e10vqza

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

AMENDMENT NO. 1

(Mark One)


þ		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2008


o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from to

Commission File No. 1-10762

Harvest Natural Resources, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		77-0196707
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

1177 Enclave Parkway, Suite 300 Houston, Texas (Address of Principal Executive Offices)		77077 (Zip Code)

(281) 899-5700
(Registrant’s Telephone Number, Including Area Code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o

Accelerated Filer þ

Non-Accelerated Filer o

Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

At July 24, 2008, 33,984,417 shares of the Registrant’s Common Stock were outstanding.

Restatement

Overview

Harvest Natural Resources, Inc. (“Harvest” or the “Company”) is filing this Amendment on Form 10-Q/A (“Form 10-Q/A”) to amend its Quarterly Report on Form 10-Q for the three and six months ended June 30, 2008, filed with the Securities and Exchange Commission (“SEC”) on August 7, 2008 (“Original Form 10-Q”). Accordingly, pursuant to rule 12b-15 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Form 10-Q/A contains complete text of Items 1, 2 and 4 of Part 1, and Item 6 of Part II as amended as well as certain currently dated certifications.

The Form 10-Q/A is being filed to amend and restate the Company’s previously issued consolidated financial statements as of and for the three and six months ended June 30, 2008. This amendment and restatement is required to adjust the consolidated financial statements for the correction of an error in the deferred tax adjustment to reconcile our share of Petrodelta S.A.’s (“Petrodelta”) Net Income reported under International Financial Reporting Standards (“IFRS”) to that required under accounting principles generally accepted in the United States of America (“GAAP”) and recorded within our Net income from unconsolidated equity affiliates.

The adjustment to record our share of Petrodelta’s Net Income under GAAP should have been limited to deferred tax adjustments related to non-monetary temporary differences impacted by inflationary adjustments under Venezuela law. During the 2008 year end close, we determined that restatements were necessary because since October 1, 2007 both monetary and non-monetary temporary differences recorded in Petrodelta’s IFRS financial statements had been adjusted in arriving at our GAAP consolidated financial statements rather than only the non-monetary temporary differences impacted by inflationary adjustments. Accordingly, we had overstated our Net income from unconsolidated equity affiliates and understated our Investment in equity affiliates.

For information relating to the effect of the restatements, see the following items:

Part I:

Item 1 — Financial Statements

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 4 — Controls and Procedures

Part II:

Item 6 — Exhibits

Aside from the forgoing items, no other items are amended or modified in this Form 10-Q/A.

Other than the restatement, this Form 10-Q/A does not reflect events occurring after the date of the Original Form 10-Q or modify or update those disclosures as affected by subsequent events. Such events include, among others, the events described in the Company’s Quarterly Reports on Form 10-Q and current reports on Form 8-K. This Form 10-Q/A should be read in conjunction with our other reports filed with the SEC subsequent to December 31, 2007 pursuant to the Exchange Act.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)


	June 30,			December 31,
	2008			2007
	(in thousands)
	(RESTATED-SEE NOTE 1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	157,204		$	120,841
Restricted cash		3,525			6,769
Accounts and notes receivable, net		7,964			9,418
Advances to equity affiliate		2,577			16,352
Prepaid expenses and other		4,205			1,032

TOTAL CURRENT ASSETS		175,475			154,412

OTHER ASSETS		1,632			4,301
INVESTMENT IN EQUITY AFFILIATES		200,463			254,775
PROPERTY AND EQUIPMENT:
Oil and gas properties (successful efforts method)		18,054			3,163
Other administrative property		1,507			1,481

		19,561			4,644
Accumulated depletion, depreciation and amortization		(1,031	)		(1,061	)

		18,530			3,583

	$	396,100		$	417,071


LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable, trade and other	$	740		$	5,949
Accounts payable, related party		10,278			10,093
Accrued expenses		10,430			11,895
Accrued interest		5,083			5,136
Income taxes payable		245			503
Short-term debt		4,651			9,302

TOTAL CURRENT LIABILITIES		31,427			42,878

COMMITMENTS AND CONTINGENCIES		—			—
MINORITY INTEREST		60,910			57,546
STOCKHOLDERS’ EQUITY:
Preferred stock, par value $0.01 a share; authorized 5,000 shares; outstanding, none		—			—
Common stock, par value $0.01 a share; authorized 80,000 shares at June 30, 2008 and December 31, 2007, respectively; issued 38,912 shares and 38,513 shares at June 30, 2008 and December 31, 2007, respectively		389			385
Additional paid-in capital		205,132			201,938
Retained earnings		151,387			150,815
Treasury stock, at cost, 5,244 shares and 3,719 shares at June 30, 2008 and December 31, 2007, respectively		(53,145	)		(36,491	)

TOTAL STOCKHOLDERS’ EQUITY		303,763			316,647

	$	396,100		$	417,071

See accompanying notes to consolidated financial statements.

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
	(in thousands, except per share data)
	(RESTATED-						(RESTATED-
	SEE NOTE 1)						SEE NOTE 1)
EXPENSES
Depreciation	$	47		$	17		$	92		$	298
Exploration expense		2,866			434			4,215			434
General and administrative		6,422			7,162			12,634			13,595
Taxes other than on income		195			185			458			422

		9,530			7,798			17,399			14,749


LOSS FROM OPERATIONS		(9,530	)		(7,798	)		(17,399	)		(14,749	)

OTHER NON-OPERATING INCOME (EXPENSE)
Gain on financing transactions		2,091			—			3,421			—
Investment earnings and other		751			2,819			1,882			5,262
Interest expense		(1,260	)		(2,466	)		(1,719	)		(4,947	)

		1,582			353			3,584			315


LOSS FROM CONSOLIDATED COMPANIES BEFORE INCOME TAXES AND MINORITY INTERESTS		(7,948	)		(7,445	)		(13,815	)		(14,434	)

INCOME TAX EXPENSE		37			52			101			166

LOSS BEFORE MINORITY INTERESTS		(7,985	)		(7,497	)		(13,916	)		(14,600	)

MINORITY INTEREST IN CONSOLIDATED SUBSIDIARY COMPANIES		2,057			(736	)		3,730			(1,373	)


NET LOSS FROM CONSOLIDATED COMPANIES		(10,042	)		(6,761	)		(17,646	)		(13,227	)

NET INCOME (LOSS) FROM UNCONSOLIDATED EQUITY AFFILIATES		9,409			(137	)		18,218			(176	)


NET INCOME (LOSS)	$	(633	)	$	(6,898	)	$	572		$	(13,403	)


NET INCOME (LOSS) PER COMMON SHARE:
Basic	$	(0.02	)	$	(0.18	)	$	0.02		$	(0.36	)

Diluted	$	(0.02	)	$	(0.18	)	$	0.02		$	(0.36	)

See accompanying notes to consolidated financial statements.

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)


	Six Months Ended June 30,
	2008			2007
	(in thousands)
	(RESTATED-
	SEE NOTE 1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)	$	572		$	(13,403	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		92			298
Gain on financing transactions		(3,421	)		—
Net (income) loss from unconsolidated equity affiliate		(18,218	)		176
Non-cash compensation-related charges		2,578			2,898
Minority interest in consolidated subsidiary companies		3,730			(1,373	)
Dividends from unconsolidated equity affiliate		72,530			—
Changes in operating assets and liabilities:
Accounts and notes receivable		(278	)		329
Advances to equity affiliate		13,775			3,780
Prepaid expenses and other		(3,173	)		162
Accounts payable		(3,879	)		(354	)
Accounts payable, related party		185			230
Accrued expenses		122			(4,504	)
Accrued interest		(53	)		(313	)
Income taxes payable		(258	)		39

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		64,304			(12,035	)


CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property and equipment		(11,217	)		(287	)
Investment in equity affiliate		—			(4,591	)
Decrease in restricted cash		3,244			13,595
Investment costs		(1,153	)		(5	)

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(9,126	)		8,712


CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuances of common stock		1,310			251
Purchase of treasury stock		(17,207	)		—
Payments of notes payable		(2,560	)		(9,302	)
Dividends paid to minority interest		(358	)		—

NET CASH USED IN FINANCING ACTIVITIES		(18,815	)		(9,051	)


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		36,363			(12,374	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		120,841			148,079

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	157,204		$	135,705

Supplemental Schedule of Noncash Investing and Financing Activities:

During the six months ended June 30, 2008, we issued 0.2 million shares of restricted stock valued at $2.0 million. Also, some of our employees elected to pay withholding tax on restricted stock grants on a cashless basis which resulted in 12,582 shares being added to treasury stock at cost. In addition, 106,000 shares held in treasury were reissued as restricted stock.

During the six months ended June 30, 2007, we issued 0.3 million shares of restricted stock valued at $2.6 million. Also, some of our employees elected to pay withholding tax on restricted stock grants on a cashless basis which resulted in 8,793 shares being added to treasury stock at cost. In addition, 20,000 shares held in treasury were reissued as restricted stock.

See accompanying notes to consolidated financial statements.

HARVEST NATURAL RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Three and Six Months Ended June 30, 2008 and 2007 (unaudited)

Note 1 — Organization and Summary of Significant Accounting Policies

Interim Reporting

In our opinion, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position as of June 30, 2008, and the results of operations for the three and six months ended June 30, 2008 and 2007 and cash flows for the six months ended June 30, 2008 and 2007. 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, 2007, 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.

Organization

Harvest Natural Resources, Inc. 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. We have acquired and developed significant interests in the Bolivarian Republic of Venezuela (“Venezuela”) originally through our subsidiary Harvest Vinccler, S.C.A. (“Harvest Vinccler”) and subsequently through our 40 percent equity affiliate, Petrodelta, S. A. (“Petrodelta”). In October 2007, Harvest Vinccler contributed the Uracoa, Tucupita and Bombal fields (“SMU Fields”) and Corporación Venezolana del Petroleo S.A. (“CVP”) contributed the Isleño, El Salto and Temblador fields (“New Fields”) (collectively “Petrodelta Fields”) to Petrodelta. In March 2008, we executed an Area of Mutual Intent (“AMI”) agreement with a private third party for the Gulf Coast Region of the United States. In addition, we have also entered into a leasehold acquisition agreement in another area of the United States. We also have exploration acreage offshore of the People’s Republic of China (“China”), offshore of the Republic of Gabon (“Gabon”) and onshore Sulawesi in the Republic of Indonesia (“Indonesia”). See Note 7 — United States Operations, Note 8 — Indonesia and Note 9 — Gabon.

Restatement

The Form 10-Q/A is being filed to amend and restate our previously issued consolidated financial statements as of and for the three and six months ended June 30, 2008. This amendment and restatement is required to adjust the consolidated financial statements for the correction of an error in the deferred tax adjustment to reconcile our share of Petrodelta’s Net Income reported under International Financial Reporting Standards (“IFRS”) to that required under accounting principles generally accepted in the United States of America (“GAAP”) and recorded within Net income from unconsolidated equity affiliates.

The adjustment to record our share of Petrodelta’s Net Income under GAAP should have been limited to deferred tax adjustments related to non-monetary temporary differences impacted by inflationary adjustments under Venezuela law. During the 2008 year end close process, we determined that restatements of our historical financial statements for the year ended December 31, 2007 and quarterly information for the quarters ended December 31, 2007, March 31, 2008 and June 30, 2008 were necessary because since October 1, 2007 both monetary and non-monetary temporary differences recorded in Petrodelta’s IFRS financial statements had been adjusted in arriving at our GAAP consolidated financial statements rather than only the non-monetary temporary differences impacted by inflationary adjustments. Accordingly, we had overstated our Net income from unconsolidated equity affiliates and understated our Investment in equity affiliates.

Our consolidated financial statements for the three and six months ended June 30, 2008 have been restated to correct the deferred tax adjustment to reconcile our share of Petrodelta’s Net Income reported under IFRS to that

required under GAAP to include only the non-monetary temporary differences impacted by inflationary adjustments under Venezuela law.

The following tables set forth the effect of the adjustments described above on the consolidated statement of operations for the three and six months ended June, 2008 and for the consolidated balance sheet as of June 30, 2008. Although the restatement changed our Net Income, Net income from unconsolidated equity affiliates and Minority interest in consolidated subsidiary companies, there was no impact on net cash used in operating activities in the consolidated statements of cash flows.

Consolidated Statements of Operations


	Three Months Ended									Six Months Ended
	June 30, 2008									June 30, 2008
	As									As
	Previously						As			Previously						As
	Reported			Adjustment			Restated			Reported			Adjustment			Restated
	*(in thousands, except per share data)*

Loss before income taxes and minority interest	$	(7,948	)	$	—		$	(7,948	)	$	(13,815	)	$	—		$	(13,815	)
Income tax expense		37			—			37			101			—			101

Loss before minority interest		(7,985	)		—			(7,985	)		(13,916	)		—			(13,916	)
Minority interest in consolidated subsidiary		2,424			(367	)		2,057			3,847			(117	)		3,730

Loss from consolidated companies		(10,409	)		367			(10,042	)		(17,763	)		117			(17,646	)
Net income from unconsolidated equity affiliates		11,243			(1,834	)		9,409			18,801			(583	)		18,218

Net income (loss)	$	834		$	(1,467	)	$	(633	)	$	1,038		$	(466	)	$	572


Net Income (Loss) Per Common Share:
Basic	$	0.02		$	(0.04	)	$	(0.02	)	$	0.03		$	(0.01	)	$	0.02
Diluted	$	0.02		$	(0.04	)	$	(0.02	)	$	0.03		$	(0.01	)	$	0.02

Consolidated Balance Sheets


	June 30, 2008
	As Previously				As
	Reported		Adjustment⁽¹⁾		Restated
	*( in thousands)*

Investment in equity affiliates	$	197,444	$	3,019	$	200,463
Total assets		393,081		3,019		396,100
Minority interest		60,306		604		60,910
Retained earnings		148,972		2,415		151,387
Total shareholders’ equity		301,348		2,415		303,763
Total liabilities and shareholders’ equity		393,081		3,019		396,100


⁽¹⁾		Adjustment is cumulative and includes amounts restated in the Annual Report on Form 10-K/A Amendment #2 for the year ended December 31, 2007.

Principles of Consolidation

The consolidated financial statements include the accounts of all wholly-owned and majority-owned subsidiaries. The equity method of accounting is used for companies in which we have significant influence. All intercompany profits, transactions and balances have been eliminated.

Investment in Equity Affiliates

The equity method of accounting is used for companies and other investments in which we have significant influence. We own a 45 percent equity interest in Fusion Geophysical, LLC (“Fusion”) and a 40 percent equity interest in Petrodelta through our 80 percent owned subsidiary HNR Finance, B.V. (“HNR Finance”). Petrodelta was formed in October 2007, and the net income from unconsolidated equity affiliates from April 1, 2006 to December 31, 2007 was reflected in the three months ended December 31, 2007 consolidated statements of operations. The three and six months ended June 30, 2008 include net income from unconsolidated equity affiliates

for Petrodelta on a current basis. Investment in Equity Affiliates is increased or decreased by earnings/losses and decreased by dividends paid. No dividends were declared or paid by Fusion in the six months ended June 30, 2008 or 2007. In May 2008, Petrodelta declared and paid a dividend of $181 million, $72.5 million net to HNR Finance ($58.0 million net to our 32 percent interest), which represents Petrodelta’s net income as reported under International Financial Reporting Standards (“IFRS”) for the period of April 1, 2006 through December 31, 2007.

Fair Value Measurements

We adopted SFAS No. 157, “Fair Value Measurements,” effective January 1, 2008 for financial assets and liabilities measured on a recurring basis. SFAS No. 157 applies to all financial assets and financial liabilities that are being measured and reported on a fair value basis. In February 2008, the FASB issued FSP No.157-2, which delayed the effective date of SFAS No.157 by one year for non-financial assets and liabilities. As defined in SFAS No.157, 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 (exit price). The adoption of FAS 157 had no impact on our consolidated financial position, results of operations or cash flows.

Restricted Cash

Restricted cash represents cash and cash equivalents held in a U.S. bank used as collateral for Harvest Vinccler’s loan agreement, and is classified as current based on the terms of the agreement. See Note 2 — Short-Term Debt.

Accounts and Notes Receivable, Net

During the six months ended June 30, 2008, Harvest Vinccler charged to income $1.7 million of value added tax (“VAT”) receivable and other receivables related to prior years when Harvest Vinccler operated the SMU Fields.

Accrued Expenses

During the six months ended June 30, 2008, Harvest Vinccler charged to income $1.7 million of vendor invoices and employee costs related to prior years when Harvest Vinccler operated the SMU Fields.

Property and Equipment

Our accounting method for oil and gas exploration and development activities is the successful efforts method. During the three and six months ended June 30, 2008, we incurred $2.9 million and $4.2 million, respectively, of exploration costs related to the purchase and re-processing of seismic for our United States operations, acquisition of seismic for our Indonesia operations, and other general business development activities. During the three and six months ended June 30, 2007, we incurred $0.4 million, respectively, of exploration costs relate to other general business development activities. During the six months ended June 30, 2008, we reclassified $3.8 million of lease investigatory costs associated with our United States operations from other assets to oil and gas properties. See Note 7 — United States Operations.

Minority Interests

We record a minority interest attributable to the minority shareholder of our Venezuela subsidiary. The minority interest in net income and losses is subtracted or added to arrive at consolidated net income.

Earnings Per Share

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. The weighted average number of common shares outstanding for computing basic EPS was 34.7 million and 34.9 million for the three and six months ended June 30, 2008, respectively, and 37.6 million and 37.5 million for the three and six months ended June 30, 2007, respectively. 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. The weighted average number of common shares outstanding for computing diluted EPS, including dilutive stock options, was 34.7 million and 36.1 million for the three and six months ended June 30, 2008, respectively, and 37.6 million and 37.5 million for the three and six months ended June 30, 2007, respectively.

An aggregate of 0.8 million options to purchase common stock were excluded from the earnings per share calculations because their exercise price exceeded the average price for the three and six months ended June 30, 2008, respectively. An aggregate of 1.7 million options to purchase common stock were excluded from the earnings per share calculations because their exercise price exceeded the average price for the three and six months ended June 30, 2007, respectively.

Stock options of 0.4 million were exercised in the six months ended June 30, 2008 resulting in cash proceeds of $1.3 million. Stock options of 0.1 million were exercised in the six months ended June 30, 2007, resulting in cash proceeds of $0.3 million.

New Accounting Pronouncements

In May 2008, the Financial Accounting Standards Board (“FASB”) issued FAS 162 — The Hierarchy of Generally Accepted Accounting Principles (“FAS 162”) which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presenting in conformity with GAAP. FAS 162 is effective 60 days following the Security and Exchange Commission’s (“SEC”) approval of the Public Company Accounting Oversight Board (“PCAOB”) amendments to AU Section 411, The Meaning of “Present Fairly” in Conformity With Generally Accepted Accounting Principles. The adoption of FAS 162 will not have a material effect on our consolidated financial position, results of operation or cash flows.

Reclassifications

Certain items in 2007 have been reclassified to conform to the 2008 financial statement presentation.

Note 2 — Short-Term Debt

Short-term debt consists of the following:


	June 30,		December 31,
	2008		2007
	(in thousands)

Note payable with interest at 20.0%	$	4,651	$	9,302

On November 20, 2006, Harvest Vinccler entered into a three-year term loan with a Venezuelan bank for 120 billion Venezuela Bolivars (“Bolivars”) (approximately $55.8 million). The first principal payment was due 180 days after the funding date in the amount of 20 billion Bolivars (approximately $9.3 million), and 20 billion Bolivars (approximately $9.3 million) every 180 days thereafter. The interest rate for the first 180 days was fixed at 10.0 percent and was adjusted to 20.0 percent on February 1, 2008 in accordance with the loan agreement within the limits set forth by the Central Bank of Venezuela or in accordance with the conditions in the financial market. As of June 30, 2008, the loan was collateralized by a $3.5 million deposit plus interest in a U.S. bank. The loan was used to meet the SENIAT, the Venezuelan income tax authority, income tax assessments and related interest, refinance a portion of another Bolivar loan and to fund operating requirements. On July 9, 2008, the loan was repaid in full and the cash collateral returned to us. We have no other debt obligations.

Note 3 — Commitments and Contingencies

Excel Enterprises L.L.C. vs. Benton Oil & Gas Company, now known as Harvest Natural Resources, Inc., Chemex, Inc., Benton-Vinccler, C.A., Gale Campbell and Sheila Campbell in the District Court for Harris County, Texas. This suit was brought in May 2003 by Excel alleging, among other things, breach of a consulting agreement between Excel and us, misappropriation of proprietary information and trade secrets, and fraud. Excel seeks actual and exemplary damages, injunctive relief and attorneys’ fees. In April 2007, the Court set the case for trial. The

trial date has been reset for the first quarter of 2009. We dispute Excel’s claims and plan to vigorously defend against them. We are unable to estimate the amount or range of any possible loss.

Uracoa Municipality Tax Assessments. Harvest Vinccler has received nine assessments from a tax inspector for the Uracoa municipality in which part of the SMU Fields are located as follows:

	•		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 PDVSA under the 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.

	•		Two claims were filed in July 2006 alleging the 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.

	•		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.

	•		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.

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 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.

Libertador Municipality Tax Assessments. Harvest Vinccler has received five assessments from a tax inspector for the Libertador municipality in which part of the SMU Fields are located as follows:

	•		One claim was filed in April 2005 alleging the 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.

	•		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 the claims.

	•		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 the claims.

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.

In June 2007, the SENIAT issued an assessment for taxes in the amount of $0.4 million for Harvest Vinccler’s failure to withhold VAT from vendors during 2005. Also, the SENIAT imposed penalties and interest in the amount of $1.3 million for Harvest Vinccler’s failure to withhold VAT. In July 2008, the SENIAT adjusted the

assessment for penalties and interest to the change in tax units as mandated by the Venezuelan tax code and issued a new assessment for $2.3 million. The change in assessment resulted in an additional $1.0 million expense recorded in the six months ended June 30, 2008. A tax court has ruled against the SENIAT stating that penalties and interest cannot be calculated on tax units. The case is currently pending a decision in the Venezuelan Supreme Court. The SENIAT has recognized a payment made by Harvest Vinccler in 2006 for the underwithheld VAT and has partially confirmed that some of the affected vendors have remitted the underwithheld VAT. Harvest Vinccler has received credit, less penalties and interest, from the SENIAT for the VAT remitted by the vendors. Harvest Vinccler has filed claims against the SENIAT for the portion of VAT not recognized by the SENIAT and believes it has a substantial basis for its position. Harvest Vinccler is evaluating its legal options pertaining to the additional tax assessment.

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 which will have a material adverse impact on our financial condition, results of operations and cash flows.

Note 4 — Taxes Other Than on Income

The components of taxes other than on income were:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
	(in thousands)
Franchise Taxes	$	42	$	37	$	83	$	90
Payroll and Other Taxes		153		148		375		332

	$	195	$	185	$	458	$	422

Note 5 — Operating Segments

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. As a result of the situation in Venezuela, our GAAP consolidated financial statements for the three and six months ended June 30, 2007, do not reflect the net results of our producing operations in Venezuela. See Note 6 — Investment in Equity Affiliates, Petrodelta. Costs included under the heading “United States and Other” include operations, exploration, 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:


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
	(in thousands)
	(RESTATED-						(RESTATED-
	SEE NOTE 1)						SEE NOTE 1)
Segment Income (Loss)
Venezuela	$	9,997		$	(2,960	)	$	18,108		$	(5,490	)
United States and other		(10,630	)		(3,938	)		(17,536	)		(7,913	)

Net income (loss)	$	(633	)	$	(6,898	)	$	572		$	(13,403	)


	June 30,			December 31,
	2008			2007
	(in thousands)
	(RESTATED-SEE NOTE 1)
Operating Segment Assets
Venezuela	$	221,313		$	306,644
United States and other		196,915			126,773

		418,228			433,417
Intersegment eliminations		(22,128	)		(16,346	)

	$	396,100		$	417,071

Note 6 — Investment in Equity Affiliates

Petrodelta

HNR Finance owns a 40 percent interest in Petrodelta and recorded its share of the earnings of Petrodelta from April 1, 2006 to December 31, 2007 in the three months ended December 31, 2007. Petrodelta’s financial information is prepared in accordance with IFRS which we have adjusted to conform to GAAP. In May 2008, Petrodelta declared and paid a dividend of $181 million, $72.5 million net to HNR Finance ($58.0 million net to our 32 percent interest), which represents Petrodelta’s net income as reported under IFRS for the period of April 1, 2006 through December 31, 2007. All amounts through Net Income Equity Affiliate represent 100 percent of Petrodelta. Summary financial information has been presented below at June 30, 2008 and December 31, 2007, and for the three and six months ended June 30, 2008 (in thousands):


	Three Months			Six Months
	Ended			Ended
	June 30, 2008			June 30, 2008
	(RESTATED-SEE NOTE 1)
Barrels of oil sold		1,238			2,447
Thousand cubic feet of gas sold		3,049			6,221
Total barrels of oil equivalent		1,746			3,484

Average price per barrel	$	83.12		$	81.09
Average price per thousand cubic feet	$	1.54		$	1.54

Revenues:
Oil sales	$	102,897		$	198,432
Gas sales		4,695			9,580
Royalty		(43,130	)		(77,089	)

		64,462			130,923

Expenses:
Operating expenses		18,851			33,194
Depletion, depreciation and amortization		7,754			12,052
General and administrative		2,056			3,734
Taxes other than on income		3,602			7,088

		32,263			56,068


Income from operations		32,199			74,855

Investment Earnings and Other		4,955			5,008


Income before Income Tax		37,154			79,863

Current income tax expense		9,115			30,611
Deferred income tax benefit		(8,293	)		(14,976	)

Net Income		36,332			64,228
Adjustment to reconcile to reported Net Income from Unconsolidated Equity Affiliate:
Deferred income tax benefit		12,874			16,430

Net Income Equity Affiliate		23,458			47,798
Equity interest in unconsolidated equity affiliate		40	%		40	%

Income before amortization of excess basis in equity affiliate		9,383			19,119
Amortization of excess basis in equity affiliate		(277	)		(552	)
Conform depletion expense to GAAP		408			(258	)

Net income from unconsolidated equity affiliate	$	9,514		$	18,309


	June 30,		December 31,
	2008		2007

Current assets	$	723,130	$	478,734
Property and equipment		173,142		176,783
Other assets		61,288		38,738
Current liabilities		486,283		287,491
Other liabilities		6,249		5,964
Net equity		465,028		400,800

Law of Special Contribution to Extraordinary Prices at the Hydrocarbons International Market (“Windfall Profits Tax”)

On April 15, the Venezuelan government published in the Official Gazette the Law of Special Contribution to Extraordinary Prices at the Hydrocarbons International Market (“Windfall Profits Tax”). The Windfall Profits

Tax is effective April 15, 2008, the date published. The Windfall Profits Tax established a special 50 percent tax to the Venezuelan government when the average price of Brent crude (“Brent”) exceeds $70 per barrel. In a similar manner, the percentage is increased from 50 percent to 60 percent when the average price of Brent exceeds $100 per barrel. The Windfall Profits Tax applies only to oil sales and is a reduction in the price per barrel received by Petrodelta from PDVSA and, consequently, is deductible for Venezuelan income tax purposes. There have been no regulations issued to indicate how the mechanics of the Windfall Profits Tax will work. However, Petrodelta has reduced oil sales revenue for the three and six months ended June 30, 2008 by $22.1 million for the period of April 15, 2008 through June 30, 2008, based on its interpretation of the law.

On July 10, 2008, the Venezuelan government published in the Official Gazette an amendment to the Windfall Profits Tax (the “Amendment”). The Amendment changed the basis of the price adjustment from Brent to the Venezuelan basket of prices as published by the Ministry of the People’s Power for Energy and Petroleum (“MENPET”). The Amendment does not provide guidance for the Venezuelan basket nor does it provide an effective date for the change, although the Amendment should be effective July 10, 2008, the date published. Therefore, the calculation for the Windfall Profits Tax for the three and six months ended June 30, 2008 has not been adjusted for the Amendment pending clarification from the Venezuelan government and legal counsel.

Fusion Geophysical, LLC (“Fusion”)

Fusion is a technical firm specializing in the areas of geophysics, geosciences and reservoir engineering. The purchase of Fusion extends our technical ability and global reach to support a more organic growth and exploration strategy. Our 45 percent minority equity investment in Fusion is accounted for using the equity method of accounting. Operating revenue and total assets represent 100 percent of Fusion. No dividends were declared or paid during the three and six months ended June 30, 2008 and 2007, respectively. Summarized financial information for Fusion follows (in thousands):


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007

Operating Revenues	$	2,302		$	1,478		$	4,994		$	3,051

Net Income	$	131		$	71		$	526		$	338
Equity interest in unconsolidated equity affiliate		45	%		45	%		45	%		45	%

Net income from unconsolidated equity affiliate		59			32			237			152
Amortization of fair value of intangibles		(164	)		(169	)		(328	)		(328	)

Net loss from unconsolidated equity affiliate	$	(105	)	$	(137	)	$	(91	)	$	(176	)


	June 30,		December 31,
	2008		2007

Current assets	$	5,172	$	3,995
Total assets		16,069		14,846
Current liabilities		2,747		2,100
Total liabilities		2,747		2,100

Note 7 — United States Operations

We have initiated a domestic exploration program in two different basins. We will be the operator of both exploration programs and have complemented our existing personnel with the addition of highly experienced management and technical personnel and with the acquisition of our 45 percent equity interest in Fusion in 2007. Each of the agreements are located in highly competitive lease acquisition areas. In order to maximize our lease position, we elected to complete the lease acquisition phase prior to disclosure of the prospect locations or the announcement of our drilling objectives.

Gulf Coast

We executed an AMI agreement with a private third party for the upper Gulf Coast Region of the United States. The AMI covers the coastal areas from Nueces County, Texas to Cameron Parish, Louisiana, including state waters. We will be the operator and have an initial working interest of 55 percent in the AMI. The private third party contributed two prospects, including the leases and proprietary 3-D data sets, and numerous leads generated over the last three decades of regional geological focus. We will fund the first $20 million of new lease acquisitions, geological and geophysical studies, seismic reprocessing and drilling costs. All subsequent costs will be shared pursuant to the terms of the AMI. The parties have identified two prospects for evaluation and have completed nearly all leasing of each prospect area. The other party is obligated to evaluate and present additional opportunities at their sole cost. As each prospect is accepted it will be covered by the AMI. Through June 30, 2008, we have incurred $5.4 million of the carry obligation for the payment of leasehold costs, seismic, as well as reprocessing of the seismic and additional leases.

Preparations are underway for drilling of an exploratory well on the first prospect in the AMI. This is expected to spud during the third quarter of 2008. During the three months ended June 30, 2008, approximately $1.5 million, which is part of the carry obligation, was expended to purchase tubulars for the well along with other necessary preparatory expenses for the drilling of the well.

Other United States

We have entered into an agreement with a private party to pursue a lease acquisition program and drilling program on a project in another United States basin. The leasing program is ongoing, and, for competitive purposes, the prospect area will not be disclosed prior to the completion of leasing. We will be the operator and have a working interest of 50 percent in the project. The other party is obligated to assemble the lease position on the project. We will earn our 50 percent working interest in the project by compensating the other party for leases acquired in accordance with terms defined in the agreement, and by drilling one test well at our sole expense. Through June 30, 2008, we have incurred $5.3 million in the acquisition of leasehold and rights.

Note 8 — Indonesia

In February 2008, Indonesia’s oil and gas regulatory authority, BP Migas, approved the assignment to us of a 47 percent interest in the Budong-Budong production sharing contract (“Budong PSC”). Final government approval from the Ministry of Energy and Mineral Resources, Migas, was received in April 2008. The Budong PSC is located onshore West Sulawesi, Indonesia. We acquired our 47 percent interest in the Budong PSC by committing to fund the first phase of the exploration program including the acquisition of 2-D seismic and drilling of the first two exploration wells. This commitment is capped at $17.2 million. Prior to drilling the first exploration well, subject to the estimated cost of that well, our partner will have a one-time option to increase the level of the carried interest to $20.0 million, and as compensation for the increase, we will increase our participation to a maximum of 54.65 percent. The Budong PSC includes a ten-year exploration period and a 20-year development phase. For the initial three-year exploration phase, which began January 2007, we are in the process of acquiring, processing and interpreting approximately 550 kilometers of 2-D seismic and plan to drill two exploration wells. Our partner will be the operator through the exploration phase as required by the terms of the Budong PSC. We will have control of major decisions and financing for the project with an option to operate in the development and production phase if approved by BP Migas. Through June 30, 2008, we have incurred $1.6 million of the carry obligation for the purchase of seismic and related costs.

Note 9 — Gabon

In April 2008, we completed the purchase of a 50 percent interest in the production sharing contract related to the Dussafu Marin Permit offshore Gabon in West Africa (“Dussafu PSC’) for $4.5 million. We are the operator of the Dussafu PSC. Located offshore Gabon, adjacent to the border with the Republic of Congo, the Dussafu PSC contains 680,000 acres with water depths to 1,000 feet. In the Dussafu PSC, we are committed to perform geological, geophysical and engineering studies and to shoot 500 kilometers of 2-D seismic. Through June 30, 2008, we have incurred $0.5 million for engineering services and acreage review.

Note 10 — Gain on Financing Transaction

During the three and six months ended June 30, 2008, Harvest Vinccler entered into security exchange transactions to effectively convert U.S. Dollars to Bolívars as Harvest Vinccler has no source for Bolivars. In these exchange transactions, one of Harvest’s affiliates purchased U.S. government securities and exchanged them for U.S. Dollar indexed debt issued by the Venezuelan government. The U.S. Dollar indexed Venezuelan government securities can only be traded in Venezuela for Bolivars (“Southern Bonds” or “TICC’s”). The exchanges were transacted through an intermediary at the securities transaction rate of Bolivars to U.S. Dollars. Harvest Vinccler at the same time purchased a like amount of U.S. government securities and exchanged those securities with the intermediary for the TICCs. Harvest Vinccler converted the TICCs to Bolivars at a local bank at the official exchange rate of 2.15 Bolivars to one U.S. Dollar and used the Bolivars for operating expenses and to settle 10 million Bolivars (approximately $4.6 million) of its Bolivar denominated debt. These security exchange transactions resulted in a $2.1 million and $3.4 million gain on financing transactions for the three and six months ended June 30, 2008, respectively. There were no such financing transactions in the three and six months ended June 30, 2007.

Note 11 — Subsequent Event

On July 1, 2008, we and our partner in the AMI acquired 6,510 acres of offshore leases representing all or part of 12 separate tracts from the State of Texas General Land Office for a total gross cost of $2.7 million, which is part of the $20 million carry obligation. This lease acquisition covers the second exploratory prospect in the AMI and completes the lease acquisition phase in this area.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Harvest Natural Resources, Inc. (“Harvest” or the “Company”) cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this report or made by management of the Company involve risks and uncertainties and are subject to change based on various important factors. When used in this report, the words “budget”, “guidance”, forecast”, “anticipate”, “expect”, “believes”, “goals”, “projects”, “plans”, “anticipates”, “estimates”, “should”, “could”, “assume” and similar expressions are intended to identify forward-looking statements. In accordance with the provisions of the Private Securities Litigation Reform Act of 1995, we caution you that important factors could cause actual results to differ materially from those in the forward-looking statements. Such factors include our concentration of operations in Venezuela, the political and economic risks associated with international operations (particularly those in Venezuela), the anticipated future development costs for undeveloped reserves, drilling risks, the risk that actual results may vary considerably from reserve estimates, the dependence upon the abilities and continued participation of certain of our key employees, the risks normally incident to the exploration, operation and development of oil and natural gas properties, risks incumbent to being a minority shareholder in a corporation, the permitting and the drilling of oil and natural gas wells, the availability of materials and supplies necessary to projects and operations, the price for oil and natural gas and related financial derivatives, changes in interest rates, the Company’s ability to acquire oil and natural gas properties that meet its objectives, availability and cost of drilling rigs, seismic crews, overall economic conditions, political stability, civil unrest, acts of terrorism, currency and exchange risks, currency controls, changes in existing or potential tariffs, duties or quotas, changes in taxes, changes in governmental policy, availability of sufficient financing, changes in weather conditions, and ability to hire, retain and train management and personnel. A discussion of these factors is included in our Annual Report on Form 10-K for the year ended December 31, 2007, which includes certain definitions and a summary of significant accounting policies and should be read in conjunction with this Quarterly Report.

Executive Summary

We are a global acquire and exploit producer, focused on exploration opportunities within proven active hydrocarbon systems. This technically-driven strategy provides us with low entry costs into areas with large hydrocarbon resource potential. To support our strategy, we supplemented our business development and technical expertise by expanding our London office, opening a Singapore office and purchasing a 45 percent equity interest in Fusion Geophysical, LLC (“Fusion”). We are building a portfolio of exploration prospects to complement our low technical risk Venezuelan development assets.

Restatement

The Form 10-Q/A is being filed to amend and restate our previously issued consolidated financial statements as of and for the three and six months ended June 30, 2008. This amendment and restatement is required to adjust the consolidated financial statements for the correction of an error in the deferred tax adjustment to reconcile our share of Petrodelta S.A.’s (“Petrodelta”) Net Income reported under International Financial Reporting Standards (“IFRS”) to that required under accounting principles generally accepted in the United States of America (“GAAP”) and recorded within Net income from unconsolidated equity affiliates.

The adjustment to record our share of Petrodelta’s Net Income under GAAP should have been limited to deferred tax adjustments related to non-monetary temporary differences impacted by inflationary adjustments under Venezuela law. During the 2008 year end close process, we determined that restatements of our historical financial statements for the year ended December 31, 2007 and quarterly information for the quarters ended December 31, 2007, March 31, 2008 and June 30, 2008 were necessary because since October 1, 2007 both monetary and non-monetary temporary differences recorded in Petrodelta’s IFRS financial statements had been adjusted in arriving at our GAAP consolidated financial statements rather than only the non-monetary temporary differences impacted by inflationary adjustments. Accordingly, we had overstated our Net income from unconsolidated equity affiliates and understated our Investment in equity affiliates.

required under GAAP to include only the non-monetary temporary differences impacted by inflationary adjustments under Venezuela law.

Consolidated Statements of Operations


	Three Months Ended									Six Months Ended
	June 30, 2008									June 30, 2008
	As									As
	Previously						As			Previously						As
	Reported			Adjustment			Restated			Reported			Adjustment			Restated
	*(in thousands, except per share data)*

Loss before income taxes and minority interest	$	(7,948	)	$	—		$	(7,948	)	$	(13,815	)	$	—		$	(13,815	)
Income tax expense		37			—			37			101			—			101

Loss before minority interest		(7,985	)		—			(7,985	)		(13,916	)		—			(13,916	)
Minority interest in consolidated subsidiary		2,424			(367	)		2,057			3,847			(117	)		3,730

Loss from consolidated companies		(10,409	)		367			(10,042	)		(17,763	)		117			(17,646	)
Net income from unconsolidated equity affiliates		11,243			(1,834	)		9,409			18,801			(583	)		18,218

Net income (loss)	$	834		$	(1,467	)	$	(633	)	$	1,038		$	(466	)		$572


Net Income (Loss) Per Common Share:
Basic	$	0.02		$	(0.04	)	$	(0.02	)	$	0.03		$	(0.01	)	$	0.02
Diluted	$	0.02		$	(0.04	)	$	(0.02	)	$	0.03		$	(0.01	)	$	0.02

Consolidated Balance Sheets


	June 30, 2008
	As Previously				As
	Reported		Adjustment⁽¹⁾		Restated
			*( in thousands)*

Investment in equity affiliates	$	197,444	$	3,019	$	200,463
Total assets		393,081		3,019		396,100
Minority interest		60,306		604		60,910
Retained earnings		148,972		2,415		151,387
Total shareholders’ equity		301,348		2,415		303,763
Total liabilities and shareholders’ equity		393,081		3,019		396,100


⁽¹⁾		Adjustment is cumulative and includes amounts restated in the Annual Report on Form 10-K/A Amendment #2 for the year ended December 31, 2007.

Venezuela

Certain operating statistics for the three and six months ended June 30, 2008 and 2007 for the Petrodelta S. A. (“Petrodelta”) fields operated by Petrodelta are set forth below. This information is provided at 100 percent. This information may not be representative of future results.


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007

Oil production (million barrels)		1.2		1.3		2.4		2.8
Natural gas production (billion cubic feet)		3.0		3.4		6.2		6.7
Barrels of oil equivalent		1.7		1.9		3.5		3.9
Operating expense ($millions)		18.9		7.3		33.2		21.1
Capital expenditures ($millions)		7.3		1.3		9.4		1.6

Crude oil delivered from the Petrodelta fields to PDVSA is priced with reference to Merey 16 published prices, weighted for different markets and adjusted for variations in gravity and sulphur content, commercialization costs and distortions that may occur given the reference price and prevailing market conditions. Market prices for crude oil of the type produced in the fields operated by Petrodelta averaged approximately $100.20 and $89.57 a barrel, $83.12 and $81.09 net of the impact of the Law of Special Contribution to Extraordinary Prices at the Hydrocarbons International Market (“Windfall Profits Tax”) implemented by the Venezuelan government, for the three and six months ended June 30, 2008. Market prices averaged approximately $54.30 and $49.08 a barrel for the three and six months ended June 30, 2007. The activity from April 1, 2006 to December 31, 2007 was recorded in the three months ended December 31, 2007. The price for natural gas per the sales contract is $1.54 per thousand cubic feet.

Petrodelta commenced drilling operations in the Uracoa field on April 21, 2008. As of June 30, 2008, Petrodelta had drilled and completed two successful wells. The first drilling rig will continue to drill in the Uracoa field and is projected to complete nine to twelve new wells this year. Petrodelta has contracted a second drilling rig which is now in Venezuela being assembled and is expected to begin drilling during the third quarter of 2008.

In May 2008, Petrodelta declared and paid a dividend of $181 million, $72.5 million net to HNR Finance B.V. (“HNR Finance”) ($58.0 million net to our 32 percent interest), which represents Petrodelta’s net income as reported under International Financial Reporting Standards (“IFRS”) for the period of April 1, 2006 through December 31, 2007.

On April 15, 2008, the Venezuelan government published in the Official Gazette the Windfall Profits Tax. The Windfall Profits Tax is effective April 15, 2008, the date published. The Windfall Profits Tax establishes a special 50 percent tax to the Venezuelan government when the average price of Brent crude (“Brent”) exceeds $70 per barrel. In a similar manner, the percentage is increased from 50 percent to 60 percent when the average price of Brent exceeds $100 per barrel. The Windfall Profits Tax applies only to oil revenue and is a reduction in the price per barrel received by Petrodelta from PDVSA and, consequently, is deductible for Venezuelan income tax purposes. There have been no regulations issued to indicate how the mechanics of the Windfall Profits Tax will work. However, Petrodelta has reduced oil sales revenue for the three months ended June 30, 2008 by $22.1 million for the period of April 15, 2008 through June 30, 2008, based on its interpretation of the law.

United States Operations

We have initiated a domestic exploration program in two different basins. We will be the operator of both exploration programs and have complemented our existing personnel with the addition of highly experienced management and technical personnel and with the acquisition of our 45 percent equity interest in Fusion in 2007. Each of the agreements is located in highly competitive lease acquisition areas. In order to maximize our lease position, we elected to complete the lease acquisition phase prior to disclosure of the prospect locations or the announcement of our drilling objectives.

Gulf Coast

We executed an AMI agreement with a private third party for the upper Gulf Coast Region of the United States. The AMI covers the coastal areas from Nueces County, Texas to Cameron Parish, Louisiana, including state waters. We will be the operator and have an initial working interest of 55 percent in the AMI. The private third party contributed two prospects, including the leases and proprietary 3-D data sets, and numerous leads generated over the last three decades of regional geological focus. We will fund the first $20 million of new lease acquisitions, geological and geophysical studies, seismic reprocessing and drilling costs. All subsequent costs will be shared pursuant to the terms of the AMI. The parties have identified two prospects for evaluation and have completed nearly all leasing of each prospect area. The other party is obligated to evaluate and present additional opportunities at their sole cost. As each prospect is accepted it will be covered by the AMI. Our commitment for 2008 on the first prospect is to complete the lease acquisition, seismic acquisition, reprocess well site seismic and drill the initial exploratory well. Our commitment for 2008 on the second prospect is to acquire leases and re-process seismic data in preparation for drilling.

Preparations are underway for drilling of an exploratory well on the first prospect in the AMI, the Harvest Hunter No. 1. The well is expected to spud during the third quarter of 2008. The estimated dry hole budget for this well is $5.5 million.

On July 1, 2008, we and our partner in the AMI acquired 6,510 acres of offshore leases representing all or part of 12 separate tracts from the State of Texas General Land Office for a total gross cost of $2.7 million. This lease acquisition covers the second exploratory prospect in the AMI and completes the lease acquisition phase in this area.

Other United States

We have entered into an agreement with a private party to pursue a lease acquisition program and drilling program on a project in another United States basin. The leasing program is ongoing, and, for competitive purposes, the prospect area will not be disclosed prior to the completion of leasing. We will be the operator and have a working interest of 50 percent in the project. The other party is obligated to assemble the lease position on the project. We will earn our 50 percent working interest in the project by compensating the other party for leases acquired in accordance with terms defined in the agreement, and by one drilling one test well at Harvest’s sole expense. Our commitment for 2008 is to complete the lease acquisition program and initiate preparations to acquire seismic data over a portion of the prospect area. Initial drilling on the prospect will likely occur in 2009.

Remaining 2008 net expenditures on our currently identified U.S. exploration programs are expected to be $11.0 million, inclusive of the costs associated with the drilling of the Harvest Hunter No. 1 well.

Indonesia

Gabon

In April 2008, we completed the purchase of a 50 percent interest in the production sharing contract related to the Dussafu Marin Permit offshore Gabon in West Africa (“Dussafu PSC’) for $4.5 million. We are the operator of the Dussafu PSC. Located offshore Gabon, adjacent to the border with the Republic of Congo, the Dussafu PSC contains 680,000 acres with water depths to 1,000 feet. In the Dussafu PSC, we are committed to perform geological, geophysical and engineering studies and to shoot 500 kilometers of 2-D seismic. We plan to shoot the 2-D seismic and reprocess some of the existing 3-D seismic during 2008 with an estimated net budget in 2008 of approximately $2.8 million.

See the notes accompanying the financial statements in Item 1 Financial Statements of this Quarterly Report on Form 10-Q, and Item 1 Business, Item 1A Risk Factors and Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2007 for a complete description of the situation in Venezuela and other matters.

Management Changes

Effective May 19, 2008, Stephen C. Haynes was elected Vice President and Chief Financial Officer. The election is due to the retirement on May 31, 2008 of former Senior Vice President and Chief Financial Officer, Steven W. Tholen. Also effective May 19, 2008, G. Michael Morgan was elected Vice President of Business Development. Kurt A. Nelson, former Vice President — Controller, also retired May 31, 2008. Johnnye Yearwood was appointed Controller effective June 1, 2008.

Capital Resources and Liquidity

Debt Reduction. At June 30, 2008, Harvest Vinccler had debt of 10 million Venezuela Bolivars (“Bolivars”) (approximately $4.7 million) which was secured by $3.5 million in restricted cash deposited in a U.S. bank. This debt was retired on July 9, 2008. We have no other debt obligations.

Working Capital. Our capital resources and liquidity are affected by the ability of Petrodelta to pay dividends. In May 2008, Petrodelta declared and paid a dividend of $181 million, $72.5 million net to HNR Finance ($58 million net to our 32 percent interest), which represents Petrodelta’s net income as reported under IFRS for the period of April 1, 2006 through December 31, 2007. See Item 1A Risk Factors and Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2007 for a complete description of the situation in Venezuela and other matters.

The net funds raised and/or used in each of the operating, investing and financing activities are summarized in the following table and discussed in further detail below:


	Six Months Ended June 30,
	2008
	(restated)			2007
	(in thousands)

Net cash provided by (used in) operating activities	$	64,304		$	(12,035	)
Net cash provided by (used in) investing activities		(9,126	)		8,712
Net cash used in financing activities		(18,815	)		(9,051	)

Net increase (decrease) in cash	$	36,363		$	(12,374	)

At June 30, 2008, we had current assets of $175.5 million and current liabilities of $31.4 million, resulting in working capital of $144.1 million and a current ratio of 5.6:1. This compares with a working capital of $111.5 million and a current ratio of 3.6:1 at December 31, 2007. The increase in working capital of $32.6 million was primarily due to the receipt of a $72.5 million dividend net to HNR Finance ($58 million net to us) from our unconsolidated equity affiliate and payment of advances by PDVSA offset by payments of accounts payable trade and accrued expenses.

Cash Flow from Operating Activities. During the six months ended June 30, 2008, net cash provided by operating activities was $64.3 million. During the six months ended June 30, 2007, net cash used in operating activities was approximately $12.0 million. The $76.3 million increase was primarily due to the receipt of a $72.5 million dividend net to HNR Finance ($58.0 million net to us) from our unconsolidated equity affiliate and payment of advances by PDVSA offset by payments of accounts payable trade and accrued expenses.

Cash Flow from Investing Activities. During the six months ended June 30, 2008, we had capital expenditures of approximately $11.2 million related to lease acquisition for our domestic exploration program. During the six months ended June 30, 2007, we had limited production-related expenditures due to the pending formation of Petrodelta. In January 2007, we purchased a 45 percent interest in Fusion for $4.6 million. During the six months ended June 30, 2008 and 2007, we had $3.2 million and $13.6 million of restricted cash returned to us. We incurred $1.1 million of investigatory costs related to various international and domestic exploration studies during the six months ended June 30, 2008.

With the conversion to Petrodelta, Petrodelta’s capital commitments will be determined by their business plan. Petrodelta’s capital commitments are expected to be funded by internally generated cash flow. Our budgeted capital expenditures for Gabon, Indonesia and United States operations will be funded through our existing cash balances and dividends received from Petrodelta’s operations.

Cash Flow from Financing Activities. During the six months ended June 30, 2008, Harvest Vinccler repaid 10 million Bolivars (approximately $4.7 million) of its Bolivar denominated debt, and we redeemed the 20 percent minority interest in our Barbados affiliate. During the six months ended June 30, 2007, Harvest Vinccler repaid 20 million Bolivars (approximately $9.3 million) of its Bolivar denominated debt.

In June 2007, we announced that our Board of Directors had authorized the purchase of up to $50 million of our common stock from time to time through open market transactions. As of June 30, 2008, 4.6 million shares had been purchased, at an average cost of $10.93 per share, including commissions. The repurchase program is now complete. At June 30, 2008, we had 34.0 million shares outstanding.

In July 2008, our Board of Directors authorized the purchase of up to $20 million of our common stock from time to time through open market transactions. We believe that Harvest stock remains undervalued and that the investment in the shares of our Company represents an attractive alternative to holding cash in excess of our near-term needs. Given our cash balances and the expectation Petrodelta will internally fund its activities, we have sufficient cash to undertake this buyback program as well as to fund an active development and exploration program in other countries. As of August 4, 2008, no stock had been purchased under the program.

Results of Operations

You should read the following discussion of the results of operations for the three and six months ended June 30, 2008 and 2007 and the financial condition as of June 30, 2008 and December 31, 2007 in conjunction with our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2007.

Three Months Ended June 30, 2008 Compared with Three Months Ended June 30, 2007

We reported net loss of $0.6 million, or $0.02 diluted earnings per share, for the three months ended June 30, 2008 compared with a net loss of $6.9 million, or $0.18 diluted loss per share, for the three months ended June 30, 2007. Net loss for the three months ended June 30, 2008 includes our 40 percent share of Petrodelta’s net earnings of $9.5 million for the same period. Petrodelta was formed in October 2007, and we recorded our share of the earnings of Petrodelta from April 1, 2006 to December 31, 2007 in the three months ended December 31, 2007 consolidated statements of operations. The three months ended March 31, 2008 was the first period that we reported the earnings of Petrodelta on a current basis.

Total expenses and other non-operating (income) expense (in millions):


	Three Months Ended
	June 30,						Increase
	2008			2007			(Decrease)
Exploration expense	$	2.9		$	0.4		$	2.5
General and administrative		6.4			7.2			(0.8	)
Taxes other than on income		0.2			0.2			—
Gain on financing transactions		(2.1	)		—			2.1
Investment earnings and other		(0.8	)		(2.8	)		(2.0	)
Interest expense		1.3			2.5			(1.2	)

In December 2007, we changed our accounting method for oil and gas exploration and development activities to the successful efforts method from the full cost method. During the three months ended June 30, 2008, we incurred $2.9 million of exploration costs related to the purchase and re-processing of seismic related to our United States operations, acquisition of seismic related to our Indonesia operations, and other general business development activities. During the three months ended June 30, 2007, we incurred $0.4 million of exploration costs related to other foreign general business development.

General and administrative costs were higher in the three months ended June 30, 2007 than the three months ended June 30, 2008 due to the $1.1 million a labor dispute settlement in Venezuela. Taxes other than income for the three months ended June 30, 2008 were consistent with that of the three months ended June 30, 2007.

During the three months ended June 30, 2008, we entered into an exchange transaction exchanging U.S. government securities for U.S. Dollar indexed debt issued by the Venezuelan government. This security exchange transactions resulted in a $2.1 million gain on financing transactions for the three months ended June 30, 2008. There was no gain on financing transactions for the three months ended June 30, 2007.

Investment earnings and other decreased in the three months ended June 30, 2008 as compared to the same period of the prior year due to lower interest rates earned on cash balances. Interest expense decreased due to Harvest Vinccler’s reduced debt balances in the three months ended June 30, 2008 compared with the three months ended June 30, 2007 offset by the $1.0 million adjusted assessment received from the SENIAT, the Venezuelan tax authority.

For the three months ended June 30, 2008, income tax expense, which is comprised of income tax on our foreign activities and withholding tax on interest income from Harvest Vinccler, was consistent with the three months ended June 30, 2007.

Six Months Ended June 30, 2008 Compared with Six Months Ended June 30, 2007

We reported net income of $0.6 million, or $0.02 diluted earnings per share, for the six months ended June 30, 2008 compared with a net loss of $13.4 million, or $0.36 diluted loss per share, for the six months ended June 30, 2007. Net income for the six months ended June 30, 2008 includes our 40 percent share of Petrodelta’s net earnings of $18.3 million for the same period. Petrodelta was formed in October 2007, and we recorded our share of the earnings of Petrodelta from April 1, 2006 to December 31, 2007 in the three months ended December 31, 2007 consolidated statement of operations. The six months ended June 30, 2008 is the first period that we reported the earnings of Petrodelta on a current basis.

Total expenses and other non-operating (income) expense (in millions):


	Six Months Ended
	June 30,						Increase
	2008			2007			(Decrease)
Exploration expense	$	4.2		$	0.4		$	3.8
General and administrative		12.6			13.6			(1.0	)
Taxes other than on income		0.5			0.4			0.1
Gain on financing transactions		(3.4	)		—			3.4
Investment earnings and other		(1.9	)		(5.3	)		(3.4	)
Interest expense		1.7			4.9			(3.2	)

In December 2007, we changed our accounting method for oil and gas exploration and development activities to the successful efforts method from the full cost method. During the six months ended June 30, 2008, we incurred $4.2 million of exploration costs related to the purchase and re-processing of seismic related to our United States operations, acquisition of seismic related to our Indonesian operations, and other general business development activities. During the six months ended June 30, 2007, we incurred $0.4 million of exploration costs related to other foreign general business development.

General and administrative expenses were higher in the six months ended June 30, 2007 than the six months ended June 30, 2008 due to a $1.1 million labor dispute settlement in Venezuela. Taxes other than on income for the six months ended June 30, 2008 were consistent with that of the six months ended June 30, 2007.

During the six months ended June 30, 2008, we entered into an exchange transaction exchanging U.S. government securities for U.S. Dollar indexed debt issued by the Venezuelan government. This security exchange transactions resulted in a $3.4 million gain on financing transactions for the six months ended June 30, 2008. There was no gain on financing transactions for the six months ended June 30, 2007.

Investment earnings and other decreased in the six months ended June 30, 2008 as compared to the same period of the prior year due to lower interest rates earned on cash balances. Interest expense decreased due to the payments of Harvest Vinccler’s outstanding debt in the six months ended June 30, 2008 compare with the six months ended June 30, 2007 offset by the $1.0 million adjusted assessment received from the SENIAT.

For the six months ended June 30, 2008, income tax expense, which is comprised of income tax on our foreign activities and withholding tax on interest income from Harvest Vinccler, was consistent with the six months ended June 30, 2007.

Effects of Changing Prices, Foreign Exchange Rates and Inflation

Our results of operations and cash flow are affected by changing oil prices. Fluctuations in oil prices may affect our total planned development activities and capital expenditure program.

Venezuela imposed currency exchange restrictions in February 2003, and adjusted the official exchange rate in February 2004 and again in March 2005. We do not expect the currency conversion restrictions or the adjustment in the exchange rate to have a material impact on us at this time. Dividends from Petrodelta will be denominated in U.S. Dollars when paid. Within the United States, inflation has had a minimal effect on us, but it is potentially an important factor with respect to Petrodelta’s results of operations.

On January 1, 2008, the redenomination of Venezuela’s currency to the equivalent of 1,000 pre-2008 Bolivars became effective. This means that the Bolivar dropped three zeros effective January 1, 2008. From January 1, 2008, all amounts of money are denominated in the new and smaller scale of Bolivars under the temporary name of Bolívares Fuertes, which after a period of time will bear again the name of Bolivars.

During the six months ended June 30, 2008, our net foreign exchange gains attributable to our international operations were minimal.


Item 3.		Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from adverse changes of the situation in Venezuela, our recently initiated exploration program and adverse changes in oil prices, interest rates, foreign exchange and political risk, as discussed in our Annual Report on Form 10-K for the year ended December 31, 2007. The information about market risk for the six months ended June 30, 2008 does not differ materially from that discussed in the Annual Report on Form 10-K for the year ended December 31, 2007.


Item 4.		Controls and Procedures (Restated)

Evaluation of Disclosure Controls and Procedures. In our Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 filed on August 7, 2008, our management, including our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2008. In connection with the restatement as discussed in Note 1 to the unaudited consolidated financial statements, an evaluation was carried out under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e), as amended, (the “Exchange Act”) as of June 30, 2008. Based on that evaluation and in light of the material weakness described below, our Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2008, our disclosure controls and procedures were not effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in rules and forms of the SEC, and is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The Company identified the following material weakness in internal control over financial reporting as of June 30, 2008. Effective controls did not exist to ensure that the deferred tax adjustments to reconcile net income reported by Petrodelta under IFRS to that required by GAAP were completely and accurately identified and that the necessary adjustments were appropriately analyzed and recorded on a timely basis. This control deficiency resulted in the misstatement of our net income from unconsolidated equity affiliates and minority interest in consolidated subsidiary companies on our consolidated statement of operations, investment in equity affiliate and minority interest on our consolidated balance sheet and related financial disclosures, and the restatements of the Company’s consolidated financial statements as of and for the quarter ended June 30, 2008. Additionally, this control deficiency could result in misstatements of the aforementioned accounts and disclosures that would result in a material misstatement of the consolidated financial statements that would not be prevented or detected.

Management’s Remediation Efforts. Subsequent to June 30, 2008, management has enhanced the controls over its equity investment to ensure that the adequate information regarding Petrodelta’s tax temporary differences is obtained and that a comprehensive analysis of such information is performed. Specifically, management has requested further information related to the nature of each tax temporary difference which enables management to determine the impact on the deferred tax adjustment to reconcile net income reported by Petrodelta under IFRS to that required under GAAP. The enhanced controls have enabled management to ensure that the deferred tax adjustment to reconcile net income reported by Petrodelta under IFRS to that required under GAAP is completely and accurately reconciled and identified. Management further enhanced the controls necessary to ensure that all necessary adjustments are appropriately analyzed and recorded on a timely basis. However, the material weakness will not be considered remediated until the enhancements are in place and operating effectively for a sufficient period of time.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during our most recent quarter ended June 30, 2008, that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.		Legal Proceedings

In June 2007, the SENIAT issued an assessment for taxes in the amount of $0.4 million for Harvest Vinccler’s failure to withhold value added tax (“VAT”) from vendors during 2005. Also, the SENIAT imposed penalties and interest in the amount of $1.3 million for Harvest Vinccler’s failure to withhold VAT. In July 2008, the SENIAT adjusted the assessment for penalties and interest to the change in tax units as mandated by the Venezuelan tax code and issued a new assessment for $2.3 million. The change in assessment resulted in an additional $1.0 million expense recorded in the six months ended June 30, 2008. A tax court has ruled against the SENIAT stating that penalties and interest cannot be calculated on tax units. The case is currently pending a decision in the Venezuelan Supreme Court. The SENIAT has recognized a payment made by Harvest Vinccler in 2006 for the underwithheld VAT and has partially confirmed that some of the affected vendors have remitted the underwithheld VAT. Harvest Vinccler has received credit, less penalties and interest, from the SENIAT for the VAT remitted by the vendors. Harvest Vinccler has filed claims against the SENIAT for the portion of VAT not recognized by the SENIAT and believes it has a substantial basis for its position. Harvest Vinccler is evaluating its legal options pertaining to the additional tax assessment.

See our Annual Report on Form 10-K for the year ended December 31, 2007 for a description of other certain legal proceedings. There have been no material developments in such legal proceedings since the filing of such Annual Report.


Item 1A.		Risk Factors

See our Annual Report on Form 10-K for the year ended December 31, 2007 under Item 1A Risk Factors for a description of risk factors. There has been no material changes during the quarter ended June 30, 2008 to those risk factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 4. Submission of Matters to a Vote of Security Holders

At our Annual Meeting of Stockholders held on May 15, 2008, the following items were voted on by the Stockholders:

1. To approve the Election of Directors:


	Votes in Favor		Votes Against/Withheld
Stephen D. Chesebro’		31,179,299		269,251
James A. Edmiston		31,178,124		270,426
Dr. Igor Effimoff		31,186,859		261,691
H. H. Hardee		30,115,263		1,333.287
Robert E. Irelan		31,179,699		268,851
Patrick M. Murray		30,113,338		1,335,212
J. Michael Stinson		30,031,158		1,417,392

2. To ratify the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for the year ended December 31, 2008:


Votes in Favor	Against/Withheld Votes	Abstentions/Broker Non- Votes

31,235,773	183,418	29,359


Item 5.		Other Information


Item 6.		Exhibits

(a) Exhibits


3.1		Amended and Restated Certificate of Incorporation. (Incorporated by reference to Exhibit 3.1(i) to our Form 10-Q filed on August 13, 2002, File No. 1-10762.)

3.2		Restated Bylaws as of May 17, 2007. (Incorporated by reference to Exhibit 3.1 to our Form 8-K filed on April 23, 2007, File No. 1-10762.)

4.1		Form of Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 to our Form 10-K filed on March 17, 2008, File No. 1-10762

4.2		Certificate of Designation, Rights and Preferences of the Series B. Preferred Stock of Benton Oil and Gas Company, filed May 12, 1995. (Incorporated by reference to Exhibit 4.1 to our Form 10-Q filed on May 13, 2002, File No. 1-10762.)

4.3		Third Amended and Restated Rights Agreement, dated as of August 23, 2007, between Harvest Natural Resources, Inc. and Wells Fargo Bank, N.A. (Incorporated by reference to Exhibit 99.3 to our Form 8-A filed on October 23, 2007, File No. 1-10762.)

10.1		Employment Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and Stephen C. Haynes. (Incorporated by reference to Exhibit 10.1 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.2		Stock Option Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and Stephen C. Haynes. (Incorporated by reference to Exhibit 10.2 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.3		Employee Restricted Stock Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and Stephen C. Haynes. (Incorporated by reference to Exhibit 10.3 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.4		Employment Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and G. Michael Morgan. (Incorporated by reference to Exhibit 10.4 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.5		Stock Option Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and G. Michael Morgan. (Incorporated by reference to Exhibit 10.5 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.6		Employee Restricted Stock Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and G. Michael Morgan. (Incorporated by reference to Exhibit 10.6 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.7		Separation Agreement dated May 31, 2008 between Harvest Natural Resources, Inc. and Steven W. Tholen. (Incorporated by reference to Exhibit 10.7 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.8		Separation Agreement dated May 31, 2008 between Harvest Natural Resources, Inc. and Kurt A. Nelson. (Incorporated by reference to Exhibit 10.8 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.9		Consulting Agreement dated June 1, 2008 between Harvest Natural Resources, Inc. and Steven W. Tholen. (Incorporated by reference to Exhibit 10.9 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

Exhibit Index


Exhibit
Number		Description
3.1		Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1(i) to our Form 10-Q filed on August 13, 2002, File No. 1-10762).

3.2		Restated Bylaws as of May 17, 2007. (Incorporated by reference to Exhibit 3.1 to our Form 8-K filed on April 23, 2007, File No. 1-10762.)

4.1		Form of Common Stock Certificate. (Incorporated by reference to Exhibit 4.1 to our Form 10-K filed on March 17, 2008. File No. 1-10762.)

4.2		Certificate of Designation, Rights and Preferences of the Series B. Preferred Stock of Benton Oil and Gas Company, filed May 12, 1995. (Incorporated by reference to Exhibit 4.1 to our Form 10-Q filed on May 13, 2002, File No. 1-10762.)

4.3		Third Amended and Restated Rights Agreement, dated as of August 23, 2007, between Harvest Natural Resources, Inc. and Wells Fargo Bank, N.A. (Incorporated by reference to Exhibit 99.3 to our Form 8-A filed on October 23, 2007, File No. 1-10762.)

10.1		Employment Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and Stephen C. Haynes. (Incorporated by reference to Exhibit 10.1 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.2		Stock Option Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and Stephen C. Haynes. (Incorporated by reference to Exhibit 10.2 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.3		Employee Restricted Stock Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and Stephen C. Haynes. (Incorporated by reference to Exhibit 10.3 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.4		Employment Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and G. Michael Morgan. (Incorporated by reference to Exhibit 10.4 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.5		Stock Option Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and G. Michael Morgan. (Incorporated by reference to Exhibit 10.5 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.6		Employee Restricted Stock Agreement dated May 19, 2008 between Harvest Natural Resources, Inc. and G. Michael Morgan. (Incorporated by reference to Exhibit 10.6 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.7		Separation Agreement dated May 31, 2008 between Harvest Natural Resources, Inc. and Steven W. Tholen. (Incorporated by reference to Exhibit 10.7 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.8		Separation Agreement dated May 31, 2008 between Harvest Natural Resources, Inc. and Kurt A. Nelson. (Incorporated by reference to Exhibit 10.8 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.9		Consulting Agreement dated June 1, 2008 between Harvest Natural Resources, Inc. and Steven W. Tholen. (Incorporated by reference to Exhibit 10.9 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

10.10		Consulting Agreement dated June 1, 2008 between Harvest Natural Resources, Inc. and Kurt A. Nelson. (Incorporated by reference to Exhibit 10.10 to our Form 10-Q filed on August 7, 2008, File No. 1-10762.)

31.1		Certification of the principal executive officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification accompanying Quarterly Report on Form 10-Q pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350 executed by James A. Edmiston, President and Chief Executive Officer.

32.2		Certification accompanying Quarterly Report on Form 10-Q pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350 executed by Stephen C. Haynes, Vice President, Chief Financial Officer and Treasurer.


	HARVEST NATURAL RESOURCES, INC.
Dated: March 13, 2009	By:	/s/ James A. Edmiston
		James A. Edmiston
		President and Chief Executive Officer


Dated: March 13, 2009	By:	/s/ Stephen C. Haynes
		Stephen C. Haynes
		Vice President — Finance, Chief Financial Officer and Treasurer

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		Page
PART I	FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS
	Unaudited Consolidated Balance Sheets at June 30, 2008 and December 31, 2007		4
	Unaudited Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2008 and 2007		5
	Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007		6
	Notes to Consolidated Financial Statements		7

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		18

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		26

Item 4.	CONTROLS AND PROCEDURES		26

PART II	OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS		27

Item 1A.	RISK FACTORS		27

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		27

Item 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		27

Item 5.	OTHER INFORMATION		28

Item 6.	EXHIBITS		28

Signatures			30
EX-31.1
EX-31.2
EX-32.1
EX-32.2