Harvest Natural Resources sells Gabon interests, Delta Petroleum note paid

HOUSTON -- HNR Energia B.V., a wholly-owned subsidiary of Harvest Natural Resources, Inc. closed the sale of all of its Gabon interests in accordance with a previously announced sale and purchase agreement dated Dec. 21, 2016 among Harvest, HNR Energia B.V. and BW Energy Gabon Pte. Ltd, a private Singapore company.

Under the terms of the agreement, BW Energy Gabon acquired HNR Energia's 100% interest in Harvest Dussafu B.V., which owns a 66.667% interest in the Dussafu production sharing contract covering a 210,000-acre area located offshore Gabon, for $32 million in cash, subject to certain adjustments, including reimbursement for approximately $2.3 million of expenditures in respect of the interests since Sept. 30, 2016. $2.5 million of the $32 million purchase price was retained in an escrow account at Citibank to satisfy any post-closing claims the purchaser may have against Harvest and HNR Energia under the Sale and Purchase Agreement. The $2.5 million (less the amount of any claims) will be released to HNR Energia from the escrow account July 10, 2017.

After taking into consideration taxes and transaction related costs, the net proceeds of the transaction are estimated to be $29.7 million, less any successful claims made against the $2.5 million escrow. Tudor, Pickering, Holt & Co. served as financial advisor to the company. Mayer Brown LLP and Norton Rose Fulbright US LLP acted as legal counsel to the Company. 

On March 31, 2017, Delta Petroleum N.V. paid off the 11% non-convertible senior promissory note payable owed to HNR Energia relating to Harvest's sale of its Venezuelan interest in October 2016. The note was due on April 7, 2017. The total interest and principal paid to HNR Energia was $12.6 million.

In light of closing the Gabon transaction and the collection of the note due from Delta Petroleum, Harvest's board will move forward with plans for its dissolution. Under the dissolution, liquidation and winding up process under Delaware law, the proceeds from the Gabon transaction and the repayment of debt from Delta Petroleum will be combined with other Harvest assets to be distributed to Harvest's stockholders, subject to certain payments and costs during Harvest's winding up process. 

These costs would include general and administrative costs, dissolution expenses, taxes, costs associated with pursuing ongoing litigation, and payments related to terminations of employment, as well as funds to establish reserves for the payment of current and possible future liabilities of Harvest.

Before the time of dissolution, Harvest's board plans to consider the declaration of a pre-dissolution dividend as part of its overall plan of complete dissolution and liquidation. Harvest will announce the record date for, and amount of, the dividend if and when it is declared by the board. It is expected that Harvest's stock will be delisted from the New York Stock Exchange after payment of this dividend and shortly before the dissolution becomes effective.