UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 25, 2003
HARVEST NATURAL RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10762 77-0196707
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
15835 Park Ten Place Drive, Suite 115
Houston, Texas 77084
(Address, including zip code, of principal executive offices)
(281) 579-6700
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 16, 2003, Harvest Natural Resources, Inc. (the "Company") entered
into an agreement to sell our equity investment consisting of our 34 percent
interest in LLC Geoilbent ("Geoilbent") to a nominee of the YUKOS Oil Company, a
Russian oil and gas company, for cash of $75.0 million, which included $5.5
million as repayment of an inter-company loan and payables owed to us by
Geoilbent. The proceeds of the sale were reduced by approximately $2.0 million
of selling costs (primarily consulting and legal fees). The Company was paid a
$2.0 million earnest money deposit and the balance of $73.0 million was
deposited in a third-party escrow account with closing conditioned upon final
consents from the Russian Ministry for Antimonopoly Policy and Support for
Entrepreneurship and the European Bank for Reconstruction and Development. These
consents have been received and closing occurred on September 25, 2003. The
amount of consideration that the Company received for this sale was determined
by arms'-length negotiations between the Company and the purchaser's
representatives.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(b) UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The Unaudited Pro Forma Condensed Consolidated Financial Information
reflects the disposition of the entire 34 percent investment in Geoilbent
and repayment of intercompany loan and payables. The Pro Forma adjustments
reflect a net gain after tax of $31.9 million which is not reflected in the
unaudited pro forma condensed consolidated statements of operations. The
estimated taxable gain on the sale will be offset by net operating losses
for U.S. federal income tax purposes.
The unaudited pro forma condensed consolidated balance sheet as of June 30,
2003 assumes the disposition transaction occurred on that date. The
unaudited pro forma condensed consolidated statements of operations for the
six months ended June 30, 2003 and the year ended December 31, 2002 assume
the disposition occurred at the beginning of the earliest period presented.
The Company believes the assumptions used provide a reasonable basis for
presenting the significant effects directly attributable to the disposition
transaction.
The unaudited pro forma condensed consolidated financial statements do not
purport to represent what the Company's results of operations would have
been if such transactions had occurred on such dates. These unaudited pro
forma condensed consolidated financial statements should be read in
conjunction with the Company's Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations.
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HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF
JUNE 30, PRO-FORMA
2003 ADJUSTMENTS(1) PRO FORMA
--------- -------------- ---------
(Amounts in thousands)
ASSETS:
Cash and Marketable Securities $ 76,873 $ 73,000 $ 149,873
Intercompany Note and Account Receivable 4,968 (4,968) --
Investment in Geoilbent 34,872 (35,672) --
800
Other Assets 219,027 -- 219,027
--------- --------- ---------
Total $ 335,740 $ 33,160 $ 368,900
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities $ 50,684 $ 420 $ 51,104
Long Term Debt 100,017 100,017
Other Liabilities and Minority Interest 28,485 28,485
Deferred Income -- 800 800
Stockholders' Equity 156,554 31,940 188,494
--------- --------- ---------
Total $ 335,740 $ 33,160 $ 368,900
========= ========= =========
(1) To record the sales price ($75.0 million) less selling expenses ($2.0
million) of the entire 34 percent equity interest in Geoilbent, repayment
of an intercompany note and other receivables, alternative minimum tax
($400) offset by a valuation allowance, and state income tax ($20) on the
gain. No deferred taxes have been provided due to the utilization of net
operating loss carry forward and the reversal of our valuation allowance.
The Company accrued as deferred income 34 percent of Geoilbent's actual
second quarter and estimated third quarter operating results. The Company
reports Geoilbent's equity income with a one quarter delay.
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HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX
MONTHS ENDED PRO-FORMA
JUNE 30, 2003 ADJUSTMENTS(2) PRO FORMA
------------- -------------- ---------
(Amounts in thousands)
Income from Consolidated Companies $ 3,174 $ $ 3,174
Equity in Net Income (Loss) of
Affiliated Companies (17,428) 17,428 --
-------- ---------- --------
Net Income (Loss) $(14,254) $ 17,428 $ 3,174
======== ========== ========
Net Income (Loss) Per Common Share:
Basic $ (0.40) $ 0.09
Diluted $ (0.40) $ 0.09
(2) To reverse the Net Loss from Geoilbent
HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE
MONTHS ENDED PRO-FORMA
DECEMBER 31, 2002 ADJUSTMENTS(2) PRO FORMA
----------------- -------------- ---------
(Amounts in thousands)
Income from Consolidated Companies $ 100,197 $ $ 100,197
Equity in Net Income (Loss) of
Affiliated Companies 165 (1,647) (1,482)
--------- --------- ---------
Net Income (Loss) $ 100,362 $ (1,647) $ 98,715
========= ========= =========
Net Income (Loss) Per Common Share:
Basic $ 2.90 $ 2.85
Diluted $ 2.78 $ 2.73
(2) To reverse the Net Income from Geoilbent
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(b) EXHIBITS
10.1 Sale and Purchase Agreement dated September 16, 2003 between the
Company and a nominee of the YUKOS Oil Company, regarding the sale of the
Company's 34 percent interest in LLC Geoilbent.
99.1 Press Release dated September 25, 2003 announcing the closing of
Harvest Natural Resources sale of its Russian interest.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized on this 9th day of October 2003.
HARVEST NATURAL RESOURCES, INC.
/s/ Kurt A. Nelson
---------------------------------------
Kurt A. Nelson
Vice President and Controller
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INDEX TO EXHIBITS
Item
Number Exhibit
- ------ -------
10.1 Sale and Purchase Agreement dated September 16, 2003 between the
Company and a nominee of the YUKOS Oil Company, regarding the sale of
the Company's 34 percent interest in LLC Geoilbent.
99.1 Press Release dated September 25, 2003 announcing the closing of
Harvest Natural Resources sale of its Russian interest.
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