Harvest Natural: Hits Oil
Yesterday was ATP Oil & Gas and today it is Harvest Natural Resources turn.
Harvest Natural Resources today announced further results from the flow testing of the Bar F 1-20-3-2 well in Duchesne County, Utah. Harvest had provided initial preliminary flow test results during the Company’s earnings release conference call on March 16, 2010.
Since the last update, Harvest has completed drilling out plugs installed to isolate the six hydraulically fractured oil intervals, and commenced a flow test of the commingled six intervals between 8,200 and 9,600 feet in the Lower Green River and Upper Wasatch formations. The testing program yielded first oil to surface on March 24, 2010, and the well has produced over 4,000 barrels of approximately 42 degree API oil over the first five days of production through March 29, 2010. These production volumes have been achieved as the well is cleaning up, producing load water pumped into the well during the fracing process. The testing is at a current stable production rate of approximately 900 barrels of oil per day and 650 mcf of natural gas per day with a flowing surface pressure of approximately 1,400 psi. The testing program is expected to continue for another one to two weeks.
Harvest President and CEO James Edmiston said, “We believe that the results achieved in the Bar F testing program to date indicate a high likelihood that we have made a commercial oil discovery in the Bar F well, and we are excited about the potential growth opportunity that this brings to Harvest in the Uintah Basin. We expect to put the Bar F on production as soon as necessary surface facilities and gas flowline construction work can be completed. We believe that these results indicate that a significant portion of Harvest’s 65,000 acres (39,000 acres net to Harvest) land position in the Basin is prospective for appraisal and potentially development drilling targeting the intervals tested in the Bar F well. We are moving forward with planning and preparations for a flexible multi-well follow-up drilling program that we hope to commence in the second half of 2010.”
HNR is setting up for a huge 2010. The company will now have production outside of Venezuela that should offset all its operating expenses and could be cash flow positive. The market had discounted the shares due to risk related to Venezuela. Today’s news reduces the risks and creates a new stream of cash flow for the company.
HNR still have many other projects outside of Venezuela that it is testing. In three years, when we look back at 2010 we will realize that this was a game changer event for the company. I believe in the next 2-3 yrs the company’s shares will be worth substantially more than what it is trading at today.