HNR reports increased taxes, interest from Venezuela

Harvest Vinccler, a unit of Harvest Natural Resources Inc. (HNR), received a final $56 million assessment for 2001-04 in additional taxes and related interest from Seniat, Venezuela's tax authority.

Sept. 11, 2006

2 min read

By OGJ editors
HOUSTON, Sept. 11 -- Harvest Vinccler, a unit of Harvest Natural Resources Inc. (HNR), received a final $56 million assessment for 2001-04 in additional taxes and related interest from Seniat, Venezuela's tax authority.

HNR's 80% stake in Harvest Vinccler amounts to $45 million, the Houston company said. Previously Seniat issued a preliminary $94 million tax assessment against Harvest Vinccler for 2001-04 (OGJ, Sept. 4, 2006, p. 54).

Last year, the HNR unit paid $5.3 million for two items in the preliminary tax assessment. The company took a 2006 second-quarter charge of $43 million for resolution of 2001-04 tax issues and an additional $18 million for increased taxes and interest for 2005-06.

The charge was based on a negotiated agreement between Harvest Vinccler and Seniat. The recent $56 million final assessment exceeds that agreement. HNR said the additional taxes for 2001-06 stemmed from retroactive tax rate increases.

HNR Pres. and Chief Executive Officer James A. Edmiston said, "We are extremely disappointed that the Seniat did not honor the agreement reached in July after several months of negotiation."

The company continues working with Seniat. Resolution of the tax issues is a step in the transition of Harvest Vinccler's operations as a mixed company. Mixed companies were formed as part of Venezuela's changing arrangements with international oil companies (OGJ, Apr. 25, 2005, p. 48).