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
"ReadyTalk is an audio and web video conferencing provider. We've really come to embrace WebRTC as the platform for our future of technology," explained Dan Cunningham, CTO of ReadyTalk, in this SYS-CON.tv interview at WebRTC Summit at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life sett...
We are always online. We access our data, our finances, work, and various services on the Internet. But we live in a congested world of information in which the roads were built two decades ago. The quest for better, faster Internet routing has been around for a decade, but nobody solved this problem. We’ve seen band-aid approaches like CDNs that attack a niche's slice of static content part of the Internet, but that’s it. It does not address the dynamic services-based Internet of today. It does...
The WebRTC Summit New York, to be held June 6-8, 2017, at the Javits Center in New York City, NY, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 20th International Cloud Expo and @ThingsExpo. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web ...
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.
Without lifecycle traceability and visibility across the tool chain, stakeholders from Planning-to-Ops have limited insight and answers to who, what, when, why and how across the DevOps lifecycle. This impacts the ability to deliver high quality software at the needed velocity to drive positive business outcomes. In his general session at @DevOpsSummit at 19th Cloud Expo, Phil Hombledal, Solution Architect at CollabNet, discussed how customers are able to achieve a level of transparency that e...
"We're a cybersecurity firm that specializes in engineering security solutions both at the software and hardware level. Security cannot be an after-the-fact afterthought, which is what it's become," stated Richard Blech, Chief Executive Officer at Secure Channels, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
The Internet of Things (IoT) promises to simplify and streamline our lives by automating routine tasks that distract us from our goals. This promise is based on the ubiquitous deployment of smart, connected devices that link everything from industrial control systems to automobiles to refrigerators. Unfortunately, comparatively few of the devices currently deployed have been developed with an eye toward security, and as the DDoS attacks of late October 2016 have demonstrated, this oversight can ...
Fact is, enterprises have significant legacy voice infrastructure that’s costly to replace with pure IP solutions. How can we bring this analog infrastructure into our shiny new cloud applications? There are proven methods to bind both legacy voice applications and traditional PSTN audio into cloud-based applications and services at a carrier scale. Some of the most successful implementations leverage WebRTC, WebSockets, SIP and other open source technologies. In his session at @ThingsExpo, Da...
Kubernetes is a new and revolutionary open-sourced system for managing containers across multiple hosts in a cluster. Ansible is a simple IT automation tool for just about any requirement for reproducible environments. In his session at @DevOpsSummit at 18th Cloud Expo, Patrick Galbraith, a principal engineer at HPE, discussed how to build a fully functional Kubernetes cluster on a number of virtual machines or bare-metal hosts. Also included will be a brief demonstration of running a Galera MyS...
Internet-of-Things discussions can end up either going down the consumer gadget rabbit hole or focused on the sort of data logging that industrial manufacturers have been doing forever. However, in fact, companies today are already using IoT data both to optimize their operational technology and to improve the experience of customer interactions in novel ways. In his session at @ThingsExpo, Gordon Haff, Red Hat Technology Evangelist, will share examples from a wide range of industries – includin...
Organizations planning enterprise data center consolidation and modernization projects are faced with a challenging, costly reality. Requirements to deploy modern, cloud-native applications simultaneously with traditional client/server applications are almost impossible to achieve with hardware-centric enterprise infrastructure. Compute and network infrastructure are fast moving down a software-defined path, but storage has been a laggard. Until now.
We're entering the post-smartphone era, where wearable gadgets from watches and fitness bands to glasses and health aids will power the next technological revolution. With mass adoption of wearable devices comes a new data ecosystem that must be protected. Wearables open new pathways that facilitate the tracking, sharing and storing of consumers’ personal health, location and daily activity data. Consumers have some idea of the data these devices capture, but most don’t realize how revealing and...
Unless your company can spend a lot of money on new technology, re-engineering your environment and hiring a comprehensive cybersecurity team, you will most likely move to the cloud or seek external service partnerships. In his session at 18th Cloud Expo, Darren Guccione, CEO of Keeper Security, revealed what you need to know when it comes to encryption in the cloud.