2010-01-14-2009-10-22-2009-12-22

Acquired company with assets in AB, SK, BC, gaining 51,000 BOE/d, 219.9 MMBOE 2P.

State-owned oil company Korea National Oil Corp. has closed its acquisition of Harvest Energy Trust, Calgary, for approximately C$4.1 billion in cash and debt. KNoc paid C$10 per Harvest unit for total cash consideration of approximately C$1.8 billion plus the assumption of C$2.3 billion of Harvest debt. The price represented a 47% premium over the 30-day weighted average through Oct. 20. Harvest is an integrated oil company with upstream operations and downstream refining and marketing operations. Upstream operations are concentrated in the Chedderville, Crossfield, Bellshill, Lloydminster, Wainwright, Suffield and Red Earth areas of Alberta; the Kindersley and Kenosee areas of Saskatchewan; and the Hay River area of British Columbia. Production is 51,000 barrels of oil per day (71% oil). Proved plus probable reserves are 219.9 million barrels of oil equivalent as of year-end 2008. Upside includes more than 500,000 acres of undeveloped land and more than 1,000 drilling locations. Downstream operations include a 115,000-barrel-per-day medium sour hydrocracking refinery in Newfoundland. Concurrent with the deal, Harvest repaid approximately C$600 million of bank debt and entered into an amended $600-million credit facility with a syndicate of lenders. Harvest president and chief executive John Zahary, who will continue to lead the acquired company's management team, says, "We are extremely pleased to announce this transaction, which provides substantial value to our investors. Harvest has a considerable portfolio of opportunities including large oil in place assets coupled with production and throughput expansion opportunities in the upstream and downstream segments respectively. Continued investment by KNoc will supplement this growth." Harvest was advised by TD Securities Inc. and represented by Burnet, Duckworth & Palmer LLP during the sale. Bennett Jones LLP was legal counsel and Bank of America Merrill Lynch was advisor to KNoc. Harvest's shares have been delisted from the New York and Toronto stock exchanges. The company says it had planned to convert from a trust model to a corporate structure by year-end 2010 in advance of Canadian laws affecting trusts.