Rodman & Renshaw Maintains Market Outperform on Harvest Natural Resources After Disappointing Results in Oman

Rodman & Renshaw has published a research report on Harvest Natural Resources

after the company reported disappointing initial results from its exploration in Oman. In the report, Rodman & Renshaw writes, "HNR announced its Mafraq South-A (MFS-1) exploration well onshore Oman was a dry hole. The well encountered the target reservoirs shallower than expected but logs did not indicate the presence of hydrocarbons, with the failure attributed to lack of an effective seal. It will be plugged and abandoned; the company expects to expense $5.5 million of related well costs in Q4. No change to our $18 NAV as we have included no exploration upside for Oman. While the news is disappointing, we note that this is the nature of high-risk, high-reward exploration (geologic chance of success on the MFS-1 had been pegged at 28%). Moreover, it does not necessarily condemn other structures on the block. HNR had identified 6 prospects and 7 leads on its Qarn Alam Block 64 (80% operated interest) in Oman, from which it estimated mean gross unrisked prospective resource of 349 MMBbl of condensate and ~8.9 Tcf of gas." Rodman & Renshaw maintains its Market Outperform rating and $18 price target on Harvest Natural Resources, which is currently trading down $1.22 from yesterday's $7.77 closing price.