InterOil Announces 2012 Third Quarter Financial and Operating Results

PORT MORESBY, Papua New Guinea and HOUSTON, Nov. 15, 2012 /PRNewswire/ -- InterOil Corporation (NYSE: IOC) (POMSoX:IOC) today announced financial and operating results for the third quarter ended September 30, 2012 and also certain recent developments.

Third Quarter 2012 Highlights and Recent Developments

  • Net profit for the quarter ended September 30, 2012 was $5.3 million.  Operating segments of Corporate, Midstream Refining and Downstream collectively derived a net profit for the quarter of $16.8 million, while the investments in the development segments of Upstream and Midstream Liquefaction resulted in a net loss of $11.5 million.
  • After successfully running and cementing 13 3/8 inch casing at 3,632 feet (1,107 meters) at Antelope-3, InterOil's rig 2 has drilled the well to a depth of 5,013 feet (1,528 meters). Forward plan is to drill to the top of the Antelope reservoir estimated at 5,545 feet (1,690 meters) and then continue on to total depth of 8,366 feet (2,550 meters), followed by wireline logging, rotary sidewall coring and drill stem testing.
  • Rig 3 is being mobilized to the Elk-3 drilling location. With access roads from both the north and the south and a central upstream development camp in place, InterOil is set to begin drilling the second of two obligation wells in Petroleum Retention License (PRL) 15. The Company's Tuna and Wahoo/Mako prospects, targeting seismically defined reefal indications, in PPLs 236 and 238 have matured to the drill ready stage and preparations to access to the proposed drilling locations are underway.
  • Subsequent to quarter end, on October 16, 2012, the Company entered into a five year amortizing $100 million secured term loan facility with BNP Paribas Singapore, Bank South Pacific Limited, and Australia and New Zealand Banking Group (PNG) Limited which was used to repay indebtedness under the OPIC loan, with the remaining amount to be used for general corporate purposes.  The loan is secured by the assets of the refinery and bears interest at LIBOR plus 6.5%.

InterOil's Chief Executive Officer Phil Mulacek commented, "We are pleased with the progress in our negotiations with the Government of PNG related to our proposal to develop a 3.8 million tonne per annum LNG project in the Gulf Province."

As to the Antelope-3 well, Mr. Mulacek noted that, "We are very encouraged by the progress in drilling the Antelope-3 well to near the top of the reservoir. This well is expected to further appraise our resourses.

Our prospect inventory is maturing and we anticipate that it will support our goal of a multi-year, multi-well exploration program.  We believe that these achievements, combined with our strong balance sheet, support our continued growth and operational success."

Corporate Financial Results

Net profit for the quarter ended September 30, 2012 was $5.3 million compared with a net loss of $19.8 million for the same period in 2011, an increase of $25.1 million.  Operating segments of Corporate, Midstream Refining and Downstream collectively derived a net profit for the quarter of $16.8 million, while the investments in the development segments of Upstream and Midstream Liquefaction resulted in a net loss of $11.5 million during the quarter.

The improvement in net profit for the quarter was mainly due to a $29.4 million increase in gross margin attributable to the positive crude oil and refined product price movements during the quarter and higher margins from export cargos, among other items.

Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter ended September 30, 2012 was a gain of $19.0 million versus a loss of $11.5 million for the same period in 2011.

Total revenues increased by $45.0 million from $281.9 million in the quarter ended September 30, 2011 to $326.9 million in the third quarter of 2012, primarily due to higher sales volumes during the period. The total volume of all products sold by us was 2.2 million barrels for quarter ended September 30, 2012, compared with 1.8 million barrels in the same quarter of 2011.

Business Segment Results as of September 30, 2012

Upstream - On July 27, 2012, InterOil executed a farm in agreement with Pacific Rubiales Energy Corp. ("PRE") for PRE to be able to earn a 10.0% net (12.9% gross) participating interest in the PPL 237 onshore Papua New Guinea, including the Triceratops structure located within that license.  Rig release from the Triceratops-2 well was received from PNG Department of Petroleum & Energy on August 13, 2012.  The Triceratops-2 well has been suspended as a new discovery for recompletion at a later date as a future production well.  Demobilization of Rig 2 began immediately for relocation to the Antelope-3 location.  As of September 30, 2012, PRE has paid $40.0 million of the $116 million of staged up-front cash payments. Planning of new seismic and drilling location is in progress, and will be finalized once the remapping is complete.

The Antelope-3 well was spud on September 30, 2012. Subsequent to the quarter end, the well was drilled to a depth of 3,642 feet, (1,110 meters), at which depth the 13 ¾ inch casing was set and cemented. Following which, drilling resumed with a 12 ¼ inch bit to the current depth of 5,013 feet (1,528 meters). Forward plan is to drill to the top of the Antelope reservoir estimated at 5,545 feet (1,690 meters), set the second casing string and then continue on to total depth of 8,366 feet (2,550 meters), followed by wireline logging, rotary sidewall coring and drill stem testing.

Pre-spud preparation at the Elk-3 delineation well site is nearing completion. We have begun mobilization of our Rig 3 to the field. All components of Rig 3 have shipped out of Port Moresby by barge to Hou Creek. The objective of the Elk-3 delineation well is to test the Early Miocene to Late Oligocene limestone section above the gas water contact in the Elk fault block.  The Early Miocene to Late Oligocene interval in the Elk-2 well was comprised of shallow marine and reefoid facies below the gas water contact.  This lower interval exhibited better porosity and permeability than the shallower facies penetrated in the upper reservoir.

Our Hou Creek northern wharf and field access roadway are progressing to completion, and a permanent camp location is under construction. The wharf and crane are functioning and ready to accept materials and equipment. InterOil has also completed the upstream field development camp near the Antelope-3 wellsite and drilling crews are utilizing those accommodations.

InterOil's Upstream business realized a net loss of $10.9 million in the third quarter of 2012 compared to a net loss of $15.1 million in the comparable period a year ago. The decrease in the loss in 2012 was mainly due to reduced exploration costs incurred for seismic activity coupled with an increase in gain on the sale of oil and gas properties due to the gain recognized on sale of interest in PPL 237 to PRE. The positive variance was partially offset by higher interest expense due to an increase in inter-company loan balances.

Midstream Refining – Total refinery throughput for the quarter ended September 30, 2012 was 23,980 barrels per operating day, compared with 23,797 barrels per operating day during quarter ended September 30, 2011.

Capacity utilization of the refinery for the quarter ended September 30, 2012, based on 36,500 barrels per day operating capacity, was 61% compared with 56% for the same quarter in 2011.  During the quarters ended September 30, 2012 and 2011, our refinery was shut down for 9 days and 15 days, respectively, for general maintenance activities.

Subsequent to quarter end, on October 16, 2012, the Company entered into a five year amortizing $100 million secured term loan facility with BNP Paribas Singapore, Bank South Pacific Limited, and Australia and New Zealand Banking Group (PNG) Limited.  On November 9, 2012, borrowings under the facility were used to repay all outstanding amounts under the term loan granted by OPIC and the remaining funds will be used for general corporate purposes.  The loan is secured by the assets of the refinery and bears interest at LIBOR plus 6.5%.

The Company's Midstream Refining operations generated a net profit of $5.4 million in the third quarter of 2012 versus a loss of $1.2 million in the prior year period. The positive variance is largely due to an improvement in gross margin resulting from improved crude oil and refined product prices, which were partially offset by higher derivative losses incurred for commodity contracts settled during the periods, a decrease in foreign exchange gains and increased income tax expense.

Midstream Liquefaction – Following receipt of the required PNG Government approvals, InterOil believes it will be able to conclude the LNG partnering process. We have made significant progress with FEED engineering studies, construction of roads and camps, social mapping and genealogical studies, which will assist in the partnering and execution of the project.

The Company's Midstream Liquefaction business generated a net loss of $0.6 million in the third quarter of 2012 compared with a loss of $4.0 million in the same period a year ago. The positive variance is largely due to a decrease in office, administration and other expenses related to the midstream facilities of the LNG Project development which are not capitalized.

Downstream - Total Downstream sales volumes for the quarter ended September 30, 2012 were 185.0 million litres, an increase of 22.5 million litres, or 13.8%, over the same quarter in 2011.

We believe that the PNG economy remains strong with continued robust activity in the resource sector although this is tempered by certain construction projects for the ExxonMobil LNG project now nearing an end.  For this reason and with the completion of many construction projects in the commercial office and residential sectors, it is believed that demands will flatten in the short term for diesel and jet A1.

Our retail business sector continues to grow with the roll out of new electronic systems for our retail pumps and truck stops, and it is our intention to start operating our first retail site during the fourth quarter 2012.

InterOil's Downstream operations generated a net profit of $5.6 million in the third quarter of 2012, an improvement of $4.5 million versus a profit of $1.1 million in the previous year.  The positive variance is largely due to an increase in gross margins mainly due to an increase in domestic sales volumes, which was partially offset by reduced foreign exchange gains and increased income tax expense.

Corporate – The Corporate segment generated a net profit of $7.8 million in the third quarter of 2012, compared to a net loss of $0.5 million in the same period of 2011. The positive variance is largely the result of a decreased loss on FLEX LNG investment, a decrease in office and administration expense, and higher interest income, which was partially offset by a decrease in inter-segment recharges.

Summary of Consolidated Quarterly Financial Results for Past Eight Quarters

Quarters ended

($ thousands except per share data)

2012

2011

2010

Sep-30

Jun-30

Mar-31

Dec-31

Sep-30

Jun-30

Mar-31

Dec-31

Upstream

2,216

1,727

2,284

1,891

2,645

4,638

668

245

Midstream – Refining

274,671

236,006

302,310

237,640

231,455

262,111

217,743

158,092

Midstream – Liquefaction

-

-

-

-

-

-

-

-

Downstream

201,749

223,620

218,974

209,678

186,304

191,431

157,709

143,364

Corporate

26,880

24,742

24,757

21,831

25,078

26,548

18,659

15,213

Consolidation entries

(178,652)

(186,990)

(210,174)

(181,428)

(163,584)

(180,945)

(151,125)

(122,545)

Total revenues

326,864

299,105

338,151

289,612

281,898

303,783

243,654

194,369

Upstream

956

(5,730)

(6,374)

665

(6,169)

593

(10,957)

(41,681)

Midstream – Refining

13,417

(42,647)

18,933

2,604

3,461

27,967

26,632

13,780

Midstream – Liquefaction

11

676

(1,406)

(4,123)

(3,602)

(4,035)

(2,375)

(1,959)

Downstream

9,275

11,102

21,414

6,808

3,570

5,777

8,744

4,709

Corporate

9,841

9,975

9,188

10,134

1,548

13,940

5,223

4,566

Consolidation entries

(14,503)

(9,871)

(14,216)

(11,280)

(10,263)

(5,269)

(9,200)

(7,004)

EBITDA (1)

18,997

(36,495)

27,539

4,808

(11,455)

38,973

18,067

(27,589)

Upstream

(10,936)

(15,532)

(17,244)

(9,402)

(15,080)

(6,703)

(17,949)

(47,845)

Midstream – Refining

5,358

(32,969)

11,320

15,684

(1,201)

17,314

14,894

9,504

Midstream – Liquefaction

(573)

93

(1,969)

(4,574)

(3,980)

(4,309)

(2,604)

(2,114)

Downstream

5,626

6,045

13,195

3,621

1,146

2,306

4,491

2,643

Corporate

7,849

8,445

6,270

7,616

(473)

11,275

3,463

3,381

Consolidation entries

(1,988)

2,205

(2,136)

252

(190)

3,657

(1,596)

(401)

Net profit/(loss)

5,336

(31,713)

9,436

13,197

(19,778)

23,540

699

(34,832)

Net profit/(loss) per share (dollars)









Per Share – Basic

0.11

(0.66)

0.20

0.27

(0.41)

0.49

0.01

(0.76)

Per Share – Diluted

0.11

(0.66)

0.19

0.27

(0.41)

0.48

0.01

(0.76)

(1)

EBITDA is a non-GAAP measure, please refer to "Non-GAAP EBITDA Reconciliation" in this press release.

Balance Sheet and Liquidity
InterOil closed the third quarter ended September 30, 2012 with cash, cash equivalents and cash restricted totaling $96.9 million (September 30, 2011 - $144.4 million), of which $39.6 million is restricted (September 30, 2011 - $30.1 million).

We also had aggregate working capital facilities of $307.3 million, with $21.1 million available for use in our Midstream Refining operations, and $49.4 million available for use in our Downstream operations.

The Company is managing its gearing levels by maintaining the debt-to-capital ratio (debt/(shareholders' equity + debt)) at 50% or less.  Our debt-to-capital ratio was 13.0% as of September 30, 2012 which compares to 12.7% as of September 30, 2011.

Subsequent to the close of the third quarter, on October 16, 2012, we entered into a five year amortizing $100 million secured term loan facility with BNP Paribas Singapore, Bank South Pacific Limited, and Australia and New Zealand Banking Group (PNG) Limited.  On November 9, 2012, borrowings under the facility were used to repay all outstanding amounts under the term loan granted by OPIC, and the remaining funds will be used for general corporate purposes. The loan is secured by the assets of the refinery and bears interest at LIBOR plus 6.5%.

Summary of Debt Facilities
Summarized below are the debt facilities available to us and the balances outstanding as at September 30, 2012.

Organization

Facility

Balance outstanding

Sept 31, 2012

Effective interest rate

Maturity date

OPIC secured loan (1)

$31,000,000

$31,000,000

7.06%

December 2015

BNP Paribas working capital facility

$240,000,000

$69,174,302 (2)

2.70%

January 2013

Westpac PGK working capital facility

facility

$43,245,000

$10,898,580

10.0%

November 2014

BSP PGK working capital facility

$24,025,000

$7,003,404

9.95%

August 2013

Westpac secured loan

$12,857,000

$12,857,000

4.77%

September 2015

2.75% convertible notes

$70,000,000

$70,000,000

7.91%(3)

November 2015

Mitsui unsecured loan (4)

$11,912,297

$11,912,297

6.25%

See detail below



(1)

Subsequent to the end of the quarter we entered into a new $100 million loan facility and on November 9,2012, used a portion of the proceeds from this facility to repay all amounts under the OPIC facility

(2)

Excludes letters of credit totaling 149.7 million, which reduce the available balance of the facility to $21.1 million at September 30, 2012.

(3)

Effective rate after bifurcating the equity and debt components of the $70 million principal amount of 2.75% convertible senior notes due 2015.

(4)

Facility is to fund our share of the Condensate Stripping Project costs as they are incurred pursuant to the JVOA with Mitsui ("CSP JVOA").



InterOil Corporation

Consolidated Income Statements

(Unaudited, Expressed in United States dollars)







 Quarter ended 

 Nine months ended 







September 30,

September 30,

September 30,

September 30,


2012

2011

2012

2011


$

$

$

$






Revenue





  Sales and operating revenues 

324,109,090

278,499,694

956,335,547

819,484,250

  Interest

23,381

368,768

226,360

952,421

  Other

2,732,247

3,029,088

7,557,014

8,898,772


326,864,718

281,897,550

964,118,921

829,335,443






  Changes in inventories of finished goods and work in progress

(35,607,503)

(31,631,324)

(6,263,770)

43,859,762

  Raw materials and consumables used

(250,722,505)

(238,480,416)

(896,694,438)

(787,256,505)

  Administrative and general expenses 

(11,213,365)

(11,809,956)

(31,174,931)

(33,119,377)

  Derivative (losses)/gains

(4,929,234)

1,914,207

(4,715,186)

1,498,275

  Legal and professional fees

(1,656,287)

(1,538,559)

(3,877,763)

(4,498,526)

  Exploration costs, excluding exploration impairment (note 6)

(2,056,367)

(6,568,147)

(14,660,051)

(16,636,215)

  Finance costs

(4,209,765)

(4,448,608)

(13,646,887)

(13,185,060)

  Depreciation and amortization

(5,435,498)

(5,168,473)

(15,449,807)

(13,980,789)

  Gain on sale of oil and gas properties (note 11)

2,895,000

-

2,895,000

-

  Loss on available-for-sale investment

-

(6,048,537)

-

(1,834,279)

  Foreign exchange (losses)/gains

(3,495,353)

1,918,158

3,990,338

17,696,737


(316,430,877)

(301,861,655)

(979,597,495)

(807,455,977)

Profit/(loss) before income taxes

10,433,841

(19,964,105)

(15,478,574)

21,879,466






Income taxes





  Current tax expense

(2,561,068)

(116,517)

(11,623,696)

(4,488,623)

  Deferred tax (expense)/benefit

(2,537,251)

302,687

10,160,813

(12,930,404)


(5,098,319)

186,170

(1,462,883)

(17,419,027)






Profit/(loss) for the period

5,335,522

(19,777,935)

(16,941,457)

4,460,439






Profit/(loss) is attributable to:





Owners of InterOil Corporation

5,335,522

(19,777,694)

(16,941,457)

4,454,238

Non-controlling interest 

-

(241)

-

6,201


5,335,522

(19,777,935)

(16,941,457)

4,460,439






Basic profit/(loss) per share 

0.11

(0.41)

(0.35)

0.09

Diluted profit/(loss) per share

0.11

(0.41)

(0.35)

0.09

Weighted average number of common shares outstanding





 Basic (Expressed in number of common shares)

48,445,397

47,993,229

48,271,469

47,936,721

 Diluted (Expressed in number of common shares)

48,785,877

47,993,229

48,271,469

48,857,182






See accompanying notes to the consolidated financial statements

InterOil Corporation

Consolidated Balance Sheets 

(Unaudited, Expressed in United States dollars)









As at














September 30,

December 31,

September 30,



2012

2011

2011



$

$

$







Assets





Current assets:





    Cash and cash equivalents

57,291,559

68,846,441

114,330,510


    Cash restricted

33,610,455

32,982,001

23,543,921


    Short term treasury bills - held-to-maturity 

-

11,832,110

11,324,929


    Trade and other receivables 

149,852,154

135,273,600

105,377,991


    Derivative financial instruments 

-

595,440

413,093


    Other current assets

906,644

867,967

755,309


    Inventories (note 5)

164,808,029

171,071,799

170,997,122


    Prepaid expenses

5,891,713

5,477,596

2,361,925


Total current assets

412,360,554

426,946,954

429,104,800


Non-current assets:





    Cash restricted

5,980,832

6,268,762

6,530,817


    Goodwill 

6,626,317

6,626,317

6,626,317


    Plant and equipment

251,556,473

246,043,948

237,330,322


    Oil and gas properties (note 6)

472,077,713

362,852,766

330,346,730


    Deferred tax assets

47,585,649

35,965,273

742,379


    Available-for-sale investments 

5,462,570

3,650,786

5,644,478


Total non-current assets

789,289,554

661,407,852

587,221,043


Total assets

1,201,650,108

1,088,354,806

1,016,325,843


Liabilities and shareholders' equity





Current liabilities:





    Trade and other payables

172,929,668

159,882,177

91,957,476


    Income tax payable

9,592,164

4,085,137

2,883,220


    Derivative financial instruments

371,143

11,457

318,736


    Working capital facilities (note 7)

87,076,286

16,480,503

48,085,248


    Unsecured loan and current portion of secured loans (note 9)

25,198,297

19,393,023

19,393,023


    Current portion of Indirect participation interest (note 10)

13,770,156

540,002

540,002


Total current liabilities

308,937,714

200,392,299

163,177,705


Non-current liabilities:





    Secured loans (note 9)

30,238,125

26,037,166

30,481,180


    2.75% convertible notes liability 

58,175,245

55,637,630

54,816,599


    Deferred gain on contributions to LNG project 

746,834

5,810,775

7,263,210


    Indirect participation interest (note 10)

20,904,686

34,134,840

34,134,387


    Other non-current liabilities (note 11)

20,000,000

-

-


    Asset retirement obligations

4,947,101

4,562,269

4,289,444


    Deferred tax liabilities 

-

1,889,391

-


Total non-current liabilities

135,011,991

128,072,071

130,984,820


Total liabilities

443,949,705

328,464,370

294,162,525


Equity:





Equity attributable to owners of InterOil Corporation:





    Share capital (note 12)

927,913,817

905,981,614

902,114,261


        Authorized - unlimited





        Issued and outstanding - 48,587,461





        (Dec 31, 2011 - 48,121,071)





        (Sep 30, 2011 - 48,000,131)





    2.75% convertible notes 

14,298,036

14,298,036

14,298,036


    Contributed surplus

20,107,937

25,644,245

24,552,456


    Accumulated Other Comprehensive Income

27,736,411

29,380,882

24,164,391


    Conversion options 

12,150,880

12,150,880

12,150,880


    Accumulated deficit 

(244,506,678)

(227,565,221)

(255,143,006)


Total equity attributable to owners of InterOil Corporation

757,700,403

759,890,436

722,137,018


Non-controlling interest 

-

-

26,300


Total equity

757,700,403

759,890,436

722,163,318


Total liabilities and equity

1,201,650,108

1,088,354,806

1,016,325,843

See accompanying notes to the consolidated financial statements

InterOil Corporation

Consolidated Statements of Cash Flows 

(Unaudited, Expressed in United States dollars)







 Quarter ended 

Nine months ended


September 30,

September 30,

September 30,

September 30,


2012

2011

2012

2011


$

$

$

$






Cash flows generated from (used in):










Operating activities





    Net profit/(loss) for the period

5,335,522

(19,777,935)

(16,941,457)

4,460,439

    Adjustments for non-cash and non-operating transactions





      Depreciation and amortization

5,435,498

5,168,473

15,449,807

13,980,789

      Deferred tax 

2,872,882

(66,555)

(13,509,767)

13,355,749

      Gain on sale of exploration assets

(2,895,000)

-

(2,895,000)

-

      Accretion of convertible notes liability

858,478

808,915

2,537,615

2,391,110

      Amortization of deferred financing costs

36,986

55,986

129,959

167,958

      Timing difference between derivatives recognized 





         and settled

1,122,929

(89,857)

955,126

(272,935)

      Stock compensation expense, including restricted stock

2,112,932

4,029,821

5,777,472

11,728,248

      Movement in inventory write down

(24,636,489)

(3,255,318)

-

3,417,882

      Accretion of asset retirement obligation liability

82,774

79,678

248,322

79,678

      Oil and gas properties expensed

2,056,367

6,568,147

14,660,051

16,636,215

      Loss on Flex LNG investment

-

6,048,537

-

1,834,279

      Unrealized foreign exchange loss/(gain)

22,277

(3,763,825)

(876,631)

(1,847,242)

    Change in operating working capital





      (Increase)/decrease in trade and other receivables

(31,466,298)

4,515,067

(23,460,485)

(35,290,574)

      Decrease/(increase) in other current assets and prepaid expenses

2,360,590

637,017

(452,794)

981,399

      Decrease/(increase) in inventories

59,593,399

35,072,018

4,014,645

(37,484,446)

      Increase in trade and other payables

6,708,330

13,422,313

6,017,991

23,754,298

    Net cash generated from/(used in) operating activities

29,601,177

49,452,482

(8,345,146)

17,892,847






Investing activities





    Expenditure on oil and gas properties

(46,034,941)

(35,025,246)

(149,275,108)

(98,420,370)

    Proceeds from IPI cash calls

-

91,138

3,497,542

91,138

    Expenditure on plant and equipment

(12,526,263)

(10,442,871)

(26,026,273)

(23,691,596)

    Proceeds from Pacific Rubiales Energy (conveyance accounted portion)

-

-

20,000,000

-

    Maturity of short term treasury bills

-

(11,324,929)

11,832,110

(11,324,929)

    Acquisition of Flex LNG Ltd shares, including transaction costs

-

-

-

(7,478,756)

    Decrease/(increase) in restricted cash held as security on





       borrowings

906,997

6,453,266

(340,524)

17,203,331

    Change in non-operating working capital





      Increase in trade and other receivables

-

(10,000,000)

-

(10,000,000)

      Increase/(decrease) in trade and other payables

14,342,166

(916,001)

22,892,495

(10,763,171)

    Net cash used in investing activities

(43,312,041)

(61,164,643)

(117,419,758)

(144,384,353)






Financing activities





    Repayments of OPIC secured loan

-

-

(4,500,000)

(4,500,000)

    Proceeds from Mitsui for Condensate Stripping Plant

3,578,489

551,562

3,578,489

9,872,532

    Proceeds from Westpac secured loan

-

-

15,000,000

-

    Repayments of Westpac secured loan

(2,143,000)

-

(2,143,000)

-

    Proceeds from Pacific Rubiales Energy for interest in PPL237

20,000,000

-

20,000,000

-

    Proceeds from working capital facility

24,188,225

(45,633,592)

70,595,783

(3,169,078)

    Proceeds from issue of common shares, net of transaction costs

4,757,023

192,550

10,618,423

2,549,000

  Net cash generated from financing activities

50,380,737

(44,889,480)

113,149,695

4,752,454






Increase/(decrease) in cash and cash equivalents

36,669,873

(56,601,641)

(12,615,209)

(121,739,052)

Cash and cash equivalents, beginning of period

20,623,574

168,439,410

68,846,441

233,576,821

Exchange gains on cash and cash equivalents

(1,888)

2,492,741

1,060,327

2,492,741

Cash and cash equivalents, end of period 

57,291,559

114,330,510

57,291,559

114,330,510

Comprising of:





Cash on Deposit

56,656,729

23,684,485

56,656,729

23,684,485

Term Deposits

634,830

90,646,025

634,830

90,646,025

Total cash and cash equivalents, end of period

57,291,559

114,330,510

57,291,559

114,330,510






See accompanying notes to the consolidated financial statements

NON-GAAP EBITDA Reconciliation
EBITDA represents our net income/(loss) plus total interest expense (excluding amortization of debt issuance costs), income tax expense, depreciation and amortization expense.  EBITDA is used by us to analyze operating performance.  EBITDA does not have a standardized meaning prescribed by GAAP (i.e., IFRS) and, therefore, may not be comparable with the calculation of similar measures for other companies.  The items excluded from EBITDA are significant in assessing our operating results.  Therefore, EBITDA should not be considered in isolation or as an alternative to net earnings, operating profit, net cash provided from operating activities and other measures of financial performance prepared in accordance with IFRS.  Further, EBITDA is not a measure of cash flow under IFRS and should not be considered as such.  For reconciliation of EBITDA to the net income (loss) under IFRS, refer to the following table.

The following table reconciles net income (loss), a GAAP measure, to EBITDA, a non-GAAP measure for each of the last eight quarters.

Quarters ended

($ thousands)

2012

2011

2010

Sep-30

Jun-30

Mar-31

Dec-31

Sep-30

Jun-30

Mar-31

Dec-31

Upstream

956

(5,730)

(6,374)

665

(6,169)

593

(10,957)

(41,681)

Midstream – Refining

13,417

(42,647)

18,933

2,604

3,461

27,967

26,632

13,780

Midstream – Liquefaction

11

676

(1,406)

(4,123)

(3,602)

(4,035)

(2,375)

(1,959)

Downstream

9,275

11,102

21,414

6,808

3,570

5,777

8,744

4,709

Corporate

9,841

9,975

9,188

10,134

1,548

13,940

5,223

4,566

Consolidation Entries

(14,503)

(9,871)

(14,214)

(11,280)

(10,263)

(5,270)

(9,200)

(7,004)

Earnings before interest, taxes, depreciation and amortization

18,997

(36,495)

27,541

4,808

(11,455)

38,972

18,067

(27,589)

Subtract:









Upstream

(11,438)

(10,517)

(9,408)

(8,712)

(7,806)

(7,142)

(6,352)

(5,481)

Midstream – Refining

(1,654)

(2,011)

(2,771)

(3,285)

(2,494)

(2,211)

(1,675)

(1,509)

Midstream – Liquefaction

(584)

(579)

(559)

(445)

(372)

(268)

(223)

(184)

Downstream

(394)

(909)

(1,233)

(1,170)

(1,233)

(1,116)

(826)

(835)

Corporate

(1,540)

(1,535)

(1,510)

(1,498)

(1,477)

(1,641)

(1,395)

(1,158)

Consolidation Entries

12,482

12,044

12,045

11,500

10,041

8,894

7,572

6,571

Interest expense

(3,128)

(3,507)

(3,436)

(3,610)

(3,341)

(3,484)

(2,899)

(2,596)

Upstream

-

-

-

-

-

-

-

-

Midstream – Refining

(3,484)

14,580

(1,948)

19,243

678

(5,677)

(7,298)

(65)

Midstream – Liquefaction

-

-

-

-

-

-

-

36

Downstream

(1,791)

(2,907)

(5,746)

(595)

(297)

(1,449)

(2,623)

(495)

Corporate

177

535

(880)

(493)

(195)

(629)

71

(11)

Consolidation Entries

-

-

-

-

-

-

-

(2)

Income taxes

(5,098)

12,208

(8,574)

18,155

186

(7,755)

(9,850)

(537)

Upstream

(454)

715

(1,462)

(1,355)

(1,105)

(154)

(641)

(683)

Midstream – Refining

(2,921)

(2,891)

(2,894)

(2,878)

(2,846)

(2,764)

(2,765)

(2,700)

Midstream – Liquefaction

0

(4)

(4)

(6)

(6)

(6)

(6)

(7)

Downstream

(1,464)

(1,241)

(1,240)

(1,422)

(894)

(906)

(804)

(737)

Corporate

(629)

(530)

(528)

(527)

(349)

(395)

(435)

(16)

Consolidation Entries

33

32

33

32

32

32

32

33

Depreciation and amortisation

(5,435)

(3,919)

(6,095)

(6,156)

(5,168)

(4,193)

(4,619)

(4,110)

Upstream

(10,936)

(15,532)

(17,244)

(9,402)

(15,080)

(6,703)

(17,949)

(47,845)

Midstream – Refining

5,358

(32,969)

11,320

15,684

(1,201)

17,314

14,894

9,504

Midstream – Liquefaction

(573)

93

(1,969)

(4,574)

(3,980)

(4,309)

(2,604)

(2,114)

Downstream

5,626

6,045

13,195

3,621

1,146

2,306

4,491

2,643

Corporate

7,849

8,445

6,270

7,616

(473)

11,275

3,463

3,381

Consolidation Entries

(1,988)

2,205

(2,136)

252

(190)

3,657

(1,596)

(401)

Net profit/(loss) per segment

5,336

(31,713)

9,436

13,197

(19,778)

23,540

699

(34,832)

About InterOil
InterOil Corporation is developing a vertically integrated energy business whose primary focus is Papua New Guinea and the surrounding region.  InterOil's assets consist of petroleum licenses covering about 3.9 million acres, an oil refinery, and retail and commercial distribution facilities, all located in Papua New Guinea.  In addition, InterOil is a shareholder in a joint venture established to construct an LNG plant in Papua New Guinea.

InterOil's common shares trade on the NYSE in US dollars. 

Investor Contacts for InterOil

Wayne Andrews

Meg LaSalle

Vice President Capital Markets

Investor Relations Coordinator

Wayne.Andrews@InterOil.com

Meg.LaSalle@InterOil.com

The Woodlands, TX USA

The Woodlands, TX USA

Phone: +1-281-292-1800

Phone: +1-281-292-1800

Forward Looking Statements
This press release includes "forward-looking statements" as defined in United States federal and Canadian securities laws. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the InterOil expects, believes or anticipates will or may occur in the future are forward-looking statements, including in particular drilling plans, objectives of drilling plans, timing of drilling plans, further testing of wells, development activities including plans to deploy InterOil's rigs, the development of the proposed LNG processing facility, the ability to attract a strategic LNG partner, timing and success of the LNG partnering process, approval by the PNG Government of InterOil's LNG project, satisfaction of the State of InterOil's development plans and satisfaction of the terms of the 2009 LNG Project Agreement with the State, benefits to stakeholders, the relationship with PRE, characteristics of our resources, completion of the farm-in transaction with PRE, satisfaction and timing of conditions to completion of the farm-in transaction with PRE, timing of FEED on the liquefaction facilities, the economic conditions of PNG and demand for InterOil's products, growth of InterOil's retail business sector and timing of such growth, initiatives and timing of such initiatives, anticipated financial conditions and performance, business prospects, strategies, regulatory developments, the ability to obtain financing on acceptable terms, the ability to identify drilling locations and the ability to develop reserves and production through development and exploration activities. These statements are based on certain assumptions made by the Company based on its experience and perception of current conditions, expected future developments, agreements with third parties, bids received in respect of the LNG partnering process and other factors it believes are appropriate in the circumstances. No assurances can be given however, that these events will occur. Actual results will differ, and the difference may be material and adverse to the Company and its shareholders. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause our actual results to differ materially from those implied or expressed by the forward-looking statements. Some of these factors include the risk factors discussed in the Company's filings with the Securities and Exchange Commission and on SEDAR, including but not limited to those in the Company's Annual Report for the year ended December 31, 2011 on Form 40-F and its Annual Information Form for the year ended December 31, 2011. In particular, there is no established market for natural gas or gas condensate in Papua New Guinea and no guarantee that gas or gas condensate from the Elk, Antelope and Triceratops fields will ultimately be able to be extracted and sold commercially.

Investors are urged to consider closely the disclosure in the Company's Form 40-F, available from us at www.interoil.com or from the SEC at www.sec.gov and its Annual Information Form available on SEDAR at www.sedar.com.

SOURCE InterOil Corporation



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