approximately 16,000 barrels of oil per day following the December 17, 2008 OPEC meeting establishing new production quotas. However, Petrodelta has been allowed to produce at capacity to help fulfill other companies' production shortfalls, thus averaging 19,200 barrels of oil per day during the three months ended March 31, 2009.
Petrodelta shareholders intend that the company be self-funding and rely on internally-generated cash flow to fund operations. The management and board of directors of Petrodelta have taken actions to reduce both operating and capital expenditures. On April 23, 2009, Petrodelta's board of directors endorsed a 2009 budget for Petrodelta's Business Plan. The proposed 2009 budget has been submitted to Petrodelta's shareholders for approval. For 2009, the drilling program includes utilizing two rigs to drill development and appraisal wells for both maintaining production capacity and appraising the substantial resource bases in the presently non-producing Isleņo and El Salto fields. Petrodelta began the appraisal and testing of its large portfolio of undeveloped resources in the second quarter of 2009. Currently, Petrodelta has one drilling rig operating the Temblador field. A second rig, which was drilling in the Uracoa field during the first quarter of 2009, was moved to the El Salto field and began the appraisal drilling of that field on April 30, 2009.
On April 23, 2009, Petrodelta's board of directors declared a dividend of $51.9 million, $20.8 million net to HNR Finance ($16.6 million net to our 32 percent interest). HNR Finance has already received the cash related to this dividend in the form of the advance dividend received in October 2008.
In 2005, Venezuela modified the Science and Technology Law (referred to as "LOCTI" in Venezuela) to require companies doing business in Venezuela to invest, contribute, or spend a percentage of their gross revenue on projects to promote inventions or investigate technology in areas deemed critical to Venezuela. LOCTI requires major corporations engaged in activities covered by the Hydrocarbon and Gaseous Hydrocarbon Law ("OHL") to contribute two percent of their gross revenue generated in Venezuela from activities specified in the OHL. The contribution is based on the previous year's gross revenue and is due the following year. LOCTI requires that each company file a separate declaration stating how much has been contributed; however, waivers have been granted in the past to allow PDVSA to file a declaration on a consolidated basis covering all of its and its consolidating entities liabilities. PDVSA was granted a waiver to file its 2008 declaration on a consolidated basis, and based on this waiver, Petrodelta reversed $12.4 million, $6.2 million net of tax ($2.0 million net to our 32 percent interest) for contributions to LOCTI in the fourth quarter 2008. The waiver to file the declaration on a consolidated basis has to be requested each year and granted each year. Petrodelta has accrued $2.4 million, $1.2 million net of tax ($0.4 million net to our 32 percent interest) for the three months ended March 31, 2009 for the LOCTI contributions as required by the OHL. This accrual will be reassessed when notification is received regarding a 2009 waiver.
Certain operating statistics for the three months ended March 31, 2009 and 2008 for the Petrodelta fields operated by Petrodelta are set forth below. This information is provided at 100 percent. This information may not be representative of future results.

                                                                   Three Months Ended        Three Months Ended
                                                                     March 31, 2009            March 31, 2008

Oil production (million barrels)                                               1.7                       1.2
Natural gas production (billion cubic feet)                                    1.4                       3.2
Barrels of oil equivalent                                                      2.0                       1.7
Cash operating costs ($millions)                                              11.7                      14.3
Capital expenditures ($millions)                                              29.7                      13.2

Crude oil delivered from the Petrodelta fields to PDVSA is priced with reference to Merey 16 published prices, weighted for different markets and adjusted for variations in gravity and sulphur content, commercialization costs and distortions that may occur given the reference price and prevailing market conditions. Market prices for crude oil of the type produced in the fields operated by Petrodelta averaged approximately $40.60 and $79.02 a barrel for the three months ended March 31, 2009 and 2008, respectively. The price for natural gas is $1.54 per thousand cubic feet.

United States
Gulf Coast - West Bay
During the three months ended March 31, 2009, operational activities in the West Bay prospect, one of the two initial prospects of the AMI, included the interpretation of 3-D seismic, site surveying, and preparation of engineering documents. On December 8, 2008, we submitted an Application to Install Structures to Drill and Produce Oil and Gas with the U.S. Army Corps of Engineers - Galveston District ("Corp of Engineers"). On April 7, 2009, the Corps of Engineers completed internal review of the permit application and posted the application for public review and comment. The public comment period expired on May 6, 2009. Dependent of the results of the 3-D seismic interpretation, drilling is expected to commence upon receipt of the requisite permit from the Corps of Engineers, which we expect to obtain in late 2009 or early 2010. For the three months ended March 31, 2009, we incurred $0.4 million for land acquisition, seismic interpretation, surveying, preliminary engineering and permitting. The expected remaining 2009 budget for this project is $0.1 million, exclusive of the cost of drilling the well. Western United States - Antelope
During the three months ended March 31, 2009, operational activities in the Antelope prospect primarily focused on continuing leasing activities, concentrating primarily on Allottee leases administered by the Bureau of Indian Affairs. Other operational activities included surveying, preliminary engineering, and permitting preparations for a deep natural gas test well that is expected to spud either late in the second quarter or early in the third quarter of 2009. On February 10, 2009, we filed a Request for Agency Action with the Board of the State of Utah Department of Natural Resources Division of Oil, Gas, and Mining ("DOGM") requesting establishment of 640 acre spacing of the lands associated with the deep natural gas test well. Also on February 10, 2009, we filed a Request for Agency Action with the Board of DOGM requesting Force Pooling of the non-consenting interests in the proposed deep test well. The Board of DOGM is scheduled to hear these two requests on May 27, 2009. Although we do not expect the two requests to be dismissed, we are unable to predict an outcome at this time. On April 21, 2009, we filed an Application for Permit to Drill the deep natural gas test well with DOGM. We anticipate approval of the Permit to Drill in late second quarter 2009. During the three months ended March 31, 2009, we incurred $8.3 million for lease acquisition, seismic program planning, surveying, permitting and site preparation. The expected remaining 2009 budget for this project is $10.0 million.
In December 2008, we filed Applications for Permits to Drill eight shallow oil wells with DOGM. On April 22, 2009, the Board of DOGM approved our proposal establishing 40 acre spacing for the eight shallow oil wells. We expect to receive Permits to Drill the eight shallow oil wells in the near future. The Board of DOGM is scheduled to hear our request for Force Pooling of the non-consenting interests in the eight proposed shallow oil wells at a hearing on May 27, 2009. The cost of the eight shallow oil wells will be borne 50 percent by us and 50 percent by the other party participating in the project. We expect to commence drilling of the eight shallow oil wells in the next 12 months. Budong-Budong Project, Indonesia ("Budong PSC") The acquisition program of 650 kilometers of 2-D seismic was completed in 2008. Current activities include the continued processing and interpretation of the 2-D seismic and well planning. It is expected that the first of two exploration wells will spud in the second half of 2009. In accordance with the farm-in agreement, we expect to fund 100 percent of the well expenditures to earn our 47 percent working interest up to a cap of $10.7 million; thereafter, we will pay in proportion to our working interest. During the three months ended March 31, 2009, we incurred $0.6 million for the 2-D seismic processing and interpretation. The projected 2009 project expenditures (net to us including our funding commitment) for the exploratory well drilling are $8.1 million.

Dussafu Project - Gabon ("Dussafu PSC")
The acquisition of 650 kilometers of 2-D seismic was completed in 2008. Current activities include the continued processing of the 2-D seismic to define the syn-rift potential similar to the Lucina and M'Bya fields and reprocessing of 1,076 square kilometers of existing 3-D seismic to define the sub-salt structure to unlock the potential of the Gamba play that is producing in the Etame field to the north. We expect the seismic to mature the prospect inventory to make a decision in 2009 for a well in 2010. During the three months ended March 31, 2009, we incurred $0.2 million for seismic processing and reprocessing. The projected 2009 project expenditures (net to our working interest) for exploration activities are $2.0 million. This includes $1.8 million of well planning and long-lead well items if the decision is made to drill a well.
Oman
On April 11, 2009, we signed an Exploration and Production Sharing Agreement ("EPSA") with the Sultanate of Oman ("Oman") for the Al Ghubar / Qarn Alam license block. We will have a 100 percent working interest in the EPSA during the exploration phase. Oman Oil Company will have the option to back-in to up to a 20 percent interest in the block after the discovery of gas.
The Al Ghubar / Qarn Alam license is a newly-created block designated for exploration and production of non-associated gas and condensate which the Oman Ministry of Oil and Gas has carved out of the Block 6 Concession operated by Petroleum Development of Oman ("PDO"). PDO will continue to produce oil from several fields within the block area. The 3,867 square kilometer (955,600 acres) block is located in the gas and condensate rich Ghaba Salt Basin in close proximity to the Barik, Saih Rawl and Saih Nihayda gas and condensate fields. We expect to spend $4.8 million in 2009 for signature bonus, processing and interpretation of existing 3-D seismic and drilling preparations. We have an obligation to drill two wells over a three year period. Other Exploration Projects
Relating to other projects, we incurred $0.6 million during the three months ended March 31, 2009. We have budgeted to spend $1.6 million in leasehold acquisition costs, $4.5 million in seismic acquisition and processing costs and $2.8 million on other project related costs in 2009.
Either one of the two exploratory wells to be drilled in 2009 on the Antelope project and the Budong PSC can have a significant impact on our ability to obtain financing, record reserves and generate cash flow in 2010 and beyond. Capital Resources and Liquidity
Working Capital. Our capital resources and liquidity are affected by the ability of Petrodelta to pay dividends. On April 23, 2009, Petrodelta's board of directors declared a dividend of $51.9 million, $20.8 million net to HNR Finance ($16.6 million net to our 32 percent interest). HNR Finance has already received the cash related to this dividend in the form of the advance dividend received in October 2008. We expect to receive future dividends from Petrodelta; however, we expect the amount of any future dividends to be much lower over the next several years as Petrodelta reinvests most of its earnings into the company in support of its drilling and appraisal activities. In addition to reinvesting earnings into the company in support of its drilling and appraisal activities, the recent decline in the price per barrel affects Petrodelta's ability to pay dividends. Until oil prices increase, all available cash will be used to meet current operating requirements and will not be available for dividends. See Item 1A - Risk Factors and Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2008 for a complete description of the situation in Venezuela and other matters.
The net funds raised and/or used in each of the operating, investing and financing activities are summarized in the following table and discussed in further detail below:

                                                                      Three Months Ended March 31,
                                                                       2009                   2008
                                                                             (in thousands)

Net cash provided by (used in) operating activities               $        (8,707 )       $         321
Net cash used in investing activities                                      (9,333 )              (3,719 )
Net cash used in financing activities                                        (716 )                 (31 )

Net decrease in cash                                              $       (18,756 )       $      (3,429 )

At March 31, 2009, we had current assets of $95.8 million and current liabilities of $37.5 million, resulting in working capital of $58.3 million and a current ratio of 2.6:1. This compares with a working capital of $77.0 million and a current ratio of 3.0:1 at December 31, 2008. The decrease in working capital of $18.7 million was primarily due to an increase in capital expenditures, exploration costs and income taxes payable and a reduction in accrued expenses.
Cash Flow from Operating Activities. During the three months ended March 31, 2009, net cash used in operating activities was approximately $8.7 million. During the three months ended March 31, 2008, net cash provided by operating activities was approximately $0.3 million. The $9.0 million decrease was primarily due to repayments of advances to equity affiliate received by HNR Finance in the first quarter of 2008.
Cash Flow from Investing Activities. During the three months ended March 31, 2009, we had cash capital expenditures of approximately $7.1 million. Of the 2009 expenditures, $4.8 million was attributable to activity on the Antelope project and $2.3 million was attributable to other projects. During the three months ended March 31, 2008, we had cash capital expenditures of approximately $3.3 million. Of the 2008 expenditures, $0.3 million was attributable to activity on the West Bay prospect and $3.0 million was attributable to the Antelope project.
During the three months ended March 31, 2009, we deposited with a U.S. bank $1.7 million as collateral for two standby letters of credit issued in support of bank guarantees required as part of a project bidding process. During the three months ended March 31, 2009 and 2008, we incurred $0.5 million and $0.4 million, respectively, of investigatory costs related to various international and domestic exploration studies.
With the conversion to Petrodelta, Petrodelta's capital commitments will be determined by their business plan. Petrodelta's capital commitments will be funded by internally generated cash flow. Our budgeted capital expenditures will be funded through our existing cash balances and future Petrodelta dividends.
Cash Flow from Financing Activities. During the three months ended March 31, 2009, we incurred $0.8 million in legal fees associated with prospective financing. During the three months ended March 31, 2008, we paid a dividend of $0.4 million to the noncontrolling interest in Harvest-Vinccler Dutch Holding, B.V. and redeemed the noncontrolling interest in our Barbados affiliate. Results of Operations
You should read the following discussion of the results of operations for the three months ended March 31, 2009 and 2008 and the financial condition as of March 31, 2009 and December 31, 2008 in conjunction with our consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2008.
Three Months Ended March 31, 2009 Compared with Three Months Ended March 31, 2008
We reported a net loss attributable to Harvest of $4.8 million, or $0.15 diluted earnings per share, for the three months ended March 31, 2009 compared with net income of $1.2 million, or $0.03 diluted earnings per share, for the three months ended March 31, 2008.

Total expenses and other non-operating (income) expense (in millions):

                                              Three Months Ended
                                                  March 31,             Increase
                                               2009          2008      (Decrease)
          Exploration expense               $    1.0       $  1.3       $   (0.3 )
          General and administrative             6.5          6.2            0.3
          Taxes other than on income             0.3          0.3              -
          Gain on financing transactions           -         (1.3 )          1.3
          Investment earnings and other         (0.3 )       (1.1 )          0.8
          Interest expense                         -          0.5           (0.5 )
          Income tax expense                     0.9          0.1            0.8

Our accounting method for oil and gas properties is the successful efforts method. During the three months ended March 31, 2009, we incurred $0.5 million of exploration costs related to the processing and reprocessing of seismic data related to ongoing operations, and $0.5 million related to other general business development activities. During the three months ended March 31, 2008, we incurred $1.3 million of exploration costs related to the purchase of seismic data related to our U.S. operations.
General and administrative costs were higher in the three months ended March 31, 2009 compared to the three months ended March 31, 2008 primarily due to employee related expenses. Taxes other than on income for the three months ended March 31, 2009 were consistent with that of the three months ended March 31, 2008.
During the three months ended March 31, 2008, we entered into an exchange transaction exchanging U.S. government securities for U.S. Dollar indexed debt issued by the Venezuelan government. This security exchange transactions resulted in a $1.3 million gain on financing transactions for the three months ended March 31, 2008. There was no gain on financing transactions for the three months ended March 31, 2009.
Investment earnings and other decreased due to lower interest rates earned on lower average cash balances. Interest expense was lower for the three months ended March 31, 2009 compared to the three months ended March 31, 2008 due to the repayment of debt in 2008.
For the three months ended March 31, 2009, income tax expense was higher than that of the three months ended March 31, 2008 primarily due to additional income tax to be assessed in the Netherlands for 2007 and 2008 of $0.7 million as a result of financing activities, which is being recorded in the first quarter of 2009, and additional current income tax in the Netherlands of $0.2 million due to interest income earned from loans to affiliates and on cash in the bank offset by the income tax on the $1.3 million gain on financing transactions occurring in the three months ended March 31, 2008.
Effects of Changing Prices, Foreign Exchange Rates and Inflation Our results of operations and cash flow are affected by changing oil prices. Fluctuations in oil prices may affect our total planned development activities and capital expenditure program.
Venezuela has imposed currency exchange restrictions. This currency exchange restriction or adjustment in the exchange rate has not had a material impact on us at this time. Dividends from Petrodelta will be denominated in U.S. Dollars when paid. We have not encountered currency restrictions in other countries in which we operate or have offices. Local reporting and large transactions are denominated in U.S. Dollars. During the three months ended March 31, 2009 and 2008, our net foreign exchange gains attributable to our international operations were minimal. The U.S. Dollar and Bolivar exchange rates have not been adjusted since March 2005. However, there are many factors affecting foreign exchange rates and resulting exchange gains and losses, most of which are beyond our control. It is not possible for us to predict the extent to which we may be affected by future changes in exchange rates and exchange controls.
Within the United States and the other counties in which we operate or have offices, except for Venezuela, inflation has had a minimal effect on us, but it is potentially an important factor with respect to Petrodelta's results of operations.

An exemption under the Venezuelan Criminal Exchange Law for transactions in certain securities results in an indirect securities transaction market of foreign currency exchange, through which companies may obtain foreign currency legally without requesting it from the Venezuelan government. Publicly available quotes do not exist for the securities transaction exchange rate but such rates may be obtained from brokers. Securities transaction markets are used to move financial securities in and out of Venezuela. . . .