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<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 1 - us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-->
<!-- xbrl,ns -->
<!-- xbrl,nx -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left">
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt">
</div>
<div align="center" style="font-size: 10pt; margin-top: 0pt"><b></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 1 — Organization</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Interim Reporting</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The accompanying unaudited consolidated financial statements contain all
adjustments necessary for a fair statement of the financial position as of June 30, 2011, and the
results of operations for the three and six months ended June 30, 2011 and 2010, and cash flows for
the six months ended June 30, 2011 and 2010. The unaudited consolidated financial statements are
presented in accordance with the requirements of Form 10-Q and do not include all disclosures
normally required by accounting principles generally accepted in the United States of America
(“GAAP”). Reference should be made to our consolidated financial statements and notes thereto
included in our Annual Report on Form 10-K for the year ended December 31, 2010, which include
certain definitions and a summary of significant accounting policies and should be read in
conjunction with this Quarterly Report on Form 10-Q. The results of operations for any interim
period are not necessarily indicative of the results of operations for the entire year.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Organization</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Harvest Natural Resources, Inc. (“Harvest”) is an independent energy company engaged in the
acquisition, exploration, development, production and disposition of oil and natural gas properties
since 1989, when it was incorporated under Delaware law.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We have significant interests in the Bolivarian Republic of Venezuela (“Venezuela”). Our
Venezuelan interests are owned through HNR Finance, B.V. (“HNR Finance”). Our ownership of HNR
Finance is through several corporations in all of which we have direct controlling interests.
Through these corporations, we indirectly own 80 percent of HNR Finance and our partner, Oil & Gas
Technology Consultants (Netherlands) Coöperatie U.A., a controlled affiliate of Venezolana de
Inversiones y Construcciones Clerico, C.A. (“Vinccler”), indirectly owns the remaining 20 percent
interest in HNR Finance. HNR Finance owns 40 percent of Petrodelta, S.A. (“Petrodelta”). As we
indirectly own 80 percent of HNR Finance, we indirectly own a net 32 percent interest in
Petrodelta, and Vinccler indirectly owns eight percent. Corporación Venezolana del Petroleo S.A.
(“CVP”) owns the remaining 60 percent of Petrodelta. HNR Finance also has a direct controlling
interest in Harvest Vinccler S.C.A. (“Harvest Vinccler”). Harvest Vinccler’s main business
purposes are to assist us in the management of Petrodelta and in negotiations with Petroleos de
Venezuela S.A. (“PDVSA”). We do not have a business relationship with Vinccler outside of
Venezuela.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In addition to our interests in Venezuela, we have exploration acreage mainly onshore in West
Sulawesi in the Republic of Indonesia (“Indonesia”), offshore of the Republic of Gabon (“Gabon”),
onshore in the Sultanate of Oman (“Oman”), and offshore of the People’s Republic of China
(“China”). Until March 1, 2011, we had developed and undeveloped acreage in the Antelope project
in the Western United States in the Monument Butte Extension Appraisal and Development Project
(“Monument Butte Extension”) and Lower Green River/Upper Wasatch Oil Delineation and Development
Project (“Lower Green River/Upper Wasatch”) where we had established production. See <i>Note 3 —
Dispositions, Note 9 — United States Operations</i>, <i>Note 10 — Indonesia</i>, <i>Note 11 — Gabon </i>and <i>Note 12 — Oman</i>.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 2 - us-gaap:SignificantAccountingPoliciesTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 2 — Summary of Significant Accounting Policies</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Principles of Consolidation</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The consolidated financial statements include the accounts of all wholly-owned and
majority-owned subsidiaries. All intercompany profits, transactions and balances have been
eliminated.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Reporting and Functional Currency</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The United States Dollar (“U.S. Dollar”) is the reporting and functional currency for all of
our controlled subsidiaries and Petrodelta. Amounts denominated in non-U.S. Dollar currencies are
re-measured in U.S. Dollars, and all currency gains or losses are recorded in the consolidated
statement of operations. We attempt to manage our operations in such a manner as to reduce our
exposure to foreign exchange losses. However, there are many factors that affect foreign exchange
rates and resulting exchange gains and losses, many of which are beyond our influence.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Harvest Vinccler does not have currency exchange risk other than the official prevailing
exchange rate that applies to their operating costs denominated in Venezuela Bolivars (“Bolivars”)
(4.30 Bolivars per U.S. Dollar). However, during the three and six months ended June 30, 2011,
Harvest Vinccler exchanged approximately $0.1 million and $0.4 million, respectively through
Sistema de Transacciones con Títulos en Moneda Extranjera (“SITME”) and received an average
exchange rate of 5.21 Bolivars and 5.19 Bolivars, respectively, per U.S. Dollar. During the three
and six months ended June 30, 2010, no such exchanges took place. Harvest Vinccler currently does
not have any U.S. Dollars pending government approval for settlement for Bolivars at the official
exchange rate or the SITME exchange rate.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The monetary assets that are exposed to exchange rate fluctuations are cash, accounts
receivable, prepaid expenses and other current assets. The monetary liabilities that are exposed
to exchange rate fluctuations are accounts payable, accruals and other current liabilities. All
monetary assets and liabilities incurred at the official Bolivar exchange rate are settled at the
official Bolivar exchange rate. At June 30, 2011, the balances in Harvest Vinccler’s Bolivar
denominated monetary assets and liabilities accounts that are exposed to exchange rate changes are
3.1 million Bolivars and 4.3 million Bolivars, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     See <i>Note 8 — Investment in Equity Affiliates — Petrodelta</i> for a discussion of currency
exchange risk on Petrodelta’s business.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Revenue Recognition</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We record revenue for our U.S. oil and natural gas operations when we deliver our production
to the customer and collectability is reasonably assured. Revenues from the production of oil and
natural gas on properties in which we have joint ownership are recorded under the sales method.
Differences between these sales and our entitled share of production are not significant. See <i>Note
3 — Dispositions</i>.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Cash and Cash Equivalents</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Cash equivalents include money market funds and short-term certificates of deposit with
original maturity dates of less than three months.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Restricted Cash</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Restricted cash is classified as current or non-current based on the terms of the agreement.
Restricted cash at June 30, 2011 represents cash held in a U.S. bank used as collateral for two
standby letters of credit issued in support of the drilling of the Dussafu Ruche Marin-1 (“DRM-1”) exploratory well
on the Dussafu Marin Permit (“Dussafu PSC”) (see <i>Note 11 — Gabon)</i>.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Financial Instruments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our financial instruments that are exposed to concentrations of credit risk consist primarily
of cash and cash equivalents, accounts receivable, and notes payable. Cash and cash equivalents
are placed with commercial banks with high credit ratings. This diversified investment policy
limits our exposure both to credit risk and to concentrations of credit risk.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Total long-term debt at June 30, 2011 consisted of $32 million of fixed-rate unsecured senior
convertible notes maturing in 2013 unless earlier redeemed, purchased or converted. At December
31, 2010, total long-term debt consisted of $32 million of fixed-rate unsecured senior convertible
notes maturing in 2013 unless earlier redeemed, purchased or converted and $60 million of
fixed-rate unsecured term loan facility maturing in 2012. See <i>Note 4
— Long-Term Debt</i>.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Accounts and Notes Receivable</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Notes receivable relate to prospect leasing cost financing arrangements, bear interest and can
have due dates that are less than one year or more than one year. Amounts outstanding under the
notes bear interest at a rate based on the current prime rate and are recorded at face value.
Interest is recognized over the life of the note. We may or may not require collateral for the
notes.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Each note is analyzed to determine if it is impaired pursuant to Accounting Standards Updates
(“ASU”) 2010-20. A note is impaired if it is probable that we will not collect all principal and
interest contractually due. We do not accrue interest when a note is considered impaired. All
cash receipts on impaired notes are applied to reduce the accrued interest on the note until the
interest is made current and, thereafter, applied to reduce the principal amount of such notes.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     At June 30, 2011 and December 31, 2010, note receivable plus accrued interest was
approximately $3.3 million and $3.4 million, respectively, and was secured by a portion of the
production from the Bar F #1-20-3-2 in Utah. With the sale of our oil and gas assets in Utah’s
Uinta Basin (“Antelope Project”) effective March 1, 2011, the note receivable plus accrued interest
will be settled upon finalization of certain terms of the Joint Exploration and Development
Agreement (“JEDA”) which defined the participating parties’ obligations over our Antelope Project.
See <i>Note 3 — Dispositions</i>, <i>Note 5 — Commitments and Contingencies</i>, and <i>Note 9 — United States
Operations, Western United States — Antelope</i>.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Other Assets</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     At June 30, 2011, other assets consist of investigative costs of $0.4 million associated with
new business development projects and deferred financing costs of $1.4 million. The investigative
costs are reclassified to oil and gas properties or expensed depending on management’s assessment
of the likely outcome of the project. During the six months ended June 30, 2011, no investigative
costs related to new business development were reclassified to oil and gas properties or expensed. At December
31, 2010, other assets consisted of investigative costs of $0.3 million associated with new
business development projects and deferred financing costs of $2.2 million.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Deferred financing costs relate to specific financing and are amortized over the life of the
financing to which the costs relate. See <i>Note 4 — Long-Term Debt</i>.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Other Assets at June 30, 2011 also includes a blocked payment of $0.7 million net to our
66.667 percent interest in accordance with the U.S. sanctions against Libya as set forth in
Executive Order 13566 of February 25, 2011, and administered by the United States Treasury
Department’s Office of Foreign Assets Control (“OFAC”). See <i>Note 5 — Commitments and
Contingencies</i>.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Investment in Equity Affiliates</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Investments in unconsolidated companies in which we have less than a 50 percent interest and
have significant influence are accounted for under the equity method of accounting. Investment in
Equity Affiliates is increased by additional investments and earnings and decreased by dividends
and losses. We review our Investment in Equity Affiliates for impairment whenever events and
circumstances indicate a decline in the recoverability of its carrying value. There are many
factors to consider when evaluating an equity investment for possible impairment. Currency
devaluations, inflationary economies and cash flow analysis are some of the factors we consider in
our evaluation for possible impairment. At June 30, 2011 and December 31, 2010, there were no
events that caused us to evaluate our investment in equity affiliates for impairment.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Property and Equipment</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We use the successful efforts method of accounting for oil and gas properties.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Suspended Exploratory Drilling Costs</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Budong PSC</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     At June 30, 2011, oil and gas properties included capitalized suspended exploratory drilling
costs of $13.9 million related to drilling in the Budong-Budong Production Sharing Contract
(“Budong PSC”) of the Lariang-1
(“LG-1”). The LG-1 targeted the Miocene and Eocene reservoirs to a planned depth of
approximately 7,200 feet. The LG-1 was drilled to a total depth of 5,311 feet and encountered
multiple oil and gas shows within the secondary Miocene objective. At a depth of 5,300 feet,
losses of heavy drilling mud into the formation were encountered which, when coupled with the very
high formation pressures, led the partners to the decision to
discontinue drilling and plug and
abandon the well for safety reasons on April 8, 2011. The primary Eocene targets had not been
reached, as the well was planned for a total measured depth of approximately 7,200 feet. While the
results to date have not definitively determined the commerciality of development of the LG-1, we
believe that the well results confirm that the Miocene formation exhibits sufficient quantities of
hydrocarbons to justify potential development pending further appraisal. See <i>Note 10 — Indonesia</i>.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Capitalized Interest</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We capitalize interest costs for qualifying oil and gas properties. The capitalization period
begins when expenditures are incurred on qualified properties, activities begin which are necessary
to prepare the property for production and interest costs have been incurred. The capitalization
period continues as long as these events occur. The average additions for the period are used in
the interest capitalization calculation. During the three and six months ended June 30, 2011, we
capitalized interest costs of $0.2 million and $1.0 million, respectively, for qualifying oil and
gas property additions. During the three and six months ended June 30, 2010, we capitalized
interest costs of $0.2 million, respectively, for qualifying oil and gas property additions.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Fair Value Measurements</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     At June 30, 2011 and December 31, 2010, cash and cash equivalents include $128.4 million and
$51.0 million, respectively, in a money market fund comprised of high quality, short term
investments with minimal credit risk which are reported at fair value. The fair value measurement
of these securities is based on quoted prices in active markets (level 1 input) for identical
assets. The estimated fair value of our senior convertible notes based on observable market
information (level 2 input) as of June 30, 2011 and December 31, 2010 was $62.7 million and $61.7
million, respectively. The estimated fair value of our term loan facility based on internally
developed discounted cash flow model and inputs based on management’s best estimates (level 3
input) for identical liabilities as of December 31, 2010 was $49.2 million.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Our current assets and liabilities accounts include financial instruments, the most
significant of which are accounts receivables and trade payables. We believe the carrying values
of our current assets and liabilities approximate fair value, with the exception of the note
receivable. Because this note receivable is not publicly-traded and not easily transferable, the
estimated fair value of our note receivable is based on the market approach and time value of money
which approximates the note receivable book value of $3.3 million and $3.4 million at June 30, 2011
and December 31, 2010, respectively. The majority of inputs used in the fair value calculation of
the note receivable are Level 3 inputs and are consistent with the information used in determining
impairment of the note receivable.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The following is a reconciliation of the net beginning and ending balances recorded for
financial assets and liabilities classified as Level 3 in the fair value hierarchy.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><i>(in thousands)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Financial assets:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Beginning balance
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">3,420</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,265</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Issuances
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">200</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Accrued interest
</div></td>
<td> </td>
<td> </td>
<td align="right">200</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">398</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Payments
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(285</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(443</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Ending balance
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">3,335</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">3,420</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Financial liabilities:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Beginning balance
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">49,237</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Debt issuance
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">60,000</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Discount on debt
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(11,122</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Amortization of discount on debt
</div></td>
<td> </td>
<td> </td>
<td align="right">10,763</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">359</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Payments
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(60,000</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Ending balance
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">49,237</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Asset Retirement Liability</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Accounting Standards Codification (“ASC”) 410,
“Asset Retirement and Environmental Obligations” (“ASC 410”), requires entities to record the fair
value of a liability for a legal obligation to retire an asset in the period in which the liability
is incurred if a reasonable estimate of fair value can be made. No wells were abandoned during the
six months ended June 30, 2011 or the year ended December 31, 2010. Changes in asset retirement
obligations during the six months ended June 30, 2011 and the year ended December 31, 2010 were as
follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><i>(in thousands)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Asset retirement obligations beginning of period
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">663</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">50</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Liabilities recorded during the period
</div></td>
<td> </td>
<td> </td>
<td align="right">52</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">382</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Liabilities settled during the period
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Revisions in estimated cash flows
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(120</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">197</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Accretion expense
</div></td>
<td> </td>
<td> </td>
<td align="right">4</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">34</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Reclassify
to gain on sale of assets
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(599</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Asset retirement obligations end of period
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">663</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Noncontrolling Interests</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Changes in noncontrolling interest during the six months ended June 30, 2011 and 2010, were as
follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><i>(in thousands)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance at beginning of period
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">70,051</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">57,406</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income attributable to noncontrolling interest
</div></td>
<td> </td>
<td> </td>
<td align="right">6,911</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,965</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Balance at end of period
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">76,962</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">66,371</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Earnings Per Share</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Basic earnings per common share (“EPS”) are computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution that would occur if securities or other contracts to issue
common stock were exercised or converted into common stock.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>Three Months Ended June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Basic</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Diluted</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Basic</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Diluted</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14"><i>(in thousands, except per share data)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Loss from continuing operations<sup style="font-size: 85%; vertical-align: text-top">(a)</sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(9,163</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(9,163</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(1,099</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(1,099</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Discontinued operations
</div></td>
<td> </td>
<td> </td>
<td align="right">99,213</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">99,213</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">803</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">803</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Net income (loss) attributable to Harvest
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">90,050</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">90,050</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(296</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(296</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted average common shares outstanding
</div></td>
<td> </td>
<td> </td>
<td align="right">34,039</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">34,039</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33,399</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33,399</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Effect of dilutive securities
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,162</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Weighted average common shares,
including dilutive effect
</div></td>
<td> </td>
<td> </td>
<td align="right">34,039</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">40,201</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33,399</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33,399</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Per share:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Loss from continuing operations<sup style="font-size: 85%; vertical-align: text-top">(a)</sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.27</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.23</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.03</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.03</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Discontinued operations
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2.92</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2.47</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.02</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.02</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Net income (loss) attributable to
Harvest
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2.65</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2.24</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.01</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.01</td>
<td nowrap="nowrap">)</td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14" style="border-bottom: 1px solid #000000"><b>Six Months Ended June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Basic</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Diluted</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Basic</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>Diluted</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="10"><i>(in thousands, except per share data)</i></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income (loss) from continuing operations<sup style="font-size: 85%; vertical-align: text-top">(a)</sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(5,127</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(5,127</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">21,476</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">21,476</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Discontinued operations
</div></td>
<td> </td>
<td> </td>
<td align="right">95,947</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">95,947</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,818</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,818</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Net income attributable to Harvest
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">90,820</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">90,820</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">24,294</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">24,294</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Weighted average common shares outstanding
</div></td>
<td> </td>
<td> </td>
<td align="right">33,992</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33,992</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33,337</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33,337</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Effect of dilutive securities
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">5,841</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">4,038</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Weighted average common shares,
including dilutive effect
</div></td>
<td> </td>
<td> </td>
<td align="right">33,992</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">39,833</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">33,337</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">37,375</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Per share:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Income (loss) from continuing operations<sup style="font-size: 85%; vertical-align: text-top">(a)</sup>
</div></td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.15</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(0.13</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">0.64</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.57</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Discontinued operations
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2.82</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2.41</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.09</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.08</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Net income attributable to Harvest
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">2.67</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">2.28</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.73</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">0.65</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left">
<div style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000"> 
</div>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr>
<td width="3%"></td>
<td width="1%"></td>
<td width="96%"></td>
</tr>
<tr valign="top">
<td nowrap="nowrap" align="left"><sup style="font-size: 85%; vertical-align: text-top">(a)</sup></td>
<td> </td>
<td>Excludes net income attributable to noncontrolling interest.</td>
</tr>
</table>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     For the three months ended June 30, 2011 and 2010, the per share calculations above exclude
0.7 million and 3.8 million options, respectively, because their exercise price exceeded the
average stock price for the period. The per share calculations above for the three months ended
June 30, 2011 also exclude 1.6 million warrants because their exercise price exceeded the average
stock price for the period. For the three months ended June 30, 2010,
the per share calculations above exclude 5.6 million convertible
shares because they were anti-dilutive. We did not have any warrants outstanding during the three months ended
June 30, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     For the six months ended June 30, 2011 and 2010, the per share calculations above exclude 0.3
million and 3.8 million options, respectively, because their exercise price exceeded the average
stock price for the period. The per share calculations above for the six months ended June 30,
2011 also exclude 1.6 million warrants because their exercise price exceeded the average stock
price for the period. For the six months ended June 30, 2010, the per
share calculations above exclude 5.6 million convertible shares
because they were anti-dilutive. We did not have any warrants outstanding during the six months ended June
30, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Stock options for 41,666 shares were exercised in the six months ended June 30, 2011 resulting
in cash proceeds of $0.4 million. Stock options for 0.1 million shares were exercised in the six
months ended June 30, 2010 resulting in cash proceeds of $0.1 million.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>New Accounting Pronouncements</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In April 2011, the Financial Accounting Standard Board (“FASB”) issued ASU No. 2011-04, which
is included in ASC 820, “Fair Value Measurement” (“ASC
820”). This update explains how to measure fair value. It does not require additional fair value
measurements and is not intended to establish valuation standards or affect valuation practices
outside of financial reporting. ASU No. 2011-04 is effective for fiscal years, and interim periods
within those years, beginning after December 15, 2011. Early
adoption is not permitted. The adoption of ASU No. 2011-04 is not expected to have a material
impact on our consolidated financial position, results of operation or cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In June 2011, the FASB issued ASU No. 2011-05, which is included in ASC 220,
“Comprehensive Income” (“ASC 220”). This update requires that all nonowner changes in
stockholders’ equity be presented either in a single continuous statement of comprehensive income
or in two separate but consecutive statements. ASU No. 2011-05 is effective for fiscal years, and
interim periods within those years, beginning after December 15, 2011 and will be applied
restrospectively. Early adoption is permitted. The adoption of ASU No. 2011-05 will impact the
presentation of our results of operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Revisions</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Net
income from discontinued operations for the three months ended
March 31, 2011 and 2010 was revised
to include approximately $0.4 million and $0.3 million,
respectively, of general and administrative expense related to the sale of our Antelope
Project. These revisions did not impact consolidated net income for the three months ended March 31,
2011 and 2010, and we concluded the adjustments were not material to our Quarterly Report on Form 10-Q for the
three months ended March 31, 2011. These revisions have been reflected in the six months ended June
30, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Reclassifications</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Certain items in 2010 have been reclassified to conform to the 2011 financial statement
presentation.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 3 - us-gaap:DisposalGroupsIncludingDiscontinuedOperationsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 3 — Dispositions</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Assets Held for Sale</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On May 17, 2011, we closed the transaction to sell our Antelope Project (see <i>Note 9 — United States Operations, Western United States —</i>
Antelope). The sale has an effective date of March 1, 2011. We received cash proceeds of
approximately $217.8 million which reflects increases to the purchase price for customary
adjustments and deductions for transaction related costs. We do not have any continuing
involvement with the Antelope Project. The related gain on the sale of $103.9 million is reported
in discontinued operations in the second quarter of 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Antelope Project has been classified as discontinued operations. The Antelope Project
assets and liabilities held for sale as of December 31, 2010, are reported in the consolidated
balance sheet as follows:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="88%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><i>(in thousands)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Proved oil and gas properties
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">31,037</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Unproved oil and gas properties
</div></td>
<td> </td>
<td> </td>
<td align="right">57,737</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total assets held for sale
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">88,774</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Asset retirement liabilities
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">663</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Total liabilities held for sale
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">663</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Discontinued Operations</i></b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Revenue and net income on these dispositions are shown in the table below:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Three Months Ended</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><b>Six Months Ended</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="15"><i>(in thousands)</i></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenue applicable to discontinued operations
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">2,368</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2,914</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">6,488</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">6,038</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income from discontinued operations
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">99,213</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">803</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">95,947</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">2,818</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Net income from discontinued operations for the three months ended June 30, 2011 includes
$0.2 million for employee severance and special accomplishment
bonuses and $5.2 million of U.S.
income tax related to the sale of our Antelope Project. Net income from discontinued operations
for the six months ended June 30, 2011 includes
$1.4 million for impairment of inventory from cost to market,
$3.6 million for employee severance and special accomplishment
bonuses, and $5.2 million of U.S.
income tax related to the sale of our Antelope Project. See <i>Note 2 — Summary of Significant
Accounting Policies — Revisions </i>for a discussion of
adjustments to net income for the three
months ended March 31, 2011 and 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Special
accomplishment bonuses of $1.2 million directly related to the sale of the Antelope
Project were paid at the closing of the sale. Employee severance costs of $0.1 million were paid
in the three months ended June 30, 2011, and $1.3 million is expected to be paid in January 2012.
Severance costs for key employees include $0.5 million of restricted stock units which was paid in
July 2011. Severance costs for key employees also include 58,000 stock appreciation rights (“SAR”)
granted at an exercise price of $4.595 per right. These SARs are exercisable by the key employee
for up to one year after termination.
</div>
</div>
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<!-- Begin Block Tagged Note 4 - us-gaap:LongTermDebtTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 4 — Long-Term Debt</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Long-Term Debt</b>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><i>(in thousands)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Senior convertible notes, unsecured, with interest at 8.25%
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">See description below
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">32,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">32,000</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Term loan facility with interest at 10%
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">See description below
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">60,000</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">32,000</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">92,000</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Discount on term loan facility
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">See description below
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(10,763</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">32,000</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">81,237</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On February 17, 2010, we closed an offering of $32.0 million in aggregate principal amount of
our 8.25 percent senior convertible notes. Under the terms of the notes, interest is payable
semi-annually in arrears on March 1 and September 1 of each year, beginning September 1, 2010. The
senior convertible notes will mature on March 1, 2013, unless earlier redeemed, repurchased or
converted. The notes are convertible into shares of our common stock at a conversion rate of
175.2234 shares of common stock per $1,000 principal amount of senior convertible notes, equivalent
to a conversion price of approximately $5.71 per share of common stock. The senior convertible
notes are general unsecured obligations, ranking equally with all of our other unsecured senior
indebtedness, if any, and senior in right of payment to any of our subordinated indebtedness, if
any. The senior convertible notes are also redeemable in certain circumstances at our option and
may be repurchased by us at the purchaser’s option in connection with occurrence of certain events.
Financing costs associated with the senior convertible notes offering are being amortized over the
remaining life of the notes and are recorded in other assets. The balance for financing costs was
$1.4 million and $1.9 million at June 30, 2011 and December 31, 2010, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On October 29, 2010, we closed a $60.0 million term loan facility with MSD Energy Investments
Private II, LLC (“MSD Energy”), an affiliate of MSD Capital, L.P., as the sole lender under the
term loan facility. Under the terms of the term loan facility, interest was paid on a monthly
basis at the initial rate of 10 percent and had a maturity of October 28, 2012. The initial rate
of interest was scheduled to increase to 15 percent on July 28, 2011, the Bridge Date. Financing
costs associated with the term loan facility offering were being amortized over the remaining life
of the loan and were recorded in other assets. The balance for financing costs was $0.3 million at
December 31, 2010.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The proceeds from the sale of our Antelope Project are considered an “Extraordinary Receipt”
as defined in the term loan facility with MSD Energy. Pursuant to the terms of the term loan
facility, on May 17, 2011, we paid amounts outstanding under the term loan facility, including
principal, accrued and unpaid interest and a prepayment premium of 3.5 percent of the amount
outstanding, or an aggregate $62.1 million, with the net cash proceeds received from the sale of
our Antelope Project. With the payment of the term loan facility, the balance of the
financing
costs related to the issuance of the term loan facility of $0.3 million was expensed to loss on
extinguishment of debt in the six months ended June 30, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In connection with the term loan facility, we issued to MSD Energy (1) 1.2 million warrants
exercisable at any time on or after the closing date for a period of five years from the closing
date on a cashless exercise basis at $15 per share until the Bridge Date, at which time the
exercise price per share will equal the lower of $15 or 120 percent of the average closing bid
price of Harvest’s common stock for the 20 trading days immediately preceding the Bridge Date
(“Tranche A”); (2) 0.4 million warrants exercisable at any time on or after the closing date for a
period of five years from the closing date on a cashless exercise basis at $20 per share until the
Bridge Date, at which time the exercise price per share will equal the lower of $15 or 120 percent
of the average closing bid price of Harvest’s common stock for the 20 trading days immediately
preceding the Bridge Date (“Tranche B”); and (3) 4.4 million warrants exercisable at any time on or
after the Bridge Date for a period of five years from the Bridge Date on a cashless exercise basis
at the lower of $15 per share or 120 percent of the average closing price of Harvest’s common stock
for the 20 trading days immediately preceding the Bridge Date (“Tranche C”). The Tranche C
warrants may be redeemed by Harvest for $0.01 per share at any time prior to the Bridge Date in
conjunction with the repayment of the loan prior to the Bridge Date. On May 17, 2011, in
connection with the payment of the term loan facility, we repurchased all of the Tranche C warrants
at $0.01 per share. The cost to repurchase the warrants ($44,000) was expensed to loss on extinguishment of
debt in the six months ended June 30, 2011.
On July 28, 2011, the Bridge Date, Tranche A and Tranche B warrants
were repriced to
$14.78 per warrant which is the lower of $15 or 120 percent of the average closing price
of Harvest’s common stock for the 20 trading days immediately preceding the Bridge
Date.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Black-Scholes option pricing model was used in pricing Tranche A and Tranche B. Tranche A
was priced at $5.46 per warrant, and Tranche B was priced at $4.60 per warrant. The Monte Carlo
option pricing model was used in pricing Tranche C due to the pricing and vesting variables in the
agreement. Tranche C was priced at $0.62 per warrant. The value of the warrants was recorded as
discount on debt with a corresponding credit to additional paid in capital. On May 17, 2011, in
connection with the payment of the term loan facility, the balance of the discount on debt for
Tranche A and Tranche B was expensed to loss on extinguishment of debt in the six months ended June
30, 2011. The balance of the discount on debt for Tranche C ($2.7
million) was reversed out of additional paid in
capital as the warrants associated with Tranche C were unvested.
</div>
</div>
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<!-- Begin Block Tagged Note 5 - us-gaap:CommitmentsAndContingenciesDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 5 — Commitments and Contingencies</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We have various contractual commitments pertaining to exploration, development and production
activities. Currently, we have a work commitment of $22.0 million which is a minimum amount to be
spent on the Al Ghubar / Qarn Alam license (“Block 64 EPSA”) in Oman for the drilling of two wells
over a three-year period which expires in May 2012. We began funding this commitment in the second quarter of 2011. We also have minimum work commitments
during the various phases of the exploration periods in the Budong PSC and Dussafu PSC.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In October 2007, we entered into a JEDA with a private third party with respect to the
Antelope Project. In connection with the sale of each party’s interests in the Antelope Project
(see <i>Note 3 — Dispositions</i>), on January 11, 2011, we entered into a letter agreement with the
private third party wherein the private third party agreed to reimburse us for certain expenses
related to the sale of the two parties’ interests in the Antelope Project. The private third party
disputes our calculation of the amount owed to us pursuant to the January 11, 2011 letter
agreement. On March 11, 2011, we entered into a letter agreement with the private third party
regarding certain obligations between the parties related to the JEDA. The private third party
disputes our calculation of the amount due pursuant to one of the items in the March 11, 2011
letter agreement. At June 30, 2011, we have a note receivable outstanding from the private third
party of $3.3 million (see <i>Note 2 — Summary of Significant Accounting Policies, Accounts and Notes
Receivable</i>) and an account payable outstanding to the private third party of $3.6 million related
to the purchase in July 2010 of an incremental 10 percent interest in the Antelope Project. At
this time, we cannot predict the outcome of this dispute with the private third party.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On May 31, 2011, the United Kingdom branch of our subsidiary, Harvest Natural Resources, Inc.
(UK), initiated a wire transfer of approximately $1.1 million ($0.7 million net to our 66.667
percent interest) intending to pay Libya Oil Gabon S.A. (“LOGSA”) for fuel that LOGSA supplied to
our subsidiary in the Netherlands, Harvest Dussafu, B.V., for the company’s drilling operations in
Gabon. On June 1, 2011, our bank notified us that it had been required to block the payment in
accordance with the U.S. sanctions against Libya as set forth in Executive Order 13566 of February
25, 2011, and administered by the United States Treasury Department’s OFAC, because the payee,
LOGSA, may be a blocked party under the sanctions. The bank further advised us that it could not
release the funds to the payee or return the funds to us unless we obtain authorization from OFAC.
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On June 30, 2011, we filed a voluntary self-disclosure with OFAC to report that we had
possibly violated the U.S. sanctions by attempting to remit funds to LOGSA. We concurrently applied for a license with OFAC that would
authorize us to pay LOGSA for the
fuel provided. We are unable, at this time, to predict when a license may be granted, if at
all. We also intend to file an application with OFAC for return of the blocked funds to us.
Unless that application is approved, the funds will remain in the blocked account, and we
can give no assurance when, or if, OFAC will permit the funds to be released. In addition, we owe this
supplier approximately $0.7 million ($0.5 million net to our 66.667 percent interest) in additional
payments that we are unable to remit unless we are authorized to do
so. We are also investigating to what extent payments to LOGSA can be made under European Union sanctions.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     If
it is found that we violated the U.S. sanctions, such violations may
be punishable by civil penalties, including fines, denial of
export privileges, injunctions, asset seizures, debarment from government contracts and revocations
or restrictions of licenses, as well as criminal fines and imprisonment. Although we are unable to
estimate the amount or range of any possible losses resulting from this matter, we do not believe
that this matter will have a material adverse effect on our consolidated financial condition, results of
operations or cash flows.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <u>Robert C. Bonnet and Bobby Bonnet Land Services vs. Harvest (US) Holdings, Inc., Branta
Exploration & Production, LLC, Ute Energy LLC, Cameron Cuch, Paula Black, Johnna Blackhair, and
Elton Blackhair in the United States District Court for the District of Utah.</u> This suit was
served in April 2010 on Harvest and Elton Blackhair, a Harvest employee, alleging that the
defendants, among other things, intentionally interfered with Plaintiffs’ employment agreement with
the Ute Indian Tribe — Energy & Minerals Department and intentionally interfered with Plaintiffs’
prospective economic relationships. Plaintiffs seek actual damages, punitive damages, costs and
attorney’s fees. We dispute Plaintiffs’ claims and plan to vigorously defend against them. We are
unable to estimate the amount or range of any possible loss.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <u>Uracoa Municipality Tax Assessments</u>. Our Venezuelan subsidiary, Harvest Vinccler, has
received nine assessments from a tax inspector for the Uracoa municipality in which part of the
Uracoa, Tucupita and Bombal fields are located as follows:
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Three claims were filed in July 2004 and allege a failure to withhold for technical
service payments and a failure to pay taxes on the capital fee reimbursement and
related interest paid by Petroleos de Venezuela S.A. (“PDVSA”) under the Operating
Service Agreement (“OSA”). Harvest Vinccler has filed a motion with the Tax Court in
Barcelona, Venezuela, to enjoin and dismiss one of the claims and has protested with
the municipality the remaining claims.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Two claims were filed in July 2006 alleging a failure to pay taxes at a new rate set
by the municipality. Harvest Vinccler has filed a protest with the Tax Court in
Barcelona, Venezuela, on these claims.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Two claims were filed in August 2006 alleging a failure to pay taxes on estimated
revenues for the second quarter of 2006 and a withholding error with respect to certain
vendor payments. Harvest Vinccler has filed a protest with the Tax Court in Barcelona,
Venezuela, on one claim and filed a protest with the municipality on the other claim.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Two claims were filed in March 2007 alleging a failure to pay taxes on estimated
revenues for the third and fourth quarters of 2006. Harvest Vinccler has filed a
protest with the municipality on these claims.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Harvest Vinccler disputes the Uracoa tax assessments and believes it has a substantial basis for
its positions. Harvest Vinccler is unable to estimate the amount or range of any possible loss.
As a result of the SENIAT’s, the Venezuelan income tax authority, interpretation of the tax code as
it applies to operating service agreements, Harvest Vinccler has filed claims in the Tax Court in
Caracas against the Uracoa Municipality for the refund of all municipal taxes paid since 1997.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     <u>Libertador Municipality Tax Assessments</u>. Harvest Vinccler has received five
assessments from a tax inspector for the Libertador municipality in which part of the Uracoa,
Tucupita and Bombal fields are located as follows:
</div>
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>One claim was filed in April 2005 alleging a failure to pay taxes at a new rate set
by the municipality. Harvest Vinccler has filed a protest with the Mayor’s Office and a
motion with the Tax Court in Barcelona, Venezuela, to enjoin and dismiss the claim. On
April 10, 2008, the Tax Court suspended the case pending a response from the Mayor’s
Office to the protest. If the municipality’s response is to confirm the assessment,
Harvest Vinccler will defer to the competent Tax Court to enjoin and dismiss the claim.</td>
</tr>
</table>
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div style="margin-top: 6pt">
<table width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; text-align: left">
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Two claims were filed in June 2007. One claim relates to the period 2003 through
2006 and seeks to impose a tax on interest paid by PDVSA under the OSA. The second
claim alleges a failure to pay taxes on estimated revenues for the third and fourth
quarters of 2006. Harvest Vinccler has filed a motion with the Tax Court in Barcelona,
Venezuela, to enjoin and dismiss both claims.</td>
</tr>
<tr>
<td style="font-size: 6pt"> </td>
</tr>
<tr valign="top" style="font-size: 10pt; color: #000000; background: transparent">
<td width="2%" style="background: transparent"> </td>
<td width="3%" nowrap="nowrap" align="left"><b>•</b></td>
<td width="1%"> </td>
<td>Two claims were filed in July 2007 seeking to impose penalties on tax assessments
filed and settled in 2004. Harvest Vinccler has filed a motion with the Tax Court in
Barcelona, Venezuela, to enjoin and dismiss both claims.</td>
</tr>
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">Harvest Vinccler disputes the Libertador allegations set forth in the assessments and believes it
has a substantial basis for its position. Harvest Vinccler is unable to estimate the amount or
range of any possible loss. As a result of the SENIAT’s interpretation of the tax code as it
applies to operating service agreements, Harvest Vinccler has filed claims in the Tax Court in
Caracas against the Libertador Municipality for the refund of all municipal taxes paid since 2002.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We are a defendant in or otherwise involved in other litigation incidental to our business.
In the opinion of management, there is no such litigation that will have a material adverse impact
on our consolidated financial condition, results of operations and cash flows.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 6 - us-gaap:IncomeTaxDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 6 — Taxes</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Taxes Other Than on Income</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The components of taxes other than on income were:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Six Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14"><i>(in thousands)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Franchise Taxes
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">45</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">45</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">91</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">106</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Payroll and Other Taxes
</div></td>
<td> </td>
<td> </td>
<td align="right">262</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">153</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">565</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">392</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">307</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">198</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">656</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">498</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Taxes on Income</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     As
further disclosed in <i>Note 3 — Dispositions</i>, we completed the sale of our Antelope Project
during the second quarter 2011, recognizing a capital gain. As a result, we expect to fully
utilize all of our available net operating losses to offset most of the gain, and to also utilize
our remaining alternative minimum tax credits against the resulting tax liability. Utilization of
these tax benefits essentially eliminates the previously accrued deferred tax asset (“DTA”), and,
therefore, also eliminates the valuation allowance associated with the DTA that we did not
previously expect to utilize.
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 7 - us-gaap:SegmentReportingDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 7 — Operating Segments</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We regularly allocate resources to and assess the performance of our operations by segments
that are organized by unique geographic and operating characteristics. The segments are organized
in order to manage regional business, currency and tax related risks and opportunities. Operations
included under the heading “United States and other” include corporate management, cash management,
business development and financing activities performed in the United States and other countries,
which do not meet the requirements for separate disclosure. All intersegment revenues, other
income and equity earnings, expenses and receivables are eliminated in order to reconcile to
consolidated totals. Corporate general and administrative and interest expenses are included in
the United States and other segment and are not allocated to other operating segments:
</div>
<!-- Folio -->
<!-- /Folio -->
</div>
<!-- PAGEBREAK -->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Six Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14"><i>(in thousands)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Segment Income (Loss)</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Venezuela
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">17,300</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">7,786</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">33,662</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">44,276</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Indonesia
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,464</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,514</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,877</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,793</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Gabon
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(417</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(101</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(550</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(423</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">United States and other
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(24,582</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(7,270</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(35,362</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(19,584</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Discontinued operations
(Antelope Project)
</div></td>
<td> </td>
<td> </td>
<td align="right">99,213</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">803</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">95,947</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,818</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Net income (loss) attributable to Harvest
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">90,050</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left">$</td>
<td align="right">(296</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td align="left">$</td>
<td align="right">90,820</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">24,294</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2"><b>December 31,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><i>(in thousands)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"><b>Operating Segment Assets</b>
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Venezuela
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">313,855</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">292,023</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Indonesia
</div></td>
<td> </td>
<td> </td>
<td align="right">58,051</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">16,254</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Gabon
</div></td>
<td> </td>
<td> </td>
<td align="right">48,515</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">25,335</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">United States and other
</div></td>
<td> </td>
<td> </td>
<td align="right">214,976</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">130,626</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Net assets held for sale (Antelope Project)
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">88,774</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">635,397</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">553,012</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Intersegment eliminations
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(91,626</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(64,768</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">543,771</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">488,244</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
</div>
<!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" -->
<!-- Begin Block Tagged Note 8 - us-gaap:EquityMethodInvestmentsDisclosureTextBlock-->
<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 8 — Investment in Equity Affiliates</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><b>Petrodelta</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Petrodelta is governed by its own charter and bylaws and operates a portfolio of properties in
eastern Venezuela including large proven oil fields as well as properties with substantial
opportunities for both development and exploration. Petrodelta has undertaken its operations in
accordance with Petrodelta’s business plan as set forth in its conversion contract. Under its
conversion contract, work programs and annual budgets adopted by Petrodelta must be consistent with
Petrodelta’s business plan. Petrodelta’s business plan may be modified by a favorable decision of
the shareholders owning at least 75 percent of the shares of Petrodelta. Petrodelta’s 2011 capital
expenditures are expected to be approximately $200 million. Petrodelta’s shareholders are still
reviewing the 2011 final capital budget for updated drilling requirements.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     As
previously disclosed, PDVSA has failed to pay on a timely basis certain amounts
owed to contractors that PDVSA has contracted to do work for Petrodelta. PDVSA purchases all of
Petrodelta’s oil production. PDVSA and its affiliates have reported shortfalls in meeting their
cash requirements for operations and planned capital expenditures, and PDVSA has fallen behind in
certain of its payment obligations to its contractors, including contractors engaged by PDVSA to
provide services to Petrodelta. In addition, PDVSA has fallen behind in certain of its payment
obligations to Petrodelta, which payments Petrodelta would otherwise use to pay its contractors.
As a result, Petrodelta has experienced, and is continuing to experience, difficulty in retaining
contractors who provide services for Petrodelta’s operations. We cannot provide any assurance as
to whether or when PDVSA will become current on its payment obligations. Inability to retain
contractors or to pay them on a timely basis is having an adverse effect on Petrodelta’s operations
and on Petrodelta’s ability to carry out its business plan.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In 2008, the Venezuelan government published in the Official Gazette the Law of Special
Contribution to Extraordinary Prices at the Hydrocarbons International Market (“original Windfall
Profits Tax”). The original Windfall Profits Tax is calculated on the Venezuelan Export Basket
(“VEB”) of prices as published by the Ministry of the People’s Power for Energy and Petroleum
(“MENPET”). The original Windfall Profits Tax is applied to gross oil production delivered to
PDVSA. The original Windfall Profits Tax established a special contribution to the Venezuelan
government of (1) a 50 percent tax when the average price of the VEB exceeded $70 per barrel but is
less than $100 per barrel, and (2) a 60 percent tax when the average price of the VEB exceeds $100 per
barrel. The
original Windfall Profits Tax was repealed with the issuance on April 18, 2011 of the Law
Creating a Special Contribution on Extraordinary Prices and Exorbitant Prices in the International
Hydrocarbons Market (the “amended Windfall Profits Tax”).
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The amended Windfall Profits Tax establishes a special contribution for extraordinary prices
to the Venezuelan government of 20 percent to be applied to the difference between the price fixed
by the Venezuela budget for the relevant fiscal year (set at $40 per barrel for 2011) and $70 per
barrel. The amended Windfall Profits Tax also establishes a special contribution for exorbitant
prices to the Venezuelan government of (1) 80 percent when the average price of the VEB exceeds $70
per barrel but is less than $90 per barrel; (2) of 90 percent when the average price of the VEB
exceeds $90 per barrel but is less that $100 per barrel; and (3) of 95 percent when the average
price of the VEB exceeds $100 per barrel. The amended Windfall Profits Tax caps the royalty paid on production at $70 per barrel.
It is not clear from the drafting of the amended Windfall Profits Tax
how the $70 cap on royalty barrels will be applied to
royalties paid in-kind. By placing a cap on the royalty barrels, the amended Windfall Profits Tax reduces the royalties
paid to the government and increases payments to the National
Development Fund (“FONDEN”).
Petrodelta
pays royalties in-kind and has not applied the $70 cap to
its royalty barrels as doing so may overstate earnings. Until
further guidance is issued, Petrodelta will continue applying the
current sales price to its royalty barrels.
<br /><br style="font-size: 6pt" />     Also, the
amended Windfall Profits Tax considers that an
exemption of this tax could be granted by MENPET for the incremental production of projects and
grass root developments until the specific investments are recovered. This exemption has to be
considered and approved in a case by case basis by MENPET.
We believe several of the fields operated by Petrodelta may qualify
for the exemption from the amended Windfall Profits Tax. We are
waiting for clarification from MENPET on the definitions of
incremental production and grass roots development, as well as
guidance on the process for applying for the exemption. There
are many sections of the amended Windfall Profits Tax which have yet
to be clarified.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Both the original and amended Windfall Profits Taxes
are deductible for Venezuelan income tax purposes.
Petrodelta recorded $65.3 million and $92.5 million for the combined original and amended Windfall
Profits Taxes during the three and six months ended June 30, 2011, respectively. We estimate that
the amended Windfall Profits Tax increased the expense for windfall profits tax by $15.4 million
for the six months ended June 30, 2011. Petrodelta recorded $1.7 million and $2.9 million of
expense for the original Windfall Profits Tax during the three and six months ended June 30, 2010,
respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Science and Technology Law (referred to as “LOCTI” in Venezuela) requires major
corporations engaged in activities covered by the Hydrocarbon and Gaseous Hydrocarbon Law (“OHL”)
to contribute two percent of their gross revenue generated in Venezuela from activities specified
in the OHL on projects to promote inventions or investigate technology in areas deemed critical to
Venezuela. The contribution is based on the previous year’s gross revenue and is due the following
year. LOCTI requires that each company file a separate declaration stating how much has been
contributed; however, waivers have been granted in the past to allow PDVSA to file a declaration on
a consolidated basis covering all of its and its consolidating entities liabilities. Since
Petrodelta expected PDVSA to continue requesting and receiving waivers, Petrodelta did not accrue a
liability to LOCTI for the year ended December 31, 2009. For filing years 2007 and 2008, PDVSA
provided Petrodelta with a copy of the waiver acceptance letter from LOCTI. PDVSA has stated that
a waiver was granted for filing year 2009; however, LOCTI has not yet issued the acceptance letter
to PDVSA for the 2009 filing year. The potential exposure to LOCTI for the year ended December 31,
2009 after devaluation is $4.8 million, $2.4 million net of tax ($0.8 million net to our 32 percent
interest). In January 2011, PDVSA informed its consolidating entities, including Petrodelta, that
effective with the 2010 reporting year it would no longer be requesting waivers to file the LOCTI
declaration on a consolidated basis. Based on this information, Petrodelta accrued the 2010
liability to LOCTI in the fourth quarter of 2010. However, in April 2011, Petrodelta received a
copy of the waiver acceptance letter issued by LOCTI to PDVSA for the 2010 filing year. Petrodelta
reversed the 2010 LOCTI accrual of $4.6 million, $2.3 million net of tax ($0.7 million net to our
32 percent interest) in the three months ended March 31, 2011. Petrodelta is accruing the 2011
liability to LOCTI on a current basis.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In December 2010, LOCTI was modified to reduce the amount of contributions beginning January
2011 to one percent of gross revenues for companies owned by individuals or corporations and 0.5
percent for companies owned by Venezuela. Petrodelta’s rate of contribution starting in 2011 will
be 0.5 percent. LOCTI was also modified to require all contributions to be paid in cash directly
to the National Fund for Science, Technology and Innovation (“FONDACIT”), the entity responsible
for the administration of LOCTI contributions. Self-funded programs and direct contributions to
projects performed by other institutions are no longer allowed.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In November 2010, Petrodelta’s board of directors declared a dividend of $30.6 million, $12.2
million net to HNR Finance ($9.8 million net to our 32 percent interest). Petrodelta shareholder
approval of the dividend was received on March 14, 2011. As of July 29, 2011, this dividend has
not been received, and the timing of the receipt of this dividend is uncertain.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Petrodelta does not have currency exchange risk other than the official prevailing exchange
rate that applies to its operating costs denominated in Bolivars (4.30 Bolivars per U.S. Dollar).
Petrodelta does not have, and has not had, any Bolivars pending government approval for settlement
for U.S. Dollars at the official exchange rate or the SITME rate. The monetary assets that are
exposed to exchange rate fluctuations are cash, accounts receivable, prepaid expenses and other
current assets. The monetary liabilities that are exposed to exchange rate fluctuations
are accounts payable, accruals and other current liabilities. All monetary assets and
liabilities incurred at the official Bolivar exchange rate are settled at the official Bolivar
exchange rate. At June 30, 2011, the balances in Petrodelta’s Bolivar denominated monetary assets
and liabilities accounts that are exposed to exchange rate changes are 97.3 million Bolivars and
2,542.6 million Bolivars, respectively.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Petrodelta’s reporting and functional currency is the U.S. Dollar. Petrodelta’s financial information is prepared in accordance with
International Financial Reporting Standards (“IFRS”) which we have adjusted to conform to GAAP.
All amounts through Net Income Equity Affiliate represent 100 percent of Petrodelta. Summary
financial information has been presented below at June 30, 2011 and December 31, 2010 and for the
three and six months ended June 30, 2011 and 2010:
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="52%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
<td width="5%"> </td>
<td width="1%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Three Months Ended</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6"><b>Six Months Ended</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="6" style="border-bottom: 1px solid #000000"><b>June 30,</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="2" style="border-bottom: 1px solid #000000"><b>2010</b></td>
<td> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="14"><i>(in thousands)</i></td>
<td> </td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Revenues:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Oil sales
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">282,975</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">135,964</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">509,588</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">277,466</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Gas sales
</div></td>
<td> </td>
<td> </td>
<td align="right">679</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,022</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,405</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,040</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Royalty
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(96,214</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(46,391</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(173,529</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(94,377</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">187,440</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">90,595</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">337,464</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">185,129</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Expenses:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Operating expenses
</div></td>
<td> </td>
<td> </td>
<td align="right">18,684</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">10,632</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">32,966</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">20,675</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">Workovers
</div></td>
<td> </td>
<td> </td>
<td align="right">7,021</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">13,496</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Depletion, depreciation and amortization
</div></td>
<td> </td>
<td> </td>
<td align="right">13,231</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,770</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">25,718</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">18,377</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:30px; text-indent:-15px">General and administrative
</div></td>
<td> </td>
<td> </td>
<td align="right">3,782</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,641</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,852</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">6,058</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:30px; text-indent:-15px">Windfall profits tax
</div></td>
<td> </td>
<td> </td>
<td align="right">65,345</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,664</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">92,471</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,915</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td align="right">108,063</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">24,707</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">167,503</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">48,025</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income from operations
</div></td>
<td> </td>
<td> </td>
<td align="right">79,377</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">65,888</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">169,961</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">137,104</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Gain on exchange rate
</div></td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">1,938</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">—</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">120,654</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Investment earnings and other
</div></td>
<td> </td>
<td> </td>
<td align="right">185</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(13</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">352</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">2,881</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Interest expense
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(3,146</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(1,328</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(4,418</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,223</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income before income tax
</div></td>
<td> </td>
<td> </td>
<td align="right">76,416</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">66,485</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">165,895</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">258,416</td>
<td> </td>
</tr>
<tr valign="bottom"><!-- Blank Space -->
<td>
<div style="margin-left:15px; text-indent:-15px"> 
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Current income tax expense
</div></td>
<td> </td>
<td> </td>
<td align="right">31,618</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">52,656</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">84,961</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">138,076</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Deferred income tax (benefit) expense
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(2,513</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">5,118</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(28,275</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">47,582</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income
</div></td>
<td> </td>
<td> </td>
<td align="right">47,311</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">8,711</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">109,209</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">72,758</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Adjustment to reconcile to reported net income
from unconsolidated equity affiliate:
</div></td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:45px; text-indent:-15px">Deferred income tax (benefit) expense
</div></td>
<td> </td>
<td> </td>
<td align="right">1,176</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(14,499</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td> </td>
<td align="right">19,739</td>
<td> </td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(47,488</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:45px; text-indent:-15px">Net income equity affiliate
</div></td>
<td> </td>
<td> </td>
<td align="right">46,135</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">23,210</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">89,470</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">120,246</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Equity interest in unconsolidated equity affiliate
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">40</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">40</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">40</td>
<td nowrap="nowrap">%</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">40</td>
<td nowrap="nowrap">%</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Income before amortization of excess basis
in equity affiliate
</div></td>
<td> </td>
<td> </td>
<td align="right">18,454</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">9,284</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">35,788</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">48,098</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Amortization of excess basis in equity affiliate
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(452</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(322</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(873</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(656</td>
<td nowrap="nowrap">)</td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Conform depletion expense to GAAP
</div></td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(216</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(47</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(297</td>
<td nowrap="nowrap">)</td>
<td> </td>
<td nowrap="nowrap" align="left"> </td>
<td align="right">(160</td>
<td nowrap="nowrap">)</td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 1px solid #000000"> </td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net income from unconsolidated equity affiliate
</div></td>
<td> </td>
<td align="left">$</td>
<td align="right">17,786</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">8,915</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">34,618</td>
<td> </td>
<td> </td>
<td align="left">$</td>
<td align="right">47,282</td>
<td> </td>
</tr>
<tr style="font-size: 1px">
<td>
<div style="margin-left:30px; text-indent:-15px"> 
</div></td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
<td> </td>
<td nowrap="nowrap" colspan="2" align="right" style="border-top: 3px double #000000"> </td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
<div align="center">
<table style="font-size: 10pt; text-align: left" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<tr valign="bottom">
<td width="76%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
<td width="5%"> </td>
<td width="3%"> </td>
<td width="1%"> </td>
<td width="3%"> </td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>June 30,</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3"><b>December 31,</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2011</b></td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="3" style="border-bottom: 1px solid #000000"><b>2010</b></td>
</tr>
<tr style="font-size: 8pt" valign="bottom">
<td> </td>
<td> </td>
<td nowrap="nowrap" align="center" colspan="7"><i>(in thousands)</i></td>
</tr>
<!-- End Table Head -->
<!-- Begin Table Body -->
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Current assets
</div></td>
<td> </td>
<td align="right">$</td>
<td align="right">905,004</td>
<td> </td>
<td> </td>
<td align="right">$</td>
<td align="right">535,225</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Property and equipment
</div></td>
<td> </td>
<td> </td>
<td align="right">365,998</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">321,816</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other assets
</div></td>
<td> </td>
<td> </td>
<td align="right">87,013</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">67,755</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Current liabilities
</div></td>
<td> </td>
<td> </td>
<td align="right">756,916</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">406,339</td>
<td> </td>
</tr>
<tr valign="bottom" style="background: #cceeff">
<td>
<div style="margin-left:15px; text-indent:-15px">Other liabilities
</div></td>
<td> </td>
<td> </td>
<td align="right">43,207</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">39,224</td>
<td> </td>
</tr>
<tr valign="bottom">
<td>
<div style="margin-left:15px; text-indent:-15px">Net equity
</div></td>
<td> </td>
<td> </td>
<td align="right">557,892</td>
<td> </td>
<td> </td>
<td> </td>
<td align="right">479,233</td>
<td> </td>
</tr>
<!-- End Table Body -->
</table>
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Fusion Geophysical, LLC (“Fusion”)</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On January 28, 2011, Fusion Geophysical, LLC’s (“Fusion”) 69 percent owned subsidiary,
FusionGeo, Inc., was acquired by a private purchaser pursuant to an Agreement and Plan of Merger.
We received $1.4 million for our equity investment and $0.7 million for the repayment in full of
the outstanding balance of the prepaid service agreement, short term loan and accrued interest.
The Agreement and Plan of Merger includes an Earn Out provision wherein we would receive an
additional payment of up to a maximum of $2.7 million if FusionGeo, Inc.’s 2011 gross profit
exceeds $5.6 million. The Earn Out payment will not be determined until early in 2012. We can
give no assurance that we will receive any Earn Out payment.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     At December 31, 2009, we fully impaired the carrying value of our equity investment in Fusion.
Accordingly, we did not record net losses incurred by Fusion in the six months ended June 30, 2011
and 2010 as doing so would have caused our equity investment to go into a negative position.
However, we have recognized a $1.4 million gain on the sale of Fusion in the six months ended June
30, 2011.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 9 — United States Operations</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In 2008, we initiated a domestic exploration program in two different basins. We are the
operator of both exploration programs.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Gulf Coast</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>West Bay Project</i>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We hold exploration acreage in the Gulf Coast Region of the United States through an Area of
Mutual Interest (“AMI”) agreement with two private third parties. During the six months ended June
30, 2011, we and our partners in the West Bay project agreed to relinquish the exploration acreage
we held to the farmor. The relinquishment is expected to be completed by August 2011. Neither we
nor our partners intend to continue any
activity in West Bay. Based on the decision in the second quarter 2011 to relinquish the
exploration acreage, we impaired the carrying value of West Bay of $3.3 million as of June 30,
2011. The West Bay project represented $3.3 million of unproved oil and gas properties on our
December 31, 2010 balance sheet.
</div>
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Western United States — Antelope</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On May 17, 2011, we closed the transaction to sell all of our interest in the oil and gas
assets located in our Antelope Project area in the Uinta Basin of Utah which consisted of
approximately 69,000 gross acres (47,600 net acres), and the related contracts, reserves,
production, wells, pipelines production facilities and other rights, title and interests located in
the Uintah Basin in Duchesne and Uintah Counties, Utah. The transaction included the Mesaverde
Gas Exploration and Appraisal Project (“Mesaverde”), the Lower Green River/Upper Wasatch and the Monument Butte Extension. We
owned an approximate working interest of 70 percent in the Mesaverde and Lower Green River/Upper
Wasatch, an approximate 60 percent working interest in one well in the Monument Butte
Extension, an approximate 43 percent working interest in the initial eight well program in the
Monument Butte Extension, and 37 percent working interest in the follow-up six well program in the
Monument Butte Extension. The initial eight well program and follow-up six well program in the
Monument Butte Extension were non-operated. The sale has an effective date of March 1, 2011 (see
<i>Note 3 — Dispositions</i>). We received cash proceeds of approximately $217.8 million which reflects
increases to the purchase price for customary adjustments and deductions for transaction related
costs. All activities associated with the Antelope Project have been
reflected as discontinued operations on the statement of operations.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 10 — Indonesia</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     On January 5, 2011, we exercised our first refusal right to a proposed transfer of interest by
the operator to a third party, which allowed us to acquire an additional 10 percent equity interest
in the Budong PSC at a cost of $3.7 million. Closing of this acquisition, which is subject to the
approval of the Government of Indonesia and BPMIGAS, increased our interest in the Budong PSC to
64.4 percent. The $3.7 million was paid on April 18, 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     During
the initial exploration period, the Budong PSC covered 1.35 million
acres. The Budong PSC includes a ten-year exploration period and a
20-year development phase. Pursuant to the terms of the Budong PSC,
at the end of the first three-year exploration phase, 45 percent of
the original area was to be relinquished to BPMIGAS. In January 2010,
35 percent of the original area was relinquished and ten percent of
the required relinquishment was deferred until 2011. On January 20,
2011, the deferred ten percent of the original total contract area
was relinquished to BPMIGAS. The Budong PSC now covers 0.75 million
acres.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     See <i>Note 2 — Summary of Significant Accounting Policies — Suspended Exploratory Drilling
Costs, Budong PSC </i>for a status of the LG-1 exploratory drilling costs. The Budong PSC represents
$26.5 million and $10.9 million of unproved oil and gas properties on our June 30, 2011 and
December 31, 2010 balance sheets, respectively.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 11 — Gabon</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We are the operator of the Dussafu PSC offshore Gabon in West Africa with a 66.667 percent
ownership interest. The Dussafu PSC partners and the Republic of Gabon, represented by the
Ministry of Mines, Energy, Petroleum and Hydraulic Resources (“Republic of Gabon”), entered into
the second three-year exploration phase of the Dussafu PSC with an effective date of May 28, 2007.
In order to complete drilling activities of the first exploratory well, in March 2011, the
Direction Generale Des Hydrocarbures (“DGH”) approved a second one-year extension to May 27, 2012
of the second exploration phase.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     A Standby Letter of Credit was issued on April 8, 2011 for the Transocean Sedneth 701
semi-submersible drilling unit. We took possession of the drilling unit mid-April 2011 on a one
well contract. A second Standby Letter of Credit was issued April 7, 2011 for the Subsea 7 Remote
Operated Vehicle.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     See <i>Note 5 — Commitments and Contingencies </i>for a discussion of legal matters related to our
Gabon operations.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Dussafu PSC represents $24.5 million and $9.2 million of unproved oil and gas properties
on our June 30, 2011 and December 31, 2010 balance sheets, respectively.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 12 — Oman</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     In April 2009, we signed an Exploration and Production Sharing Agreement (“EPSA”) with Oman
for the Block 64 EPSA. We have a 100 percent working interest in Block 64 EPSA during the
exploration phase. Oman Oil Company has the option to back-in to up to a 20 percent interest in
Block 64 EPSA after the discovery of gas. We have a work commitment of $22.0 million which is a minimum amount to be spent on the Block 64
EPSA for the drilling of two wells over a three-year period which
expires in May 2012. We began funding this commitment in the
second quarter of 2011.
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     The Block 64 EPSA represents $5.0 million and $4.2 million of unproved oil and gas properties
on our June 30, 2011 and December 31, 2010 balance sheets, respectively.
</div>
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</div>
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<div style="font-family: 'Times New Roman',Times,serif">
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 13 — Related Party Transactions</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     Dividends declared and paid by Petrodelta are paid to HNR Finance. HNR Finance must declare a
dividend in order for the partners, Harvest and Vinccler, to receive their respective shares of
Petrodelta’s dividend. Petrodelta has declared two dividends, totaling $33.0 million, which have
been received by HNR Finance and one dividend, totaling $12.2 million, which has not yet been
received by HNR Finance. HNR Finance has not distributed these dividends to the partners. At June
30, 2011, Vinccler’s share of the undistributed dividends is $9.0 million.
</div>
</div>
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<div style="font-family: 'Times New Roman',Times,serif">
<div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 14 — Subsequent Event</b>
</div>
<div align="left" style="font-size: 10pt; margin-top: 6pt">     We conducted our subsequent events review up through the date of the issuance of this
Quarterly Report on Form 10-Q.
</div>
</div>