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From Standard & Poor's Equity ResearchMorgan Keegan upgraded Harvest Natural Resources (HNR
) to outperform from market perform, noting that the company signed a memorandum of understanding for its Venezuela Project.
Analyst Subash Chandra notes the company's signing of the MOU with Petroleos de Venezuela SA for a migration of terms to their joint venture from operating service accord. The analyst says his basic premise is that the company has succeeded in restoring the present value of the field to 2004 levels; that number was $545 million after tax based on 85 million net barrels equivalent. He says that while risks remain, upside exceeds downside, in his view. He says a successful migration may imply a net asset value of $17 to $19 per share.