KNOC Canada affiliate in staff shake-up

Debt: Harvest deals with mounting obligations

Korea-owned Canadian player Harvest Operations has laid off dozens of employees, including two vice presidents, and accepted the resignation of its chief executive.

Calgary-based Harvest, which is owned by Korean National Oil Corporation, said in a statement this week that it has slashed its workforce by 34% since the beginning of 2015.

These layoffs affected permanent staff, temporary staff and contractors, Harvest said.

Among the people "no longer with the company" are vice president and controller Phil Reist and vice president of technical services Erik van Noort. They left at the end of February.

Also last month, Kyungluck Sohn tendered his resignation as president and chief executive. Piljong Sung, the company's chief strategy officer, has been named the interim chief executive.

Chief operating officer Jeff Tooth, who replaced John Wearing in the role last month, said on a quarterly conference call this week that the most recent round of layoffs affected 67 people in Calgary and in the field.

The management shake-up comes as Harvest struggles to deal with its debt obligations. The company said that at the end of 2015 it was in violation of an amended US$1 billion credit facility backed by parent KNOC. The carrying value of the credit facility - about US$923.8 million - had been reclassified from long-term debt to a current liability, the company said.

Early this year, Harvest's syndicate banks agreed to waive the new covenant. The maturity date remains at 30 April 2017, Harvest said.

Harvest posted a loss of C$909.7 million in the last three months of 2015, compared to a loss of $337.5 million a year earlier.

The losses in 2015 were mainly due to asset impairment expense of C$391.1 million and C$765.3 million for the quarter and full year, respectively, Harvest said.

Production for 2015 was 41,735 barrels of oil equivalent per day.

Harvest said it has also closed on the acquisition of Hunt Oil's Canada affiliate, a C$37.1 million cash purchase aimed at consolidating a position in the Bilbo area. Harvest had bought a large chunk of Hunt assets in Canada in a C$525 million in 2010.

Also in the fourth quarter of 2015, Harvest added certain gas assets worth C$57.5 million to its Deep Basin Partnership.

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