Harvest Natural Resources Announces Increases in Venezuelan Reserves

• Press Release
• Source: Harvest Natural Resources, Inc.
• On 5:00 am EDT, Wednesday October 21, 2009

HOUSTON, Oct. 21 /PRNewswire-FirstCall/ -- Harvest Natural Resources, Inc. (NYSE: HNR - News) today announced an increase in reserves attributed to Petrodelta, S.A. (Petrodelta), Harvest's 32 percent owned Venezuelan affiliate. Proved reserves net to Harvest increased to 47.6 million barrels of oil equivalent (MMBOE) at August 31, 2009, as compared to 43.3 MMBOE at year-end 2008. Proved, probable and possible reserves net to Harvest increased 59 percent to 211.1 MMBOE. The increase in reserves was driven primarily by the drilling of two appraisal wells in the largely undeveloped El Salto field. The reserves estimate was prepared by the independent petroleum consultants of Ryder Scott Company, L.P. (Ryder Scott) for Harvest.

As used in this press release, references to oil and gas reserves that are "net to Harvest" refer to Harvest's net 32 percent indirect equity interest in Petrodelta after royalties and do not refer to any working interest or other ownership interest held directly by Harvest.

Highlights of the interim reserves report include:

• Combined proved, probable and possible reserves net to Harvest increased by approximately 59 percent to 211.1 MMBOE at August 31, 2009 from 132.4 MMBOE at December 31, 2008. By category and net to Harvest, proved, probable and possible reserves increased by approximately 10 percent, 35 percent and 104 percent, respectively.
• Proved reserves volumes net to Harvest increased approximately 10 percent to 47.6 MMBOE at August 31, 2009 from 43.3 MMBOE at December 31, 2008.
• The after tax present value of proved reserves net to Harvest and discounted at 10 percent increased by approximately 305 percent to $449 million at August 31, 2009.
• Approximately 80 percent of the proved reserves are oil and condensate of which 30 percent are developed.
• Proved reserves of the El Salto Field alone increased 42 percent.

Increase in oil reserves comprised the majority of the reserve additions from year-end 2008 with proved, probable and possible oil reserves increasing by approximately 12 percent, 49 percent and 108 percent, respectively (see Table 2).

The majority of the increase in proved reserves was the result of drilling two appraisal wells in the El Salto Field during 2009, which more than offset production from Petrodelta's existing producing developed properties. Proved reserves of the El Salto field net to Harvest increased 42 percent to 18.5 MMBOE at August 31, 2009 from 13.0 MMBOE at year-end 2008. Petrodelta operates six fields in Venezuela and approximately 39 percent of proved reserves net to Harvest at August 31, 2009 were associated with the El Salto field.

Harvest President and Chief Executive Officer, James A. Edmiston, said: "The interim reserve report was commissioned to re-assess the growth potential of the El Salto field and to provide input into Petrodelta's capital budget process for the rest of 2009 and into 2010. We estimate that there may be approximately 980 drilling locations in El Salto alone, providing many years of growth potential. We are excited about the opportunity for Petrodelta to prove-up additional reserves and value by drilling in El Salto and its other fields."

Edmiston continued: "The previous estimate of original oil in place for the El Salto field was upwardly revised by 48 percent to 5.4 billion barrels of original oil in place. The field represents a platform for significant growth with its stacked pay zones in eight different proven fault blocks as well as exploration potential for additional traps. Petrodelta began drilling appraisal wells in the El Salto field in May 2009 to evaluate its potential for supporting the company's self-funded drilling program. The appraisal wells drilled in this field have encountered pay zones thicker than anticipated, and the initial production rate of the El Salto #31 well has exceeded our original expectations, producing at the rate of approximately 3,000 BOPD limited by infrastructure constraints. The El Salto #30 has yet to be placed on production. The updated reserves report demonstrates the quality of Petrodelta's assets and how quickly drilling can convert unproven reserves to proved status."

The reserve estimate assumes a West Texas Intermediate crude oil price of $71.05 per barrel, which yields $64.48 per barrel after adjustment for location and quality. The natural gas reserves were based on a contractual price of $1.54 per thousand cubic feet (Mcf). Both oil and gas prices were held constant.

    Table 1: Estimated Proved, Probable and Possible Reserves, Net to Harvest
    Natural Resources, as of August 31, 2009
                                    Developed
                           ---------------------------
    Proved Reserves:       Producing     Non-Producing  Undeveloped   Total
                           ---------     -------------  -----------   -----
    Oil (MBbls)              9,242            2,052        26,934     38,229
    Gas (MMcf)              28,473              723        26,898     56,094
                            ------              ---        ------     ------
    MBOE                    13,988            2,173        31,417     47,578

    Probable Reserves:
    Oil (MBbls)                  0               94        34,517     34,611
    Gas (MMcf)                   0              339         8,709      9,048
                                 -              ---         -----      -----
    MBOE                         0              151        35,969     36,119

    Possible Reserves:
    Oil (MBbls)                  0                9       121,316    121,324
    Gas (MMcf)                   0                0        36,409     36,409
                               ---              ---        ------     ------
    MBOE                         0                9       127,384    127,393

    Total 3P Reserves:
    Oil (MBbls)              9,242            2,155       182,767    194,164
    Gas (MMcf)              28,473            1,062        72,016    101,551
                            ------            -----        ------    -------
    MBOE                    13,988            2,332       194,769    211,090

    Table 2: Changes in Estimated Proved, Probable and Possible Reserves, Net
    to Harvest Natural Resources

                                December 31, 2008  August 31, 2009  %Change
                                -----------------  ---------------  -------
    Oil Reserves (MMBbl):
      Proved                           34.2            38.2           12%
      Probable                         23.3            34.6           48%
      Possible                         58.2           121.3          108%
      Total 3P                        115.7           194.2           68%

    Gas Reserves (Bcf):
      Proved                           54.2            56.1            3%
      Probable                         20.3             9.0          (56)%
      Possible                         25.1            36.4           45%
      Total 3P                        100.2           101.6            1%

    After Tax Discounted Future
     Net Income  @10% ($MM):
      Proved Reserves                  $111            $449          305%
      Probable Reserves                 $22            $268        1,118%
      Possible Reserves                $144            $937          551%
                                       ----            ----          ----
      Total 3P Reserves                $277          $1,654          497%

    Oil Price (WTI) ($/Bbl)          $40.62          $71.05           75%
    Petrodelta Oil Price ($Bbl)      $34.38          $64.48           88%
    Gas Price ($/Mcf)                 $1.54           $1.54            0%

Reserves Disclosure

The Securities and Exchange Commission (SEC) permits oil and gas companies, in filings made with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. Harvest is strictly prohibited by the SEC from including estimates of unproved reserves (i.e., possible reserves and probable reserves) in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves. All estimates of unproved reserves in this press release have been prepared by an independent petroleum engineering firm. Harvest discloses unproved reserves because management believes that this is valuable information to its investors.

The proved reserves included in this press release conform to the definition as set forth in the Securities and Exchange Commission's (SEC) Regulation S-X Part 210.4(a) as clarified by subsequent Commission Staff Bulletins. The probable reserves and possible reserves included in this press release conform to definitions of probable and possible reserves sponsored and approved by the Society of Petroleum Engineers (SPE), the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE) as set forth in the 2007 SPE/WPC/AAPG/SPEE Petroleum Resources Management System (SPE-PRMS) using the deterministic methodology.

Probable reserves are those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than proved reserves but more certain to be recovered than possible reserves. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated proved plus probable reserves (2P). In this context, when probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the 2P estimate. Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain. The interpreted reservoir continuity may not meet the reasonable certainty criteria. Probable estimates also include incremental recoveries associated with project recovery efficiencies beyond that assumed for proved.

Possible reserves are those additional reserves which analysis of geoscience and engineering data indicate are less likely to be recoverable than probable reserves. The total quantities ultimately recovered from the project have a low probability to exceed the sum of proved plus probable plus possible (3P), which is equivalent to the high estimate scenario. When probabilistic methods are used, there should be at least a 10% probability that the actual quantities recovered will equal or exceed the 3P estimate. Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this may be in areas where geoscience and engineering data are unable to clearly define the area and vertical reservoir limits of commercial production from the reservoir by a defined project. Possible estimates also include incremental quantities associated with project recovery efficiencies beyond that assumed for probable.

In calculating the reserves in this press release, initial production rates are based on the current producing rates for those wells now on production. Test data and other related information were used to estimate the anticipated initial production rates for those wells or locations that are not currently producing. If no production decline trend has been established, future production rates were held constant, or adjusted for the effects of curtailment where appropriate, until a decline in ability to produce was anticipated. An estimated rate of decline was then applied to depletion of the reserves. If a decline trend has been established, this trend was used as the basis for estimating future production rates. For reserves not yet on production, sales were estimated to commence at an anticipated date furnished by Harvest to Ryder Scott.

About Harvest Natural Resources

Harvest Natural Resources, Inc. headquartered in Houston, Texas, is an independent energy company with principal operations in Venezuela, exploration assets in the United States, Indonesia, West Africa, Oman and China and business development offices in Singapore and the United Kingdom. For more information visit Harvest's website at http://www.harvestnr.com.

    CONTACT:
    Stephen C. Haynes
    Vice President, Chief Financial Officer
    (281) 899-5716

This press release may contain projections and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. They include estimates and timing of expected oil and gas production, oil and gas reserve projections of future oil pricing, future expenses, planned capital expenditures, anticipated cash flow and our business strategy. All statements other than statements of historical facts may constitute forward-looking statements. Although Harvest believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Actual results may differ materially from Harvest's expectations as a result of factors discussed in Harvest's 2008 Annual Report on Form 10-K and other public filings.

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