Harken Energy Corp. (Amex: HEC) is aiming to reduce its international exposure, focusing instead on its U.S. gas assets while still participating at some level in international fields. The move represents a significant strategic shift for the Houston independent producer, which has highlighted its oil holdings in Colombia's Magdalena Valley and in two other Latin American countries in presentations to investors for years. The company has invested significant capital in its international properties, building an asset base of more than 9 million acres in three Latin American countries. Harken owns current production and pipeline facilities, undrilled proved reserves, significant drilling prospects and large areas with many prospect leads. Harken intends to retain a significant ownership in the assets going forward via an equity ownership stake in the combined international entity. It has retained RP&C International Ltd. of London to assist it in determining an appropriate placement and venue for the properties. "Although our 2001 capital expenditure program is being implemented as planned, the company will continue to evaluate our priorities as we assess the impact of the increased security issues in Colombia," says Harken chairman Mikel D. Faulkner. But security isn't the only risk energy companies face in Colombia and Latin America. For smaller oil companies, the capital requirements to develop fields can be a formidable hurdle, says R Lewis Ropp, an E&P analyst with Frost Securities in Dallas. "The length of time that it takes from initial discovery to actual commerciality and cash flow can be several years. So a small company just doesn't have the firepower to be able to do that. Obviously, that's the issue. What's the net present value? How do you finance those things without going under in the interim?" With some of its international worries out of the way, Harken will concentrate on its U.S. assets, especially its gas prospects in the Gulf Coast region.