Harvest considers selling interest in Budong-Budong

By Romel S. Gurky

Harvest Budong-Budong B.V., the local unit of US firm Harvest Natural Resources Inc, considers selling its interest in Budong-Budong block in West Sulawesi.

?We are actively discussing the sale of our interests in Budong-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 firm said in its 2013 Year-End Results report released Monday.

The firm also said it has satisfied all work commitments for the current exploration phase of the block.

?We have satisfied all work commitments for the current exploration phase of the Budong-Budong PSC. 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-Budong in West Sulawesi.

In December 2012, the firm signed a farmout agreement with the operator of the Budong-Budong PSC to acquire an additional 7.1 percent participating interest and to become operator of the Budong PSC.

The firm assumed the role of operator effective March 25, 2013.

Closing of the acquisition on April 22, 2013 increased its participating ownership interest in the PSC to 71.5 percent with its cost-sharing interest becoming 72 percent until first commercial production.

?The consideration for this transaction is that we will fund 100 percent of the costs of the first exploration well of the four-year extension to the Budong-Budong PSC.

If we do not drill an exploration well before October 2014, our partner has the right to give us notice that the consideration for the additional 7.1 percent participating interest must be paid in cash for $3.2 million,? the firm said.

Editing by Johannes Simbolon