HOUSTON (Yosefardi) – Harvest Natural Resources, Inc. has satisfied all work commitments for the current exploration phase of the Budong PSC in Indonesia.
However, the extension of the initial exploration term includes an exploration well, which if not drilled by January 2016, would result in the termination of the Budong PSC.
“We are actively discussing the sale of our interests in Budong, and based on indications of interest received in December 2013, we determined that is it was appropriate to recognize an impairment expense of $0.6 million and $2.8 million of other charges included in general and administrative expenses for 2013,” the company said.
In December 2012, Harvest signed a farmout agreement with the operator of the Budong PSC to acquire an additional 7.1 percent participating interest and to become operator of the Budong PSC.
It assumed the role of operator effective March 25, 2013. Closing of this acquisition on April 22, 2013 increased its participating ownership interest in the Budong PSC to 71.5 percent with its cost-sharing interest becoming 72 percent until first commercial production.
The consideration for this transaction is that Harvest will fund 100 percent of the costs of the first exploration well of the four-year extension to the Budong PSC.
If it does not drill an exploration well before October 2014, its partner has the right to give it notice that the consideration for the additional 7.1 percent participating interest must be paid in cash for $3.2 million.