containers seems to be bringing another and perhaps overlapped solution for achieving the same above-mentioned benefits. Are a container and a virtual machine fundamentally the same or different? And how? Is one techn...
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm.
What sort of WebRTC based applications can we expect to see over the next year and beyond? One way to predict development trends is to see what sorts of applications startups are building. In his session at @ThingsExpo, Arin Sime, founder of WebRTC.ventures, will discuss the current and likely future trends in WebRTC application development based on real requests for custom applications from real customers, as well as other public sources of information,
As businesses adopt functionalities in cloud computing, it’s imperative that IT operations consistently ensure cloud systems work correctly – all of the time, and to their best capabilities. In his session at @BigDataExpo, Bernd Harzog, CEO and founder of OpsDataStore, will present an industry answer to the common question, “Are you running IT operations as efficiently and as cost effectively as you need to?” He will expound on the industry issues he frequently came up against as an analyst, and...
Keeping pace with advancements in software delivery processes and tooling is taxing even for the most proficient organizations. Point tools, platforms, open source and the increasing adoption of private and public cloud services requires strong engineering rigor - all in the face of developer demands to use the tools of choice. As Agile has settled in as a mainstream practice, now DevOps has emerged as the next wave to improve software delivery speed and output. To make DevOps work, organization...
ChatOps is an emerging topic that has led to the wide availability of integrations between group chat and various other tools/platforms. Currently, HipChat is an extremely powerful collaboration platform due to the various ChatOps integrations that are available. However, DevOps automation can involve orchestration and complex workflows. In his session at @DevOpsSummit at 20th Cloud Expo, Himanshu Chhetri, CTO at Addteq, will cover practical examples and use cases such as self-provisioning infra...
The financial services market is one of the most data-driven industries in the world, yet it’s bogged down by legacy CPU technologies that simply can’t keep up with the task of querying and visualizing billions of records. In his session at 20th Cloud Expo, Jared Parker, Director of Financial Services at Kinetica, will discuss how the advent of advanced in-database analytics on the GPU makes it possible to run sophisticated data science workloads on the same database that is housing the rich inf...
For organizations that have amassed large sums of software complexity, taking a microservices approach is the first step toward DevOps and continuous improvement / development. Integrating system-level analysis with microservices makes it easier to change and add functionality to applications at any time without the increase of risk. Before you start big transformation projects or a cloud migration, make sure these changes won’t take down your entire organization.
Apache Hadoop is emerging as a distributed platform for handling large and fast incoming streams of data. Predictive maintenance, supply chain optimization, and Internet-of-Things analysis are examples where Hadoop provides the scalable storage, processing, and analytics platform to gain meaningful insights from granular data that is typically only valuable from a large-scale, aggregate view. One architecture useful for capturing and analyzing streaming data is the Lambda Architecture, represent...
My team embarked on building a data lake for our sales and marketing data to better understand customer journeys. This required building a hybrid data pipeline to connect our cloud CRM with the new Hadoop Data Lake. One challenge is that IT was not in a position to provide support until we proved value and marketing did not have the experience, so we embarked on the journey ourselves within the product marketing team for our line of business within Progress. In his session at @BigDataExpo, Sum...
Things are changing so quickly in IoT that it would take a wizard to predict which ecosystem will gain the most traction. In order for IoT to reach its potential, smart devices must be able to work together. Today, there are a slew of interoperability standards being promoted by big names to make this happen: HomeKit, Brillo and Alljoyn. In his session at @ThingsExpo, Adam Justice, vice president and general manager of Grid Connect, will review what happens when smart devices don’t work togethe...
SYS-CON Events announced today that Ocean9will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Ocean9 provides cloud services for Backup, Disaster Recovery (DRaaS) and instant Innovation, and redefines enterprise infrastructure with its cloud native subscription offerings for mission critical SAP workloads.
In his session at @ThingsExpo, Eric Lachapelle, CEO of the Professional Evaluation and Certification Board (PECB), will provide an overview of various initiatives to certifiy the security of connected devices and future trends in ensuring public trust of IoT. Eric Lachapelle is the Chief Executive Officer of the Professional Evaluation and Certification Board (PECB), an international certification body. His role is to help companies and individuals to achieve professional, accredited and worldw...
Adding public cloud resources to an existing application can be a daunting process. The tools that you currently use to manage the software and hardware outside the cloud aren’t always the best tools to efficiently grow into the cloud. All of the major configuration management tools have cloud orchestration plugins that can be leveraged, but there are also cloud-native tools that can dramatically improve the efficiency of managing your application lifecycle.