Harvest Operations Announces Second Quarter 2015 Results

CALGARY, ALBERTA--(Marketwired - Aug. 13, 2015) - Harvest Operations Corp. ("Harvest" or "the Company") announces its financial and operating results for the first quarter ended June 30, 2015.

This press release is an overview of the second quarter results for 2015 and should be read with the interim unaudited consolidated financial statements and Management's Discussion and Analysis (MD&A) for the second quarter ended June 30, 2015 available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.

All financial data has been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board except where otherwise noted. All figures reported herein are in Canadian dollars unless otherwise stated.

Q2 2015 HIGHLIGHTS:

• Sales volumes for the second quarter ended June 30, 2015 was 41,716 barrels of oil equivalent per day ("boe/d"). Harvest's share of Deep Basin Partnership's ("DBP") volumes for the second quarter was 3,884 boe/d. The construction of the HK MS Partnership ("HKMS") facility was completed and operational in early 2015. Strategically, this facility provides the DBP an advantage of access to firm processing capability, the ability to extract maximum liquids from the natural gas produced by DBP wells and will allow DBP to pursue both acquisition and drilling opportunities in the region.
• Operating netback prior to hedging for the second quarter was $16.92/boe, a decrease of $20.10/boe from the same period in 2014. The decrease can be attributed to lower realized prices per boe, partially offset by lower royalties, operating and transportation expense per boe.
• Cash contribution from Harvest's Upstream operations for the second quarter was $52.5 million (Q2 2014 was $140.9 million). The decrease in cash contribution was mainly due to lower sales volumes and lower realized prices, partially offset by lower royalties, operating expenses and transportation and marketing expenses.
• Capital asset additions of $48.4 million in the second quarter of 2015 were mainly related to the drilling, completion and tie-in of wells. No wells were rig-released during the second quarter of 2015; however, twenty-five gross wells (19.2 net) were rig-released during the six months ended June 30, 2015.
• On May 1, 2015, Harvest closed the sale of certain non-core oil and gas assets in Eastern Alberta for approximately $28.4 million in cash proceeds, net of any customary closing adjustments.

BlackGold

• Capital asset additions were $3.8 million ($49.2 million in 2014) for the second quarter of 2015. Capital additions during the quarter were mainly related to minor pre-commissioning activities and additions made year to date, mainly related to the completion of the central processing facility ("CPF").
• The CPF was mechanically completed in early 2015 and minor pre-commissioning activities will continue at a measured pace throughout 2015 with first steam occurring once the heavy oil price environment becomes favourable.

CORPORATE

• The net borrowing from the credit facility during the second quarter was $16.9 million. At June 30, 2015, Harvest had $888.4 million drawn under the credit facility (December 31, 2014 - $620.7 million).
• On April 2, 2015, Harvest entered into a US$171 million loan agreement with KNOC repayable within one year from the date of the first drawing, which was on April 10, 2015. At August 13, 2015, Harvest had drawn US$120 million under the loan agreement.
• On April 22, 2015, Harvest amended the terms of its $1.0 billion syndicated revolving credit facility and replaced it with a $940 million syndicated revolving credit facility maturing April 30, 2017. On July 15, 2015, Harvest obtained an additional $60 million commitment under its syndicated revolving credit facility, bringing the total available under the credit facility to $1.0 billion. The amended credit facility is guaranteed by KNOC. Under the amended credit facility, applicable interest and fees will be based on a margin pricing grid based on the Moody's and S&P credit ratings of KNOC. The financial covenants under the previous credit facility were deleted and replaced with a new covenant: Total Debt to Capitalization ratio of 70% or less. At June 30, 2015 Harvest was in compliance with this covenant.

FINANCIAL & OPERATING HIGHLIGHTS:

CONFERENCE CALL

Harvest will be holding a conference call to discuss our Q2 2015 results on Friday, August 14, 2015 at 9:00 a.m. Mountain Daylight Time (11:00 a.m. Eastern Daylight Time).

To access the conference call dial 1-866-223-7781 (international callers) or 1-416-340-2216 (Toronto local) a few minutes prior to start and request the Harvest conference call. The call will be available for replay by dialing 1-800-408-3053 and entering the passcode 2689511. The replay will be available up to and including August 30, 2015.

HARVEST CORPORATE PROFILE

Harvest is a wholly-owned, subsidiary of Korea National Oil Corporation ("KNOC"). Harvest is a significant operator in Canada's energy industry offering stakeholders exposure to exploration, development and production of crude oil and natural gas (Upstream) and an oil sands project under construction and development in northern Alberta (BlackGold).

KNOC is a state owned oil and gas company engaged in the exploration and production of oil and gas along with storing petroleum resources. KNOC will fully establish itself as a global government-run petroleum company by applying ethical, sustainable and environment-friendly management and by taking corporate social responsibility seriously at all times. For more information on KNOC, please visit their website at www.knoc.co.kr/ENG/main.jsp.

ADVISORY

Certain information in this press release constitute "forward-looking statements" which involve known and unknown risks, uncertainties and other factor that may cause actual results to be materially different from future results, performance or achievements expressed or implied by such statements. Words such as "expects", "anticipates", "projects", "intends", "plans", "will", "believes", "seeks", "estimates", "should", "may", "could", and variations of such words and similar expressions are intended to identify such forward-looking statements.

Readers are cautioned that the forward-looking information may not be appropriate for other purposes and the actual results may differ materially from those anticipated. Although management believes that the forward-looking information is reasonable based on information available on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity and achievements. Therefore, readers are cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. Although we consider such information reasonable at the time of preparation, it may prove to be incorrect and actual results may differ materially from those anticipated. Harvest assumes no obligation to update forward-looking statements should circumstances, estimates or opinions change, except as required by law. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.