Harvest Natural Resources’ (ticker: HNR) exploration projects around the world took one step closer to coming to fruition. The company greatly de-risked its Budong-Budong exploration project in Indonesia, and successfully drilled a horizontal well in an untested Venezuelan field.
In Indonesia, Harvest drilled the Lariang LG-1 exploration well (64.4% WI) on the Budong Budong Block PSC to 5,311 feet with 16.5 pound per gallon mud, and encountered multiple hydrocarbon shows and high pressures in the Miocene formation. The well was plugged and abandoned, due to encountering high pressure 1,700 feet above the targeted total depth; however, this test well confirmed the presence of hydrocarbons on the company’s exploration block, and the confirmation of an effective trap and seal. The rig is moving to the KD-1 location adjacent in the Karma sub-basin which will test the larger of the two structures targeted for Budong Budong. The KD-1 well will be drilled to 8,100 feet.
The company’s most recognized assets are located in Venezuela through a 32% ownership interest in Petrodelta, its Venezuelan affiliate which was producing approximately 29,800 BOPD at April 8, 2011. During the first three months of 2011, Petrodelta completed four wells and produced at the rate of 28,700 BOPD, an increase of 32% from the same period in 2010. The company is in development mode in the Temblador and El Salto fields, and has been exploring for an additional development field. Petrodelta drilled its first horizontal well in the highly anticipated, untested Isleno field which tested at 1,800 BOPD. This well helps bolster the case for drilling several wells in the field this year, providing Petrodelta a new area for growth and expansion. A 2011 capital budget of $224 million has been planned to reach a production target 36,000 BOPD and further develop infrastructure in Temblador and El Salto fields during 2011.
For those not familiar with the Harvest story, the company recently sold its Utah assets for $215 million to Newfield Exploration (NYSE: NFX) to pay down debt and allocate additional capital to its international, high-impact exploration projects. In addition to its Venezuela and Indonesia projects, HNR plans to spud its Gabon exploration well, the Ruche Marin-A, in late April 2011. The well will be drilled in 380 feet of water to a total depth of 10,100 feet to test multiple stacked pre-salt targets. Also, in Oman, HNR has two exploratory wells planned to spud in late 2011. HNR has a three-year obligation period and funding commitment of $22.0 million.
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