HOUSTON (Yosefardi) – Harvest Natural Resources, Inc. said the Budong office in Indonesia has been closed and the process of relinquishment of the Budong block is in process.
In January 2013, the Budong-Budong Production Sharing Contract (Budong PSC) partners were granted a four year extension of the initial six year exploration term of the Budong PSC to January 15, 2017.
The extension of the initial exploration term includes an exploration well, which if not drilled by January 2016, results in the obligation of the joint venture to return the entire Budong PSC to the Government of Indonesia.
Concurrently, we purchased an additional 7.1% equity interest from our partner and became operator of the Budong PSC in exchange for agreeing to fund 100% of the costs of the first exploration well.
Since this exploration well was not drilled within 18 months of the date of approval from the Government of Indonesia of this transaction (October 9, 2014), the Company was obligated to PAY our partner in the Budong PSC $3.2 million.
This charge was invoiced by and paid to our joint venture partner in October 2014.