Harvest Operations

Harvest Operations Corp. was a Canadian oil and natural-gas company headquartered in Calgary, Alberta. The business developed as Harvest Energy Trust, an open-ended Canadian investment trust, and was associated with the Canadian royalty-trust, or “Canroy,” structure that was prominent in the Canadian energy market during the 2000s. Unlike many royalty trusts, which concentrated primarily on producing oil and gas assets, Harvest combined upstream exploration and production with a downstream refining business. The company’s upstream portfolio was concentrated in Western Canada. Its oil-producing properties were mainly located in Alberta, with additional fields in Saskatchewan and assets in northern British Columbia identified as the Hay River Field. Its Alberta portfolio also included oil-sands deposits and natural-gas properties. Harvest described its resource base as including substantial original oil in place and planned further drilling across a large area of previously undeveloped land. A 2007 company description reported production of approximately 61,000 barrels of oil equivalent per day, although that figure belongs to the historical period before the company was acquired and delisted. Harvest expanded beyond production in 2006 when it acquired the North Atlantic Refinery at Come By Chance in Newfoundland and Labrador from Vitol Refining Group. The refinery had a stated capacity of 115,000 barrels per day. The transaction gave Harvest an integrated profile unusual among Canadian energy trusts and made it, according to contemporary descriptions, the first Canadian energy trust to own a refinery. The downstream operation processed crude into refined petroleum products, while the upstream business supplied the company’s oil and gas production platform. The trust was also known for distributing a relatively high proportion of cash to investors, with monthly distributions being a notable feature of its public-market presentation. Its structure and distribution policy made it attractive to income-oriented investors, although the company remained exposed to commodity prices, production decline, refining economics, capital requirements, and the wider regulatory environment affecting Canadian royalty trusts. In 2009, Korea National Oil Corporation made an offer to acquire Harvest. Unitholders approved the transaction, and the arrangement was completed on December 22, 2009, through KNOC Canada Ltd. The consideration was reported as C$10.00 per unit, with cash distributions to unitholders following completion. Harvest was subsequently delisted from both the Toronto Stock Exchange and the New York Stock Exchange in December 2009. The acquisition ended Harvest’s existence as an independently traded Canadian energy trust. Public reference material describes the pre-acquisition company and its assets, but does not establish a separate current consumer-facing brand or an independently listed Harvest entity.

Harvest Operations developed from Harvest Energy Trust, which was formed in July 2002 in Canada. It operated during the period when Canadian royalty trusts attracted substantial investor interest because they generally distributed much of their available cash flow. Harvest’s structure gave it an upstream base of oil and natural-gas production while also allowing it to participate in refining through a separately acquired downstream asset. The company’s production portfolio was primarily located in Western Canada. Its oil fields were concentrated in Alberta, with additional properties in Saskatchewan and the Hay River Field in northern British Columbia. Alberta also contained the company’s oil-sands deposits and natural-gas properties. Harvest described a significant underlying resource base and identified opportunities for extensive drilling on acreage that had not previously been developed for oil and gas production. Contemporary company information reported production of about 61,000 barrels of oil equivalent per day at the end of 2007, as well as a projected finite life for existing producing assets before depletion. These figures describe the historical trust and should not be interpreted as current operating data. A major strategic turning point came in 2006, when Harvest acquired the North Atlantic Refinery at Come By Chance, Newfoundland and Labrador, from Vitol Refining Group. The refinery was described as having capacity of 115,000 barrels per day. The acquisition distinguished Harvest from many other Canadian energy trusts because it added refining and petroleum-product operations to an otherwise primarily upstream investment model. This combination exposed the company to both production economics and refining margins, while also increasing the operational scope of the business. Harvest’s public-market identity emphasized distributions to investors. It paid monthly distributions and was cited as having a high historical yield during the 2000s. The trust structure also influenced how distributions were treated for certain investors, although taxation depended on the investor’s jurisdiction and circumstances. The business remained sensitive to oil and gas prices, production declines, refinery performance, capital spending, and changes to Canadian tax and royalty-trust policy. In 2009, Korea National Oil Corporation proposed to acquire Harvest. The offer was accepted following unitholder approval and was implemented through KNOC Canada Ltd. The plan of arrangement closed on December 22, 2009, with the reported consideration set at C$10.00 per unit. Cash payouts were made to unitholders after closing, with payment treatment for non-Canadian holders reflecting the applicable exchange rate at the closing date. Harvest was delisted from the Toronto Stock Exchange and New York Stock Exchange in December 2009. The transaction brought the period of Harvest as an independently traded Canadian energy trust to an end and placed the business under Korean state-owned energy interests. Available reference material focuses on this historical company and does not provide enough information to describe a current standalone Harvest consumer brand, current executives, or present-day operating status.

• 2009

  Korea National Oil Corporation acquisition closes

  [1]Harvest Operationsen.wikipedia.org

  KNOC Canada Ltd. completed its acquisition of Harvest under a plan of arrangement on December 22, 2009, reportedly offering C$10.00 per unit.

• 2009

  Public-market delisting

  [1]Harvest Operationsen.wikipedia.org

  Harvest was delisted from the Toronto Stock Exchange and New York Stock Exchange in December 2009 after the acquisition.

• 2007

  Historical production and resource disclosure

  [1]Harvest Operationsen.wikipedia.org

  Contemporary company information reported production of approximately 61,000 barrels of oil equivalent per day and outlined a large undeveloped drilling inventory in Western Canada.

• 2006

  North Atlantic Refinery acquisition

  [1]Harvest Operationsen.wikipedia.org

  Harvest acquired the North Atlantic Refinery at Come By Chance, Newfoundland and Labrador, adding a downstream refining operation to its upstream portfolio.

• 2002

  Harvest Energy Trust is formed

  [1]Harvest Operationsen.wikipedia.org

  Harvest Energy Trust was established in Canada as an open-ended investment trust focused on oil and natural-gas assets.

Historically positioned as an income-oriented Canadian energy trust with an integrated upstream oil-and-gas and downstream refining model.

• Upstream production

  Crude oil

  Crude oil was a principal output of Harvest’s upstream portfolio. Production properties were concentrated in Alberta, with additional oil fields in Saskatchewan and northern British Columbia. The company also reported oil-sands resources in Alberta and planned further drilling across undeveloped acreage.

• Upstream production

  Natural gas

  Natural gas formed part of Harvest’s Western Canadian exploration and production business. The company held natural-gas properties in Alberta alongside its oil assets, although the available reference material does not provide a product-level breakdown of volumes or markets.

• Downstream refining · 2006

  Refined petroleum products

  Through the North Atlantic Refinery in Come By Chance, Newfoundland and Labrador, Harvest participated in the processing of crude oil into refined petroleum products. The refinery acquisition gave the company a downstream business in addition to its Canadian exploration and production operations.

• 2009

  Accept Korea National Oil Corporation takeover offerM&A

  Background

  Korea National Oil Corporation sought to acquire Harvest during the period when the company operated as a publicly traded Canadian energy trust.

  Action taken

  Harvest’s unitholders approved a plan of arrangement under which KNOC Canada Ltd. offered C$10.00 per unit.

  Aftermath

  The arrangement closed on December 22, 2009, and Harvest was delisted from the Toronto and New York stock exchanges later that month.

  Offer price per unit. C$10.00 per unit offer (2009 acquisition)

  Source

• 2006

  Acquire the North Atlantic RefineryM&A

  Background

  Harvest was primarily recognized as an upstream Canadian energy trust, while the refinery acquisition offered a way to add downstream operations and create a more integrated business model.

  Action taken

  Harvest purchased the North Atlantic Refinery at Come By Chance from Vitol Refining Group.

  Aftermath

  The purchase made Harvest unusual among Canadian energy trusts by giving it direct ownership of a refinery and expanding its exposure beyond oil and gas production.

  Source

1. 1Harvest Operationsen.wikipedia.org