Now I'm going to conclude by throwing out one question that has been bothering me: In the reserve estimates in the valuation report, Ryder Scott attributes zero reserves for probable and possible for the original SMU fields. But if you look at the production and reserve numbers in the chart I provided here, you can see that Harvest has clearly been successful at expanding their proved reserves at their traditional SMU oil fields. So my question is, why is there no probable or possible reserves for the SMU oil fields?
The response from the company was:
In the opinion of Ryder Scott, all of the remaining reserves in the SMU fields are proved due to the extensive amount of information available regarding well control in these three fields.
So that is that. Meanwhile, some other questions that have popped into my mind:
1. Do other oil companies publish the NPV of their oil assets, and if so where do their stocks trade in relation to those numbers?
2. Venezuela's currency has a special problem- from a Bloomberg article:
The bolivar fell 0.9 percent to 5,350 bolivars per U.S. dollar in unregulated currency trading today from 5,300 yesterday, traders said. The bolivar has fallen 36 percent this year.
Venezuela pegs the bolivar at the official exchange rate of 2,150 bolivars under restrictions imposed in February 2003. People turn to unregulated markets when they can't get approval from the government's Foreign Exchange Administration Commission to buy dollars at the official exchange rate.
How is this taken into account in the Ryder Scott NPVs and should we adjust the numbers for this?
I hope the key thing readers take away from these recent posts on Harvest is that you should never just accept the number someone gives you as the value of a company (Not from the company, and not even mine!). You need to look at the assumptions yourself and challenge them, until you come up with your own number that you 1) are comfortable with, and 2) feel is fairly conservative. Keep asking questions!