UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the Quarterly Period Ended March 31, 2004 or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

for the transition period from_____ to ___

COMMISSION FILE NO. 1-10762

------------------------------

HARVEST NATURAL RESOURCES, INC.
(Exact Name of Registrant as Specified in Its Charter)

DELAWARE 77-0196707

(State or Other Jurisdiction of Incorporation or Organization) (IRS Employer Identification No.)

15835 PARK TEN PLACE DRIVE, SUITE 115
HOUSTON, TEXAS 77084
(Address of Principal Executive Offices) (Zip Code)

(281) 579-6700
(Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes [X] No [ ]

At May 3, 2004, 35,942,161 shares of the Registrant's Common Stock were
outstanding.

HARVEST NATURAL RESOURCES, INC.

FORM 10-Q

TABLE OF CONTENTS

Page
----

PART I FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS
Unaudited Consolidated Balance Sheets at March 31, 2004
and December 31, 2003....................................... 3
Unaudited Consolidated Statements of Operations and
Comprehensive Income for the Three Months
Ended March 31, 2004 and 2003............................... 4
Unaudited Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 2004 and 2003........................ 5
Notes to Consolidated Financial Statements....................... 6

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS................................................. 13

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK............ 16

Item 4. CONTROLS AND PROCEDURES............................................... 16

PART II OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS..................................................... 17

Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............................. 17

Item 3. DEFAULTS UPON SENIOR SECURITIES....................................... 17

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................... 17

Item 5. OTHER INFORMATION..................................................... 17

Item 6. EXHIBITS AND REPORTS ON FORM 8-K...................................... 17

SIGNATURES......................................................................... 18

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

MARCH 31, DECEMBER 31,
2004 2003
--------- ------------
(in thousands)

ASSETS
CURRENT ASSETS:
Cash and cash equivalents .................................................... $ 147,239 $ 138,660
Restricted cash .............................................................. 12 12
Accounts and notes receivable:
Accrued oil and gas sales ............................................. 38,910 32,766
Joint interest and other, net ......................................... 10,956 11,197
Prepaid expenses and other ................................................... 1,391 805
--------- ------------
TOTAL CURRENT ASSETS .................................................... 198,508 183,440
RESTRICTED CASH ...................................................................... 16 16
OTHER ASSETS ......................................................................... 2,577 2,080
DEFERRED INCOME TAXES ................................................................ 4,749 4,749
PROPERTY AND EQUIPMENT:
Oil and gas properties (full cost method - costs of $2,900
excluded from amortization in 2004 and 2003, respectively) ............ 594,276 593,622
Furniture and fixtures ....................................................... 8,917 8,948
--------- ------------
603,193 602,570
Accumulated depletion, depreciation and amortization ......................... (426,548) (418,507)
--------- ------------
176,645 184,063
--------- ------------
$ 382,495 $ 374,348
========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, trade and other ............................................ $ 1,524 $ 4,163
Accounts payable, related party .............................................. 10,813 10,557
Accrued expenses ............................................................. 12,208 15,069
Accrued interest payable ..................................................... 3,408 1,427
Income taxes payable ......................................................... 10,224 8,647
Current portion of long-term debt ............................................ 5,075 6,367
--------- ------------
TOTAL CURRENT LIABILITIES ............................................... 43,252 46,230
LONG-TERM DEBT ....................................................................... 96,533 96,833
ASSET RETIREMENT LIABILITY ........................................................... 1,459 1,459
COMMITMENTS AND CONTINGENCIES ........................................................ -- --
MINORITY INTEREST .................................................................... 32,679 30,113
STOCKHOLDERS' EQUITY:
Preferred stock, par value $0.01 a share; authorized 5,000 shares;
outstanding, none ..................................................... -- --
Common stock, par value $0.01 a share; authorized 80,000 shares; issued 36,582
shares at March 31, 2004 and 36,405 shares at December 31, 2003 ....... 366 364
Additional paid-in capital ................................................... 176,401 175,051
Retained earnings ............................................................ 35,044 27,537
Treasury stock, at cost, 730 shares March 31, 2004 and
December 31, 2003, respectively ....................................... (3,239) (3,239)
--------- ------------
TOTAL STOCKHOLDERS' EQUITY.............. ................................ 208,572 199,713
--------- ------------
$ 382,495 $ 374,348
========= ============

See accompanying notes to consolidated financial statements.

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)

FIRST QUARTER
-----------------------------------
2004 2003
---------------- ----------------
(in thousands, except per share data)

REVENUES
Oil sales.................................................... $ 30,808 $ 19,390
Gas sales.................................................... 7,989 --
Ineffective hedge activity................................... -- (565)
---------------- ----------------
38,797 18,825
---------------- ----------------
EXPENSES
Operating expenses........................................... 7,339 6,515
Depletion, depreciation and amortization..................... 8,161 3,515
General and administrative................................... 3,635 3,224
Taxes other than on income................................... 1,194 647
---------------- ----------------
20,329 13,901
---------------- ----------------
INCOME FROM OPERATIONS............................................... 18,468 4,924

OTHER NON-OPERATING INCOME (EXPENSE)
Investment earnings and other................................ 303 278
Interest expense............................................. (2,489) (2,668)
Net gain (loss) on exchange rates............................ (609) 526
---------------- ----------------
(2,795) (1,864)
---------------- ----------------
INCOME FROM CONSOLIDATED COMPANIES BEFORE INCOME TAXES AND MINORITY
INTERESTS.................................................... 15,673 3,060
INCOME TAX EXPENSE................................................... 5,600 1,056
---------------- ----------------
INCOME BEFORE MINORITY INTERESTS..................................... 10,073 2,004

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY COMPANIES............... 2,566 887
---------------- ----------------
INCOME FROM CONSOLIDATED COMPANIES................................... 7,507 1,117

EQUITY IN NET LOSS OF AFFILIATED COMPANIES........................... -- (16,575)
---------------- ----------------
NET INCOME (LOSS).................................................... $ 7,507 $ (15,458)
================ ================
OTHER COMPRENSIVE INCOME: UNREALIZED MARK TO MARKET GAIN FROM CASH
FLOW HEDGING ACTIVITIES, NET OF TAX ......................... -- 2,614
---------------- ----------------
$ 7,507 $ (12,844)
================ ================
NET INCOME (LOSS) PER COMMON SHARE:
Basic........................................................ $ 0.21 $ (0.44)
================ ================
Diluted...................................................... $ 0.20 $ (0.44)
================ ================

See accompanying notes to consolidated financial statements.

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

FIRST QUARTER
-------------------------
2004 2003
------------ ----------
(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)..................................................................... $ 7,507 $ (15,458)
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion, depreciation and amortization....................................... 8,161 3,515
Amortization of financing costs................................................ 76 140
Equity in losses of affiliated companies....................................... -- 16,575
Allowance for employee notes and accounts receivable........................... -- 51
Non-cash compensation-related charges.......................................... 96 42
Minority interest in undistributed earnings of subsidiaries.................... 2,566 887
Deferred income taxes.......................................................... -- (667)
Changes in Operating Assets and Liabilities:
Accounts and notes receivable.................................................. (5,903) 5,896
Prepaid expenses and other..................................................... (586) 378
Commodity hedging contract..................................................... -- (6,875)
Accounts payable............................................................... (2,639) 2,335
Accounts payable, related party................................................ 256 271
Accrued expenses............................................................... (2,861) (664)
Accrued interest payable....................................................... 1,981 2,231
Asset retirement liability..................................................... -- 4,263
Commodity hedging contract payable............................................. -- (430)
Income taxes payable........................................................... 1,577 (1,315)
------------ ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES............................... 10,231 11,175
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property and equipment................................................... (743) (12,505)
Investment in and advances to affiliated companies.................................... -- (497)
Decrease in restricted cash........................................................... -- 1,800
Purchases of marketable securities.................................................... -- (200,332)
Maturities of marketable securities................................................... -- 200,650
Investment costs...................................................................... (573) 22
------------ ----------
NET CASH USED IN INVESTING ACTIVITIES................................... (1,316) (10,862)
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from exercise of stock options........................................... 1,256 120
Purchase of treasury stock............................................................ -- (404)
Payments of notes payable............................................................. (1,592) (2,767)
------------ ----------
NET CASH USED IN FINANCING ACTIVITIES................................... (336) (3,051)
------------ ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................... 8,579 (2,738)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.............................................. 138,660 64,501
------------ ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................................................... $ 147,239 $ 61,763
============ ==========
SUPPLEMENTAL DISCLOSURES OR CASH FLOW INFORMATION
Cash paid during the period for interest.............................................. $ 1,285 $ 2,071
============ ==========
Cash paid during the period for income taxes.......................................... $ 913 $ 864
============ ==========

See accompanying notes to consolidated financial statements.

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FIRST QUARTER 2004 AND 2003 (UNAUDITED)

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

INTERIM REPORTING

In our opinion, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal recurring accruals
only) necessary to present fairly the financial position as of March 31, 2004,
and the results of operations and cash flows for the first quarter 2004 and
2003. The unaudited consolidated financial statements are presented in
accordance with the requirements of Form 10-Q and do not include all disclosures
normally required by accounting principles generally accepted in the United
States of America. Reference should be made to our consolidated financial
statements and notes thereto included in our Annual Report on Form 10-K for the
year ended 2003, which include certain definitions and a summary of significant
accounting policies and should be read in conjunction with this Quarterly Report
on Form 10-Q. The results of operations for any interim period are not
necessarily indicative of the results of operations for the entire year.

ORGANIZATION

Harvest Natural Resources, Inc. is engaged in the exploration,
development, production and management of oil and gas properties. We conduct our
business principally in Venezuela (through our subsidiary Benton-Vinccler C.A.
or "Benton-Vinccler") and, until September 25, 2003, through our minority equity
investment in LLC Geoilbent ("Geoilbent"), a Russian entity.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of all
wholly-owned and majority-owned subsidiaries. The equity method of accounting is
used for companies and other investments in which we have significant influence.
All intercompany profits, transactions and balances have been eliminated. We
accounted for our investment in Geoilbent prior to the sale of our minority
equity investment based on a fiscal year ending September 30, 2003.

MINORITY INTERESTS

We record a minority interest attributable to the minority shareholder of
our Venezuela subsidiaries. The minority interest in net income and losses is
subtracted or added to arrive at consolidated net income.

COMPREHENSIVE INCOME

Statement of Financial Accounting Standards No. 130 ("SFAS 130") requires
that all items required to be recognized under accounting standards as
components of comprehensive income, be reported in a financial statement that is
displayed with the same prominence as other financial statements. We reflected
unrealized mark-to-market gains from cash flow hedging activities as other
comprehensive income during the first quarter 2003 and, in accordance with SFAS
130, have provided a separate line in the unaudited consolidated statement of
operations.

DERIVATIVES AND HEDGING

Statement of Financial Accounting Standards No. 133 ("SFAS 133"), as
amended, establishes accounting and reporting standards for derivative
instruments and hedging activities. All derivatives are recorded on the balance
sheet at fair value. To the extent that the hedge is determined to be effective,
changes in the fair value of derivatives for qualifying cash flow hedges are
recorded each period in other comprehensive income. Our derivatives have been
designated as cash flow hedge transactions in which we hedge the variability of
cash flows related to forecasted transactions. The changes in the fair value of
these derivative instruments have been reported in other comprehensive income
because the highly effective test was met, and have been reclassified to
earnings in the period in which earnings are impacted by the variability of the
cash flows of the hedged item.

Benton-Vinccler hedged a portion of its 2003 oil sales by purchasing a WTI
crude oil "put" to protect its 2003 cash flow. The put was for 10,000 barrels of
oil per day for the period of March 1, 2003 through December 31, 2003. This put
qualified under the highly effective test and the mark-to-market gain at March
31, 2003 was included in other comprehensive income. Due to the pricing
structure for our Venezuela oil, the put had the economic effect of hedging
approximately 20,800 barrels of oil per day. The put cost was $2.50 per barrel,
or $7.7 million, and had a strike price of $30.00 per barrel. The notional
amount of each financial instrument was based on expected sales of crude oil
production from existing and future development wells and the related
incremental oil production associated with the production of natural gas. Oil
sales for the three months ended March 31, 2003 included $0.8 million loss in
amortization of the put option cost.

From time to time, we use hedging instruments to protect our projected
investment return and cash flow by reducing the impact of a downward crude oil
price movement. Currently, we have no hedging instruments in place for our 2004
production, but we continue to assess production levels and commodity prices in
conjunction with our capital resources and liquidity requirements.

ASSET RETIREMENT LIABILITY

Effective January 1, 2003, we adopted Statement of Financial Accounting
Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143").
In January 2003, as a result of adopting this statement, Benton-Vinccler
recorded under the full cost method of accounting for oil and gas properties an
increase in oil and gas properties and a corresponding liability in the amount
of $4.3 million. This asset retirement obligation is associated with the
plugging and abandonment of certain wells in Venezuela. SFAS 143 requires
entities to record the fair value of a liability for a legal obligation to
retire an asset in the period in which the liability is incurred if a reasonable
estimate of fair value can be made. No wells were abandoned in the first quarter
2004 and 11 wells were abandoned in 2003. Accretion expense related to the asset
retirement obligation was approximately $10,000 for the first quarter 2004.
Changes in asset retirement obligations during the first quarter 2004 and year
ended December 31, 2003 were as follows:

March 31, December, 31
2004 2003
-------------- --------------

Asset retirement obligations beginning of period $ 1,459 $ --
Liabilities recorded during the period -- 4,237
Liabilities settled during the period -- (733)
Revisions in estimated cash flows -- (2,125)
Accretion expense -- 80
-------------- --------------
Asset retirement obligations end of period $ 1,459 $ 1,459
============== ==============

EARNINGS PER SHARE

Basic earnings per common share ("EPS") is computed by dividing income
available to common stockholders by the weighted-average number of common shares
outstanding for the period. The weighted average number of common shares
outstanding for computing basic EPS was 35.8 million and 35.3 million for the
first quarter 2004 and 2003, respectively. Diluted EPS reflects the potential
dilution that would occur if securities or other contracts to issue common stock
were exercised or converted into common stock. The weighted average number of
common shares outstanding for computing diluted EPS, including dilutive stock
options, was 37.9 million and 35.3 million for the first quarter 2004 and 2003,
respectively. In September 2002, our board of directors authorized the
repurchase of up to one million shares of our common stock. No shares were
repurchased in the first quarter 2004 and approximately 80,000 shares were
repurchased in the first quarter 2003 for an aggregate price of $0.4 million.

An aggregate of 1.5 million and 3.0 million options and warrants to
purchase common stock were excluded from the earnings per share calculations
because they were anti-dilutive for the first quarter 2004 and 2003,
respectively.

STOCK-BASED COMPENSATION

At March 31, 2004, we had several stock-based employee compensation plans,
which are more fully described in Note 6 in our Annual Report on Form 10-K for
the year ended 2003. Prior to 2003, we accounted for those plans under the
recognition and measurement provisions of Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. Effective January 1, 2003, we adopted the fair value
recognition provisions of SFAS Statement No. 123 ("SFAS 123"), Accounting for
Stock-Based Compensation, prospectively to all employee awards granted,
modified, or settled after January 1, 2003. Awards under our plans vest in
periodic installments after one year of their grant and expire ten years from
grant date. Therefore, the cost related to stock-based employee compensation
included in the determination of net income in the first quarter 2004 and 2003
is less than that which would have been recognized if the fair value based
method had been applied to all awards since the original effective date of SFAS
123. The following table illustrates the effect on net income and earnings per
share if the fair value based method had been applied to all outstanding and
unvested awards in each period.

FIRST QUARTER
2004 2003
---------- ------------
(in thousands)

Net income (loss), as reported................................. $ 7,507 $ (15,458)
Add: Stock based employee compensation cost,
net of tax.................................................. 96 42
Less: Total stock-based employee compensation
cost determined under fair value based
method, net of tax.......................................... (251) (243)
---------- ------------
Net income (loss) - proforma................................... $ 7,352 $ (15,659)
========== ============
Earnings (loss) per share:
Basic - as reported................................... $ 0.21 $ (0.44)
========== ============
Basic - proforma...................................... $ 0.21 $ (0.44)
========== ============
Diluted - as reported................................. $ 0.20 $ (0.44)
========== ============
Diluted - proforma.................................... $ 0.19 $ (0.44)
========== ============

NOTE 2 - LONG-TERM DEBT

LONG-TERM DEBT

Long-term debt consists of the following:
MARCH 31, DECEMBER 31,
2004 2003
--------------- -------------
(in thousands)

Senior unsecured notes with interest at 9.375%.................. $ 85,000 $ 85,000
Note payable with interest at 6.4%.............................. 2,400 2,700
Note payable with interest at 7.4%.............................. 14,208 15,500
--------------- -------------
101,608 103,200
Less current portion............................................ 5,075 6,367
--------------- -------------
$ 96,533 $ 96,833
=============== =============

In November 1997, we issued $115.0 million in 9.375 percent senior
unsecured notes due November 1, 2007 ("2007 Notes"), of which we have
repurchased $30.0 million. The terms of the 2007 Notes require that net cash
proceeds in excess of $25 million from the sale of Geoilbent must be invested in
the oil and gas business within one year of the sale, or any amount not so
invested must be used to repay or prepay the 2007 Notes or certain debts of
subsidiaries.

At March 31, 2004, we and Benton-Vinccler were in compliance with all
covenants under our respective borrowing obligations.

NOTE 3 - COMMITMENTS AND CONTINGENCIES

We have employment contracts with five executive officers which provide
for annual base salaries, eligibility for bonus compensation and various
benefits. The contracts provide for a lump sum payment as a multiple of base
salary in the event of termination of employment without cause. In addition,
these contracts provide for payments as a multiple of base salary and bonus, tax
reimbursement and a continuation of benefits in the event of termination without
cause following a change in control. By providing one year notice, these
agreements may be terminated by either party on May 31, 2005.

In July 2001, we leased for three years office space in Houston, Texas for
approximately $11,000 per month. We lease 17,500 square feet of space in a
California building that we no longer occupy under a lease agreement that
expires in December 2004, all of which has been subleased for rents that
approximate our lease costs.

Excel Enterprises L.L.C. vs. Benton Oil & Gas Company, now known as
Harvest Natural Resources, Inc., Chemex, Inc., Benton-Vinccler, C.A., Gale
Campbell and Sheila Campbell in the District Court for Harris County, Texas.
This suit was brought in May 2003 by Excel alleging, among other things, breach
of a consulting agreement between Excel and us, misappropriation of proprietary
information and trade secrets, and fraud. Excel seeks actual and exemplary
damages, injunctive relief and attorneys' fees. The Court has abated the suit
pending final judgment of a case pending in Louisiana to which we are not a
party. We dispute Excel's claims and plan to vigorously defend against them. We
are unable to estimate the amount or range of any possible loss.

NOTE 4 - TAXES

TAXES OTHER THAN ON INCOME

Benton-Vinccler pays municipal taxes on operating fee revenues it receives
for production from the South Monagas Unit. We have incurred the following
Venezuelan municipal taxes and other taxes:

FIRST QUARTER
2004 2003
------------ -----------
(in thousands)

Venezuelan Municipal Taxes.................. $ 888 $ 513
Franchise Taxes............................. 129 27
Payroll and Other Taxes..................... 177 107
------------ -----------
$ 1,194 $ 647
============ ===========

TAXES ON INCOME

At December 31, 2003, we had, for U.S. federal income tax purposes,
operating loss carryforwards of approximately $58.4 million expiring in the
years 2018 through 2022. Income tax expense represents foreign taxes
attributable to our Venezuela operations.

We do not provide deferred income taxes on undistributed earnings of
international consolidated subsidiaries for possible future remittances as all
such earnings are reinvested as part of our ongoing business.

NOTE 5 - OPERATING SEGMENTS

We regularly allocate resources to and assess the performance of our
operations by segments that are organized by unique geographic and operating
characteristics. The segments are organized in order to manage regional
business, currency and tax related risks and opportunities. Revenues from the
Venezuela operating segment are derived from the production and sale of oil and
natural gas. Operations included under the heading "United States and other"
include corporate management, exploration and production activities, cash
management and financing activities performed in the United States and other
countries which do not meet the requirements for separate disclosure. All
intersegment revenues, expenses and receivables are eliminated in order to
reconcile to consolidated totals. Corporate general and administrative and
interest expenses are included in the United States and other segment and are
not allocated to other operating segments:

FIRST QUARTER
2004 2003
-------- --------
(in thousands)

OPERATING SEGMENT REVENUES
Oil and Gas Sales:
Venezuela .................... $ 38,797 $ 18,825
-------- --------
Total oil and gas sales 38,797 18,825
-------- --------

OPERATING SEGMENT INCOME (LOSS)
Venezuela .................... 10,263 3,538
Russia ....................... (537) (16,158)
United States and other ...... (2,219) (2,838)
-------- --------
Net income (loss) ..... $ 7,507 $(15,458)
======== ========

MARCH 31, DECEMBER 31,
2004 2003
--------- ------------
(in thousands)
OPERATING SEGMENT ASSETS

Venezuela ............... $ 250,920 $ 241,855
Russia .................. 369 237
United States and other . 182,123 180,768
--------- ------------
433,412 422,860
Intersegment eliminations (50,917) (48,512)
--------- ------------
$ 382,495 $ 374,348
========= ============

NOTE 6 - RUSSIAN OPERATIONS

GEOILBENT

On September 25, 2003, we sold our minority equity investment in Geoilbent
to Yukos Operational Holding Limited for $69.5 million plus the repayment of the
subordinated loan and certain payables owed to us by Geoilbent in the amount of
$5.5 million. Prior to the sale, we owned 34 percent of Geoilbent, a Russian
limited liability company formed in 1991 to develop, produce and market crude
oil from the North Gubkinskoye and South Tarasovskoye Fields in the West Siberia
region of Russia. Our minority equity investment in Geoilbent was accounted for
using the equity method and was based on a fiscal year ending September 30.
Sales quantities attributable to Geoilbent for the three months ended December
31, 2002 were 1.5 million barrels (1.0 million domestic and 0.5 million export).
Prices for crude oil for the three months ended December 31, 2002 averaged
$14.65 ($10.09 domestic and $22.79 export) per barrel. Depletion expense
attributable to Geoilbent for the three months ended December 31, 2002 was $3.32
per barrel. All amounts represent 100 percent of Geoilbent. Summarized financial
information for Geoilbent follows:

STATEMENT OF OPERATIONS:

THREE MONTHS ENDED
DECEMBER 31, 2002
------------------
(in thousands)

Revenues
Oil sales......................................... $ 21,921
Expenses
Selling and distribution expenses................. 1,046
Operating expenses................................ 4,356
Impairment of oil and gas properties.............. 50,000
Depletion, depreciation and amortization.......... 5,691
General and administrative........................ 1,545
Taxes other than on income........................ 7,963
-----------------
70,601
-----------------

Loss from operations..................................... (48,680)
Other Non-Operating Income (Expense)
Other income...................................... (574)
Interest expense.................................. (479)
Net gain on exchange rates........................ 113
-----------------
(940)
-----------------

Loss before income taxes................................. (49,620)

Income tax benefit....................................... (870)

-----------------
Net loss................................................. $ (48,750)
=================

Due to low Russian domestic oil prices, the net present value of
Geoilbent's proved reserves at December 31, 2002 were lower than Geoilbent's
unamortized capitalized cost of its oil and gas properties at that date. As a
result, Geoilbent recorded a $50 million full cost ceiling test impairment in
the three months ended December 31, 2002.

As of September 30, 2002, the Geoilbent shareholders had provided
Geoilbent with subordinated loans totaling $7.5 million (2.5 million from us).
These loans were unsecured and repayable in January 2004. The loan by us was
repaid as part of the sale of our minority equity investment in Geoilbent.

NOTE 7 - RELATED PARTY TRANSACTIONS

We have entered into construction service agreements with Venezolana
International, S.A. ("Vinsa"). Vinsa is an affiliate of Venezolana de
Inversionesy Construcciones Clerico, C.A., which owns 20 percent of
Benton-Vinccler. Vinsa provided $0.4 million and $0.1 million in construction
services on our Venezuelan gas pipeline and field operations for the first
quarter 2004 and 2003, respectively.

We have entered into a consulting agreement with Oil & Gas Technology
Consultants Inc. ("OGTC") to provide operational and technical assistance in
Venezuela. OGTC is an affiliate of Venezolana de Inversionesy Construcciones
Clerico, C.A., which owns 20 percent of Benton-Vinccler. Payment for services is
due when earnings are not reinvested in Benton-Vinccler operations. Expenses
related to this consulting agreement were $0.4 million and $0.3 million for the
first quarter 2004 and 2003, respectively.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Harvest Natural Resources, Inc. ("Harvest" or the "Company") cautions that any
forward-looking statements (as such term is defined in the Private Securities
Litigation Reform Act of 1995) contained in this report or made by management of
the Company involve risks and uncertainties and are subject to change based on
various important factors. When used in this report, the words "budget",
"anticipate", "expect", "believes", "goals", "projects", "plans", "anticipates",
"estimates", "should", "could", "assume" and similar expressions are intended to
identify forward-looking statements. In accordance with the provisions of the
Private Securities Litigation Reform Act of 1995, we caution you that important
factors could cause actual results to differ materially from those in the
forward-looking statements. Such factors include our substantial concentration
of operations in Venezuela, the political and economic risks associated with
international operations, the anticipated future development costs for our
undeveloped proved reserves, the risk that actual results may vary considerably
from reserve estimates, the dependence upon the abilities and continued
participation of certain of our key employees, the risks normally incident to
the operation and development of oil and gas properties and the drilling of oil
and natural gas wells, the availability of materials and supplies necessary to
projects and operations, the price for oil and natural gas and related financial
derivatives, changes in interest rates, basis risk and counterparty credit risk
in executing commodity price risk management activities, the Company's ability
to acquire oil and gas properties that meet its objectives, changes in operating
costs, overall economic conditions, political stability, civil unrest, acts of
terrorism, currency and exchange risks, currency controls, changes in existing
or potential tariffs, duties or quotas, availability of sufficient financing,
changes in weather conditions, and ability to hire, retain and train management
and personnel. A discussion of these factors is included in our 2003 Annual
Report on form 10-K, which includes certain definitions and a summary of
significant accounting policies and should be read in conjunction with this
Quarterly Report.

MANAGEMENT, OPERATIONAL AND FINANCIAL RESTRICTIONS

On September 25, 2003, we closed the Sale and Purchase Agreement to sell
our entire 34 percent minority equity investment in LLC Geoilbent ("Geoilbent"),
to Yukos Operational Holding Limited, a Russian oil and gas company, for $69.5
million plus $5.5 million as repayment of intercompany loans and outstanding
accounts payable owed to us by Geoilbent. The terms of our 9.375 percent senior
unsecured notes due November 1, 2007 ("2007 Notes") require that net cash
proceeds in excess of $25 million from the sale of Geoilbent must be invested in
the oil and gas business within one year of the sale, or any amount not so
invested must be used to repay or prepay the 2007 Notes or certain debts of
subsidiaries. We intend to reinvest the proceeds in oil and gas growth
opportunities in Russia and Venezuela, retire debt or use the proceeds for other
corporate purposes.

CAPITAL RESOURCES AND LIQUIDITY

Debt Reduction. We currently have a significant debt principal obligation
payable in 2007 ($85 million). We intend to continue to evaluate open market
debt purchases to reduce our 2007 Notes outstanding.

Working Capital. The net funds raised and/or used in each of the
operating, investing and financing activities are summarized in the following
table and discussed in further detail below:

FIRST QUARTER
------------------------------
2004 2003
------------- --------------
(in thousands)

Net cash provided by operating activities $ 10,231 $ 11,175
Net cash used in investing activities (1,316) (10,862)
Net cash used in financing activities (336) (3,051)
------------- --------------
Net increase (decrease) in cash $ 8,579 $ (2,738)
============= ==============

At March 31, 2004, we had current assets of $198.5 million and current
liabilities of $43.3 million, resulting in working capital of $155.2 million and
a current ratio of 4.6:1. This compares with a working capital of $137.2 million
and a current ratio of 4.0:1 at December 31, 2003. The increase in working
capital of $18.0 million was primarily due to the addition of natural gas sales
in Venezuela and the increase in oil sales volumes.

Cash Flow from Operating Activities. During the first quarter 2004 and
2003, net cash provided by operating activities was approximately $10.2 million
and $11.2 million, respectively. The $1.0 million decrease was due to gas
project payments and the crude oil put amortization. We will also be required to
make annual interest payments of approximately $8.0 million on the 2007 Notes.

Cash Flow from Investing Activities. During the first quarter 2004 and
2003, we had drilling and production-related capital expenditures of
approximately $0.7 million and $12.5 million, respectively. The timing and size
of capital expenditures for the South Monagas Unit are at our discretion. Our
remaining capital commitments worldwide support our search for new acquisitions,
are relatively minimal and are substantially at our discretion.

We continue to assess production levels and commodity prices in
conjunction with our capital resources and liquidity requirements.

Cash Flow from Financing Activities. During the first quarter 2004,
Benton-Vinccler repaid $1.6 million of its U.S. dollar debt. During the first
quarter 2003, Benton-Vinccler repaid all of its Bolivar Denominated debt ($2.2
million) and $0.6 million of its U.S. dollar debt which was an acceleration of
the next two principal payments.

RESULTS OF OPERATIONS

You should read the following discussion of the results of operations for
the first quarter 2004 and 2003 and the financial condition as of March 31, 2004
and December 31, 2003 in conjunction with our consolidated financial statements
and related notes included in our Annual Report on Form 10-K for the year ended
2003.

FIRST QUARTER 2004 COMPARED WITH FIRST QUARTER 2003

Our results of operations for the first quarter 2004 primarily reflected
the results for Benton-Vinccler in Venezuela, which accounted for all of our
production and sales revenue. Our revenues increased $20.0 million, or 51
percent, during the first quarter 2004 compared with the first quarter 2003.
This was due to the addition of natural gas sales as well as higher crude oil
prices and volumes in Venezuela. The first quarter of 2003 was affected by the
shut-in of the production in Venezuela during all of January and part of
February due to the national work stoppage.

Oil sales quantities for the first quarter 2004 from Venezuela were 21,000
barrels of oil per day ("BOPD") compared with 13,600 BOPD for the first quarter
2003. Oil revenue per barrel increased 5 percent (from $15.34 in 2003 to $16.10
in 2004) and oil sales quantities increased 36 percent (from 1.2 million barrels
["MMBbls"] of oil in 2003 to 1.9 MMBbls of oil in 2004) during the first quarter
2004 compared with the first quarter 2003. Natural gas sales quantities for the
first quarter 2004 from Venezuela were 85 million cubic feet ("Mcf") of gas per
day (7.8 billion cubic feet ["BCF"] of gas in 2004).

Our operating expenses increased $0.8 million, or 11 percent, during the
first quarter 2004 compared with the first quarter 2003. This was primarily due
to increased production. Depletion, depreciation and amortization increased $4.6
million, or 57 percent, during the first quarter 2004 compared with the first
quarter 2003 due to increased production at the South Monagas Unit. Depletion
expense per barrel of oil equivalent produced from Venezuela during the first
quarter 2004 was $2.41 compared with $2.57 during the first quarter 2003
primarily due to reduced future development costs. General and administrative
expenses during the first quarter 2004 were relatively consistent with that of
the first quarter 2003. Taxes other than on income increased during the first
quarter 2004 compared with the first quarter 2003. This was primarily due to
increased Venezuelan municipal taxes which are a function of oil and gas
revenues.

Interest expense during the first quarter 2004 was relatively consistent
with that of the first quarter 2003. Net loss on exchange rates increased $1.1
million for the first quarter 2004 compared with the first quarter 2003. This
was due to Venezuela Government currency controls imposed in February 2003 which
fixed the official exchange rate at 1,600 Venezuelan Bolivars for each U.S.
Dollar. In February 2004, the official exchange rate was adjusted to 1,920
Venezuelan Bolivars for each U.S. Dollar. We realized income before income taxes
and minority interest of $15.7 million during the first quarter 2004 compared
with income of $3.1 million in first quarter 2003. Income tax expense increased
$4.5 million due to the higher pre-tax income. The effective tax rate remained
relatively consistent from the first quarter 2003 compared to the first quarter
2004. The income attributable to the

minority interest increased $8.1 million for the first quarter 2004 compared
with the first quarter 2003. This increase was due to the increased production
of Benton-Vinccler.

Equity in net earnings of affiliated companies decreased $0.1 million
during the first quarter 2004 compared with the first quarter 2003. This was due
to the elimination of Geoilbent equity income on September 25, 2003, the date of
its sale.

EFFECTS OF FOREIGN EXCHANGE RATES

Our results of operations and cash flow are affected by changing oil
prices. However, our South Monagas Unit oil sales are based on a fee adjusted
quarterly by the percentage change of a basket of crude oil prices instead of by
absolute dollar changes. This dampens both any upward and downward effects of
changing prices on our Venezuelan oil sales and cash flows. If the price of oil
increases, there could be an increase in our cost for drilling and related
services because of increased demand, as well as an increase in oil sales.
Fluctuations in oil and natural gas prices may affect our total planned
development activities and capital expenditure program. On February 5, 2003, the
Government of Venezuela fixed the exchange rate between the Bolivar and the U.S.
dollar, and restricted the ability to exchange Venezuelan Bolivars for U.S.
dollars and vice versa. Initially the exchange rate was fixed at 1,600
Venezuelan Bolivars for each U.S. dollar. On February 6, 2004, the official
exchange rate was adjusted to 1,920 Venezuelan Bolivars for each U.S. dollar.
Oil companies, such as Benton-Vinccler, are allowed to receive payments for oil
sales in U.S. dollars and pay U.S. dollar-denominated expenses from those
payments. The full amount of Benton-Vinccler's Bolivar denominated debt was
repaid as of March 31, 2003. As of April 27, 2004, we have cash reserves of
approximately $134.7 million and do not expect the Venezuelan currency
conversion restriction to adversely affect our ability to meet our short-term
loan obligations.

CONCLUSION

While we can give you no assurance, we believe that our cash flow from
operations and $134.7 million of cash (as of April 27, 2004) will provide
sufficient capital resources and liquidity to fund execution of our business
plan including capital expenditures and semiannual interest payment obligations
for the next 12 months. Our expectation is based upon our current estimate of
projected price levels, ability to remit funds from Benton-Vinccler and an
assumption that there will be no material interruption in production or delays
in the time periods between the submission of quarterly invoices to PDVSA by
Benton-Vinccler and the subsequent payments of these invoices by PDVSA. Future
cash flows are subject to a number of variables including, but not limited to,
the level of production, prices, as well as various economic and political
conditions which have historically affected the oil and natural gas business.
Prices for oil are subject to fluctuations in response to changes in supply,
market uncertainty and a variety of factors beyond our control.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk from adverse changes in oil and natural gas
prices, interest rates, foreign exchange and political risk, as discussed in our
Annual Report on Form 10-K for the year ended 2003. Information about market
risk for the first quarter 2004 does not differ materially from that discussed
in the 2003 annual report.

ITEM 4. CONTROLS AND PROCEDURES

The SEC, among other things, adopted rules requiring reporting companies
to maintain disclosure controls and procedures to provide reasonable assurance
that a registrant is able to record, process, summarize and report the
information required in the registrant's quarterly and annual reports under the
Securities Exchange Act of 1934 (the "Exchange Act"). While we believe that our
existing disclosure controls and procedures have been effective to accomplish
these objectives, we intend to continue to examine, refine and formalize our
disclosure controls and procedures and to monitor ongoing developments in this
area.

Our principal executive officer and our principal financial officer have
informed us that, based upon their evaluation, as of March 31, 2004, of our
disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule
15d-15(e) under the Exchange Act), they have concluded that those disclosure
controls and procedures are effective.

There have been no changes in our internal controls or in other factors
known to us that could significantly affect these controls subsequent to their
evaluation, nor have we been required to take any corrective actions with regard
to any significant deficiencies and material weaknesses.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See our Annual Report on Form 10-K for the year ended 2003 for a
description of certain legal proceedings. There have been no
material developments in such legal proceedings since the filing of
such Annual Report.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.

ITEM 5. OTHER INFORMATION
None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

3.1 Certificate of Incorporation filed September 9, 1988
(Incorporated by reference to Exhibit 3.1 to our Registration
Statement (Registration No. 33-26333)).

3.2 Amendment to Certificate of Incorporation filed June 7, 1991
(Previously filed as an exhibit to our S-1 Registration
Statement (Registration No. 33-39214)).

3.3 Amended and Restated Bylaws as of December 11, 2003
(Incorporated by reference to Exhibit 3.3 to our Form 10-K
filed on March 9, 2004, File No. 1-10762).

4.1 Form of Common Stock Certificate (Previously filed as an
exhibit to our S-1 Registration Statement) (Registration No.
33-26333).

31.1 Certifications accompanying Quarterly Report pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002 executed by
Peter J. Hill, President and Chief Executive Officer and
Steven W. Tholen, Senior Vice President, Chief Financial
Officer and Treasurer.

32.1 Certifications accompanying Quarterly Report pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 executed by
Peter J. Hill, President and Chief Executive Officer and
Steven W. Tholen, Senior Vice President, Chief Financial
Officer and Treasurer.

(b) Reports on Form 8-K

On January 8, 2004, we furnished a Report on Form 8-K for a press
release dated January 8, 2004 providing certain financial and
operating guidance assumptions for 2004.

On March 4, 2004, we furnished a Report on Form 8-K for a press
release dated March 4, 2004 providing results of operations for the
4th quarter and year ended December 31, 2003.

On March 4, 2004, we filed a Report on Form 8-K announcing our
intention to file a Form 10-Q/A with the SEC for the second and
third quarters of 2003 to reflect changes to our consolidated
financial statements for the periods affected.

SIGNATURES

Pursuant to the requirements of Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

HARVEST NATURAL RESOURCES, INC.

Dated: May 7, 2004 By: /S/Peter J. Hill
-------------------------------------
Peter J. Hill
President and Chief Executive Officer

Dated: May 7, 2004 By: /S/Steven W. Tholen
-------------------------------------
Steven W. Tholen
Senior Vice President,
Chief Financial Officer and Treasurer

EXHIBIT INDEX

3.1 Certificate of Incorporation filed September 9, 1988
(Incorporated by reference to Exhibit 3.1 to our Registration
Statement (Registration No. 33-26333)).

3.2 Amendment to Certificate of Incorporation filed June 7, 1991
(Previously filed as an exhibit to our S-1 Registration
Statement (Registration No. 33-39214)).

3.3 Amended and Restated Bylaws as of December 11, 2003
(Incorporated by reference to Exhibit 3.3 to our Form 10-K
filed on March 9, 2004, File No. 1-10762).

4.1 Form of Common Stock Certificate (Previously filed as an
exhibit to our S-1 Registration Statement) (Registration No.
33-26333).