Copyright of the Daily Oil Bulletin 2017
Harvest Loss Narrows In Third-Quarter, Production Declines
Harvest Operations Corp., a Canadian subsidiary of state-owned Korea National Oil Corporation (KNOC), narrowed its net loss to $17.6 million in the third quarter from $106.9 million in the same period last year.
Third quarter revenue totalled $69.2 million, down from $78.5 million in the corresponding 2016 quarter.
Production averaged 26,912 boe/d, a decrease of 3,139 boe/d from the third quarter of last year. The decrease was primarily due to dispositions of certain producing properties in 2016 and natural declines, which were partly offset by production from new wells drilled and completed in the fourth quarter of 2016 and the first nine months of 2017.
Harvest's share of Deep Basin Partnership (DBP) sales volumes of 4,220 boe/d decreased by 484 boe/d from the same period in 2016. This decrease was attributed mainly to natural declines, as well as downtime for maintenance and third-party restrictions in the third quarter of 2017, partially offset by production from new wells drilled in the fourth quarter of 2016.
Operating loss for the quarter was $45.3 million versus $40.6 million in the third quarter of 2016. The increase in operating loss from 2016 was primarily due to reduced oil and gas sales and gains on disposition of assets, partly offset by a decrease in royalties, depreciation, depletion and amortization, and onerous-contract loss.
Capital asset additions totalled $10.9 million for the quarter and were mainly related to drilling and completion, well equipment, pipelines and facilities. Two (two net) wells were rig-released in the third quarter.
Operating netback per boe before hedging was $10.84, a decrease of $2.32 from the third quarter of 2016. This decrease in netback per boe is mainly due to a decrease in oil and gas sales per boe, and increases in operating costs per boe and transportation and marketing per boe, partly offset by a decrease in royalties per boe.
Cash contributions from Harvest's conventional operations for the quarter totalled $19.1 million, down from $25.1 million in the third quarter of 2016. The decrease was mainly due to a drop in revenues and other income, and increases in operating costs and transportation and marketing expenses, partially offset by a reduction in general and administrative costs.
Harvest’s BlackGold SAGD project recorded pre-operating losses of $2.9 million for the quarter, marginally higher than $2.8 million in the third quarter of last year. The losses were mainly due to pre-operating and general and administrative expenses.
Harvest’s BlackGold central processing facility was substantially completed in early 2015, but completion of sanctioning and commissioning was postponed due to low bitumen prices. Harvest plans to complete sanctioning and resume commissioning before year’s end.