Harvest Natural Resources selling its interest in Siberian producer Geoilbent

By OGJ editors
HOUSTON, Sept. 18 -- Harvest Natural Resources Inc., Houston, has agreed to sell its 34% interest in Siberian producer Geoilbent to a nominee of OAO Yukos for $69.5 million cash and $5.5 million in repayment of loans.

Geoilbent is a joint venture established in late 1991 to develop the Severo-Gubkinskoye oil and gas field. Partners are Purneftegasgeologia and Purneftegas, two local Russian oil companies (OGJ, Mar. 11, 2002, p. 36).

Net cash proceeds, minus expenses associated with the transaction, are estimated at $73 million. Harvest said it would use the proceeds to acquire and develop properties in Russia and Venezuela and for general corporate purposes.

Closing, expected in the fourth quarter, hinges upon approval from the Russian Ministry for Antimonopoly Policy and Support for Entrepreneurship and the European Bank for Reconstruction and Development.

Harvest Pres. and CEO Peter J. Hill, said, "Our commitment to Russia remains strong. We look forward to redeploying capital to Russian growth projects while maintaining our focus in Venezuela."

The New York-based Standard & Poor's Ratings Services said Harvest Natural Resources's announced sale was favorable to credit quality; however, the sale did not affect the company's credit ratings or outlook.

OAO Yukos and OAO Sibneft are in the process of merging into a company that will be Russia's largest oil and gas company and will rank among the world's largest oil producers (OGJ, Apr. 28, 2003, p. 32). That deal is expected to close by Dec. 31.