InterOil Second Quarter 2013 Results

PORT MORESBY, Papua New Guinea and HOUSTON, Aug. 13, 2013 /PRNewswire/ -- InterOil Corporation (NYSE: IOC) (POMSoX:IOC) today announced financial and operating results for the second quarter ended June 30, 2013.

Key Points

  • Strong track record of safety and has achieved over 9 million man hours without a lost time injury.
  • Net loss for the quarter of $13.2 million compared to a loss of $31.7 million for the same period in 2012.
  • InterOil is in negotiation with ExxonMobil Papua New Guinea Ltd relating to PNG PRL 15, which includes the Elk and Antelope fields.
  • Recommencement of exploration activity.
  • Fresh focus on streamlining business units and reducing costs.
  • Former BP and Woodside executive Dr. Michael Hession recently appointed CEO.
  • New $350.0 million working capital facility and $80.0 million non-recourse discounting facility.

Commenting on the results InterOil CEO Dr. Michael Hession said the Company was at an inflection point in its history and the leadership team intended to deliver on the value that had been built during the past sixteen years.

"InterOil is a proud PNG company with great people and excellent assets and remains committed to the further development of PNG", Dr. Hession said.

"We are streamlining the Company to concentrate on our core business activities of oil refining, wholesale and retail petroleum distribution, monetisation of our gas fields and exploration.

"We will pursue a monetisation in a way that provides revenue and employment for the PNG economy, retains up-side for the Company and its shareholders and provides funds for further exploration. All of our activities are aimed at creating value for shareholders in a vertically integrated oil and gas company that has already made major discoveries and has significant exploration potential.

"We will build on our success by resuming our exploration activities and will seek additional exploration partners."

Group Financial Results
InterOil's recorded net loss for the quarter ended June 30, 2013 was $13.2 million, compared with a loss of $31.7 million for the same period in 2012, an improvement of $18.5 million. The decrease in net loss for the quarter was mainly due to a $42.2 million increase in gross margin because of a relatively stable crude and product price as compared to a large fall in prices during the same period in 2012; and a $23.8 million net realizable value write down made during the quarter ended June 30, 2012. There was no inventory write down required during the current quarter.

EBITDA for the second quarter of 2013 was a loss of $0.6 million, an improvement of $35.9 million compared to an EBITDA loss of $36.5 million for the same period in 2012. The improvement was mainly due to relatively stable crude and product prices during the period as compared to a large fall in prices during the same period in 2012.

Total revenues increased by $46.6 million to $345.7 million, primarily due to higher sales volumes during the quarter. The total volume of all products sold was 2.4 million barrels, compared with 1.8 million barrels in the same quarter of 2012, mainly as a result of increased refinery exports.

Business Segment Results
Upstream – InterOil is preparing to resume exploration drilling activity on the Petroleum Prospecting Licence 236 at Wahoo and at other prospects. Resumption of our exploration activities will include seeking additional exploration partners.

During the second quarter of 2013, InterOil entered into a contract to acquire up to 66 kilometers of seismic lines in a combined seismic shoot over PPL338 and InterOil's PPL237 acreage. InterOil will be the operator of the work program with Oil Search.  InterOil and its partners will progress plans to acquire two further appraisal seismic lines in the Triceratops field to further define future drilling targets.

On July 16, 2013, InterOil entered into a Settlement and Termination Deed with Mitsui following the termination of the CSP JVOA on February 28, 2013, which requires InterOil to make certain payments to Mitsui. The remaining two instalments will be paid on August 31, 2013, and September 30, 2013, respectively.

The Upstream segment realized a net loss of $32.0 million in the quarter, with the increase of $16.5 million over the same period in 2012, mainly due to an increase in office and administration expenses of $19.4 million due to the transfer of historical development costs from the Midstream Liquefaction segment. This was partially offset by a decrease in exploration costs incurred of $4.7 million for seismic activity for PPL 236 during the 2012 period.

Midstream Refining – Total refinery throughput for the quarter was 29,501 barrels per operating day, compared with 23,900 barrels per operating day during the quarter ended June 30, 2012.

Capacity utilization of the refinery for the second quarter, based on 36,500 barrels per day operating capacity, was 72% compared with 60% for the same period in 2012. During the quarters ended June 30, 2013 and 2012, the refinery was shut down for 8 days and 9 days respectively for general maintenance activities.

The Midstream - Refining segment generated a net loss of $4.7 million in the quarter compared to a loss of $33.0 million for the same period in 2012.  The improvement resulted from a $46.6 million increase in gross margin due to relatively stable crude and product prices movement during the current six months ended June 30, 2013, as compared to a large fall in prices during the same period in 2012. The fall in prices in 2012 resulted in a $23.8 million net realizable value write down made during the period ended June 30, 2012, while there was no inventory write down required during the current period. The positive variance was partially offset by a $14.7 million decrease in income tax benefits mainly related to the utilization of carried forward tax losses.

Midstream Liquefaction –The Midstream Liquefaction segment had a net gain of $19.3 million during the quarter mainly due to a decrease in office and administration expenses of $19.4 million due to the transfer of historical development costs from the Upstream segment.  

Downstream – Total sales volumes for the quarter were 179.2 million litres, a decrease of 9.1 million litres, or 4.8 per cent, over the same period in 2012.

The retail business accounted for approximately 16% of total downstream sales in the second quarter of 2013 compared to 15% in the same period last year. InterOil continues to invest in new forecourt technology and in new retail fuel distribution systems.  During the quarter, the Company acquired a key high volume independently owned retail site.

Downstream generated a net profit of $4.3 million in the second quarter, compared to $6.0 million in the same period a year ago.  The decreased profit was mainly due to a decrease in gross margin resulting from a slowing PNG economy and a subsequent decline in sales volumes, particularly the high margin Jet A1 volumes. The decrease in profit was partially offset by a $1.2 million decrease in income tax expense.

Corporate – The Corporate operations generated a net loss of $1.7 million against a gain of $8.4 million in the same period a year ago.  This resulted mainly from an increase in office and administrative expenses of $17.5 million due to the costs associated with corporate employees in PNG and the operation of the Napa Napa camp, which has been part of the Corporate unit since October 1, 2012.  In addition, there were non-recurring expenses incurred for the retirement of senior management during the quarter. The increased expenses were partially offset by an increase in inter-segment recharges mainly due to the incorporation of InterOil Corporate PNG Limited, which began operating in October 2012 for the purpose of employing all corporate staff in PNG and to capture their associated costs.

Summary of Consolidated Quarterly Financial Results for Past Eight Quarters

Quarters ended

($ thousands except per share data)

2013

2012

2011

Jun-30

Mar-31

Dec-31

Sep-30

Jun-30

Mar-31

Dec-31  

Sep-30

Upstream

2,533

1,862

4,136

2,216

1,727

2,284

1,891

2,645

Midstream – Refining

289,300

305,172

301,925

274,671

236,006

302,310

237,640

231,455

Midstream – Liquefaction 

20,089

-

-

-

-

-

-

-

Downstream

199,470

208,046

220,512

201,749

223,620

218,974

209,678

186,304

Corporate

36,201

34,923

37,552

26,880

24,742

24,757

21,831

25,078

Consolidation entries

(201,932)

(199,672)

(207,686)

(178,652)

(186,991)

(210,174)

(181,428)

(163,584)

Total revenues

345,661

350,331

356,439

326,864

299,104

338,151

289,612

281,898

Upstream

(19,478)

(1,311)

(873)

956

(5,730)

(6,374)

665

(6,169)

Midstream – Refining

840

12,701

12,370

13,417

(42,647)

18,933

2,604

3,461

Midstream – Liquefaction

19,850

(123)

192

11

672

(1,410)

(4,129)

(3,608)

Downstream

7,542

10,062

12,258

9,275

11,102

21,414

6,808

3,570

Corporate

1,745

10,044

14,133

9,841

9,975

9,188

10,134

1,548

Consolidation entries

(11,146)

(13,418)

(12,199)

(14,503)

(9,871)

(14,216)

(11,280)

(10,263)

EBITDA (1)

(647)

17,955

25,881

18,997

(36,499)

27,535

4,802

(11,461)

Upstream

(32,046)

(13,774)

(13,081)

(10,936)

(15,532)

(17,244)

(9,402)

(15,080)

Midstream – Refining

(4,675)

5,855

13,401

5,358

(32,969)

11,320

15,684

(1,201)

Midstream – Liquefaction

19,284

(681)

(394)

(573)

93

(1,969)

(4,574)

(3,980)

Downstream

4,346

6,005

7,716

5,626

6,045

13,195

3,621

1,146

Corporate

(1,701)

7,342

10,519

7,849

8,445

6,270

7,616

(473)

Consolidation entries

1,562

(744)

384

(1,988)

2,205

(2,136)

252

(190)

Net (loss)/profit

(13,230)

4,003

18,545

5,336

(31,713)

9,436

13,197

(19,778)

Net (loss)/profit per share (dollars)









Per Share – Basic

(0.27)

0.08

0.38

0.11

(0.66)

0.20

0.27

(0.41)

Per Share – Diluted

(0.27)

0.08

0.38

0.11

(0.66)

0.19

0.27

(0.41)

(1)

EBITDA is a non-GAAP measure and is reconciled to IFRS under the heading "Non-GAAP Measures and Reconciliation".

Balance Sheet and Liquidity
InterOil closed the second quarter of 2013 with cash, cash equivalents and cash restricted totalling $97.5 million (June 30, 2012 - $60.9 million), of which $32.7 million is restricted (June 30, 2012 - $40.5 million).

The Company had aggregate working capital facilities at June 30 of $304 million, with $122.7 million available for use in our Midstream Refining operations, and $59.3 million available for use in the Downstream operations.

On July 17, 2013, the Company entered into a $350.0 million working capital structured facility arranged by BNP Paribas to replace the $240.0 million facility.  Out of the $350.0 million, $270.0 million will be a syndicated secured working capital facility with the support of five banking partners, namely BNP Paribas, Australia and New Zealand Banking Group Limited ("ANZ"), Natixis, Intesa Sanpaolo, and Bank South Pacific Limited ("BSP").  In addition, BNP Paribas will also be providing an $80.0 million bilateral non-recourse discounting facility.  The facility is subject to Bank of Papua New Guinea approval on the granting of PNG security over refinery assets, and other standard closing conditions.

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 18% on June 30, 2013, up from 13% a year ago.

Summary of Debt Facilities
Summarized below are the debt facilities available to us and the balances outstanding as at June 30, 2013.

Organization

Facility

Balance outstanding

June 30, 2013

Effective interest

rate

Maturity date

ANZ, BSP and BNP syndicated secured loan facility

$100,000,000

$92,000,000

6.89%

November 2017

BNP working capital facility

$240,000,000

$117,295,332(1)

2.53%

See detail below

Westpac PGK working capital facility

Facility

$41,130,000

$4,733,334

9.50%

November 2014

BSP PGK working capital facility

$22,850,000

-

9.45%

August 2013

Westpac secured loan

$10,714,000

$10,714,000

4.58%

September 2015

2.75% convertible notes

$70,000,000

$69,998,000

7.91%(3)

November 2015

Mitsui unsecured loan (2)

$11,912,297

$11,912,297

6.88%

See detail below

(1)

There were no letters of credit outstanding at June 30, 2013 and therefore the available borrowings under the facility were $122.7 million at June 30, 2013

(2)

This facility has been terminated and the amounts outstanding are expected to be repaid by September 30, 2013

(3)

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

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.

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)

2013

2012

2011

Jun-30

Mar-31

Dec-31

Sep-30

Jun-30

Mar-31

Dec-31

Sep-30

Upstream

(19,478)

(1,311)

(873)

956

(5,730)

(6,374)

665

(6,169)

Midstream – Refining

840

12,701

12,370

13,417

(42,647)

18,933

2,604

3,461

Midstream – Liquefaction 

19,850

(123)

192

11

672

(1,410)

(4,129)

(3,608)

Downstream

7,542

10,062

12,258

9,275

11,102

21,414

6,808

3,570

Corporate

1,745

10,044

14,133

9,841

9,975

9,188

10,134

1,548

Consolidation Entries

(11,146)

(13,418)

(12,199)

(14,503)

(9,871)

(14,216)

(11,280)

(10,263)

Earnings before interest, taxes, depreciation and amortization

(647)

17,955

25,881

18,997

(36,499)

27,535

4,802

(11,461)

Subtract:









Upstream

(12,043)

(11,941)

(11,734)

(11,438)

(10,517)

(9,408)

(8,712)

(7,806)

Midstream – Refining

(2,235)

(2,454)

(11,390)

(1,654)

(2,011)

(2,771)

(3,285)

(2,494)

Midstream – Liquefaction

(566)

(558)

(586)

(584)

(579)

(559)

(445)

(372)

Downstream

(263)

(422)

(337)

(394)

(909)

(1,233)

(1,170)

(1,233)

Corporate

(2,081)

(1,600)

(1,601)

(1,540)

(1,535)

(1,510)

(1,498)

(1,477)

Consolidation Entries

12,677

12,642

12,552

12,482

12,044

12,047

11,500

10,041

Interest expense

(4,511)

(4,333)

(13,096)

(3,128)

(3,507)

(3,434)

(3,610)

(3,341)

Upstream

-

-

-

-

-

-

-

-

Midstream – Refining

(118)

(1,270)

16,574

(3,484)

14,580

(1,948)

19,243

678

Midstream – Liquefaction

-

-

-

-

-

-

-

-

Downstream

(1,667)

(2,455)

(3,070)

(1,791)

(2,907)

(5,746)

(595)

(297)

Corporate

(483)

(196)

(1,330)

177

535

(880)

(493)

(195)

Consolidation Entries

-

-

-

-

-

-

-

-

Income taxes

(2,268)

(3,921)

12,174

(5,098)

12,208

(8,574)

18,155

186

Upstream

(525)

(522)

(474)

(454)

715

(1,462)

(1,355)

(1,105)

Midstream – Refining

(3,162)

(3,122)

(4,153)

(2,921)

(2,891)

(2,894)

(2,878)

(2,846)

Midstream – Liquefaction

-

-

-

-

-

-

-

-

Downstream

(1,266)

(1,180)

(1,135)

(1,464)

(1,241)

(1,240)

(1,422)

(894)

Corporate

(882)

(906)

(683)

(629)

(530)

(528)

(527)

(349)

Consolidation Entries

31

32

31

33

32

33

32

32

Depreciation and amortisation

(5,804)

(5,698)

(6,414)

(5,435)

(3,915)

(6,091)

(6,150)

(5,162)

Upstream

(32,046)

(13,774)

(13,081)

(10,936)

(15,532)

(17,244)

(9,402)

(15,080)

Midstream – Refining

(4,675)

5,855

13,401

5,358

(32,969)

11,320

15,684

(1,201)

Midstream – Liquefaction

19,284

(681)

(394)

(573)

93

(1,969)

(4,574)

(3,980)

Downstream

4,346

6,005

7,716

5,626

6,045

13,195

3,621

1,146

Corporate

(1,701)

7,342

10,519

7,849

8,445

6,270

7,616

(473)

Consolidation Entries

1,562

(744)

384

(1,988)

2,205

(2,136)

252

(190)

Net (loss)/profit per segment

(13,230)

4,003

18,545

5,336

(31,713)

9,436

13,197

(19,778)



InterOil Corporation

Consolidated Income Statements

(Unaudited, Expressed in United States dollars)






















 Quarter ended 

 Six months ended 







June 30,

June 30,

June 30,

June 30,


2013

2012

2013

2012


$

 $ (revised)* 

$

 $ (revised)* 






Revenue





  Sales and operating revenues 

344,074,551

296,907,536

693,398,326

632,226,457

  Interest

36,575

28,878

51,578

202,666

  Other

1,548,846

2,167,538

2,541,072

4,824,767


345,659,972

299,103,952

695,990,976

637,253,890






  Changes in inventories of finished goods and work in progress

(40,669,040)

43,017,078

(27,561,192)

29,343,733

  Raw materials and consumables used

(279,630,770)

(358,309,563)

(607,497,374)

(645,971,933)

  Administrative and general expenses 

(13,689,584)

(10,364,854)

(22,155,138)

(19,603,700)

  Derivative (losses)/gains

(351,491)

632,072

(822,446)

214,048

  Legal and professional fees

(1,723,802)

(1,159,127)

(3,539,677)

(2,282,772)

  Exploration costs, excluding exploration impairment (note 6)

(521,672)

(5,240,283)

(971,177)

(12,603,684)

  Finance costs

(5,781,914)

(4,758,622)

(11,118,148)

(9,437,122)

  Depreciation and amortization

(5,803,023)

(3,915,291)

(11,501,165)

(10,006,557)

  Gain on conveyance of oil and gas properties (note 6)

-

-

500,071

-

  Loss on available-for-sale investment (note 8)

(687,045)

-

(1,027,090)

-

  Foreign exchange (losses)/gains

(7,547,339)

(2,632,098)

(13,023,485)

7,487,235

  Share of net loss of joint venture partnership accounted for

  using the equity method (note 15)

(216,619)

(295,313)

(312,670)

(305,553)


(356,622,299)

(343,026,001)

(699,029,491)

(663,166,305)

Loss before income taxes

(10,962,327)

(43,922,049)

(3,038,515)

(25,912,415)






Income taxes





  Current tax expense 

(1,794,136)

(2,845,766)

(5,623,734)

(9,062,628)

  Deferred tax (expense)/benefit 

(473,681)

15,054,556

(565,177)

12,698,064


(2,267,817)

12,208,790

(6,188,911)

3,635,436






Loss for the period

(13,230,144)

(31,713,259)

(9,227,426)

(22,276,979)






Loss is attributable to:





Owners of InterOil Corporation

(13,230,144)

(31,713,259)

(9,227,426)

(22,276,979)


(13,230,144)

(31,713,259)

(9,227,426)

(22,276,979)






Basic loss per share 

(0.27)

(0.66)

(0.19)

(0.46)

Diluted loss per share

(0.27)

(0.66)

(0.19)

(0.46)

Weighted average number of common shares outstanding





 Basic (Expressed in number of common shares)

48,706,580

48,216,486

48,659,558

48,182,781

 Diluted (Expressed in number of common shares)

48,706,580

48,216,486

48,659,558

48,182,781






See accompanying notes to the consolidated financial statements

* Revised to effect transition to IFRS 11 - Joint arrangements, refer note 2(c)(ii) for further information



InterOil Corporation

Consolidated Balance Sheets 

(Unaudited, Expressed in United States dollars)



















As at














June 30,

December 31,

June 30,



2013

2012

2012



$

$ (revised) * 

$ (revised) * 







Assets





Current assets:





    Cash and cash equivalents

64,842,032

49,720,680

20,435,206


    Cash restricted

21,108,270

37,340,631

34,530,807


    Trade and other receivables 

148,761,493

161,578,481

128,541,166


    Derivative financial instruments

169,567

233,922

751,786


    Other current assets

3,500,838

832,869

770,721


    Inventories (note 5)

167,310,147

194,871,339

200,415,532


    Prepaid expenses

4,150,221

8,517,340

8,388,226


Total current assets

409,842,568

453,095,262

393,833,444


Non-current assets:





    Cash restricted

11,585,737

11,670,463

5,967,477


    Plant and equipment

255,163,441

255,031,257

249,305,349


    Oil and gas properties (note 6)

538,611,538

510,669,431

451,391,073


    Deferred tax assets (note 7)

60,370,315

63,526,458

50,458,531


    Other non-current receivables (note 12)

29,700,534

5,000,000

-


    Investments accounted for using the equity method (note 15)

-

-

-


    Available-for-sale investments (note 8)

2,795,556

4,304,176

4,768,374


Total non-current assets

898,227,121

850,201,785

761,890,804


Total assets

1,308,069,689

1,303,297,047

1,155,724,248


Liabilities and shareholders' equity





Current liabilities:





    Trade and other payables

94,861,098

178,313,483

157,819,121


    Income tax payable

15,014,046

11,977,681

11,198,360


    Derivative financial instruments

147,072

-

-


    Working capital facilities (note 9)

122,028,666

94,290,479

62,888,061


    Unsecured loan and current portion of secured loans (note 10)

31,379,982

31,383,115

23,679,023


    Current portion of Indirect participation interest (note 11)

16,283,309

15,246,397

13,770,156


Total current liabilities

279,714,173

331,211,155

269,354,721


Non-current liabilities:





    Secured loans (note 10)

79,700,127

89,446,137

32,344,139


    2.75% convertible notes liability

60,826,885

59,046,581

57,316,767


    Deferred gain on contributions to LNG project (note 15)

5,503,772

5,191,101

5,006,468


    Indirect participation interest (note 11)

13,245,089

16,405,393

20,904,686


    Other non-current liabilities (note 12)

96,000,000

20,961,380

20,000,000


    Asset retirement obligations

4,959,397

4,978,334

4,899,907


Total non-current liabilities

260,235,270

196,028,926

140,471,967


Total liabilities

539,949,443

527,240,081

409,826,688


Equity:





Equity attributable to owners of InterOil Corporation:





    Share capital (note 13)

941,295,247

928,659,756

916,961,072


        Authorized - unlimited





        Issued and outstanding - 48,812,742





        (Dec 31, 2012 - 48,607,398)





        (Jun 30, 2012 - 48,330,549)





    2.75% convertible notes

14,297,627

14,298,036

14,298,036


    Contributed surplus

28,522,857

21,876,853

24,190,727


    Accumulated Other Comprehensive Income

19,193,453

25,032,953

28,139,045


    Conversion options (note 11)

-

12,150,880

12,150,880


    Accumulated deficit 

(235,188,938)

(225,961,512)

(249,842,200)


Total equity attributable to owners of InterOil Corporation

768,120,246

776,056,966

745,897,560


Total liabilities and equity

1,308,069,689

1,303,297,047

1,155,724,248

See accompanying notes to the consolidated financial statements


* Revised to effect transition to IFRS 11 - Joint arrangements, refer note 2(c)(ii) for further information



InterOil Corporation

Consolidated Statements of Cash Flows 

(Unaudited, Expressed in United States dollars)

















 Quarter ended 

Six months ended


June 30,

June 30,

June 30,

June 30,


2013

2012

2013

2012


$

 $ (revised) *  

$

 $ (revised) *  






Cash flows generated from (used in):










Operating activities





    Net loss for the period

(13,230,144)

(31,713,259)

(9,227,426)

(22,276,979)

    Adjustments for non-cash and non-operating transactions





      Depreciation and amortization

5,803,023

3,915,291

11,501,165

10,006,557

      Deferred tax 

2,028,713

(15,182,965)

3,156,143

(16,382,649)

      Gain on conveyance of exploration assets

-

-

(500,071)

-

      Accretion of convertible notes liability

897,631

845,809

1,782,017

1,679,137

      Amortization of deferred financing costs

204,422

36,986

393,857

92,973

      Timing difference between derivatives recognized 





         and settled

340,530

(22,612)

211,427

(167,803)

      Stock compensation expense, including restricted stock

1,204,141

2,061,620

3,711,123

3,664,540

      Inventory write down

-

24,636,489

-

24,636,489

      Accretion of asset retirement obligation liability

124,540

82,774

213,748

165,548

      Gain on conversion of convertible notes

(500)

-

(500)

-

      Loss on Flex LNG investment

687,045

-

1,027,090

-

      Share of net loss of joint venture partnership accounted for





         using the equity method 

216,619

295,313

312,670

305,553

      Unrealized foreign exchange gain

(746,101)

(1,201,340)

(578,327)

(898,908)

    Change in operating working capital





      (Increase)/decrease in trade and other receivables

(18,281,935)

(6,221,589)

(34,098,124)

5,502,171

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

726,147

(5,049,933)

1,699,150

(2,819,302)

      Decrease/(increase) in inventories

37,492,493

(67,411,974)

22,189,171

(55,578,754)

      (Decrease)/increase in trade and other payables

(74,690,678)

70,658,451

(18,433,748)

(690,339)

    Net cash used in operating activities

(57,224,054)

(24,270,939)

(16,640,635)

(52,761,766)






Investing activities





    Expenditure on oil and gas properties

(28,481,609)

(45,118,428)

(66,867,839)

(90,636,483)

    Proceeds from IPI cash calls

12,800,214

1,063,738

14,988,827

3,497,542

    Expenditure on plant and equipment

(7,844,342)

(5,187,889)

(11,633,349)

(13,280,528)

    Maturity of short term treasury bills

-

-

-

11,832,110

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





       borrowings

6,233,263

770,718

16,317,087

(1,247,521)

    Change in non-operating working capital





      Decrease in trade and other receivables

5,000,000

-

5,000,000

-

      (Decrease)/increase in trade and other payables

(15,422,381)

2,172,049

(21,221,501)

10,625,410

    Net cash used in investing activities

(27,714,855)

(46,299,812)

(63,416,775)

(79,209,470)






Financing activities





    Repayments of OPIC secured loan

-

(4,500,000)

-

(4,500,000)

    (Repayments of)/proceeds from Westpac secured loan

-

-

(2,143,000)

15,000,000

    Proceeds from Pacific Rubiales Energy for interest in PPL237 (net of

       transaction costs)

(2,400,000)

20,000,000

73,600,000

20,000,000

    Proceeds from working capital facility

87,731,370

31,610,298

27,738,187

46,407,558

    Repayments of ANZ, BSP & BNP syndicated loan 

(8,000,000)

-

(8,000,000)

-

    Proceeds from issue of common shares, net of transaction costs

3,995,228

3,947,979

3,995,228

5,861,400

    Payment on conversion of convertible notes

(1,546)

-

(1,546)

-

  Net cash generated from financing activities

81,325,052

51,058,277

95,188,869

82,768,958






(Decrease)/increase in cash and cash equivalents

(3,613,857)

(19,512,474)

15,131,459

(49,202,278)

Cash and cash equivalents, beginning of period

68,461,627

39,877,362

49,720,680

68,575,269

Exchange (losses)/gains on cash and cash equivalents

(5,738)

70,318

(10,107)

1,062,215

Cash and cash equivalents, end of period 

64,842,032

20,435,206

64,842,032

20,435,206

Comprising of:





Cash on Deposit

64,592,555

19,801,855

64,592,555

19,801,855

Short Term Deposits

249,477

633,351

249,477

633,351

Total cash and cash equivalents, end of period

64,842,032

20,435,206

64,842,032

20,435,206






See accompanying notes to the consolidated financial statements


* Revised to effect transition to IFRS 11 - Joint arrangements, refer note 2(c)(ii) for further information

About InterOil
InterOil Corporation is developing a vertically integrated energy business whose primary focus is Papua New Guinea.  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.  InterOil's common shares trade on the NYSE in US dollars. 

Investor Contacts for InterOil:




Wayne Andrews 

Meg LaSalle

V. P. 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



Media Contacts:




John Hurst


Cannings Corporate Communications


+61-418-708-663


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 further seismic-related exploration activities, development activities,  the ability to attract a strategic LNG partner and complete the LNG partnering process and the timing of such process, the construction and development of the proposed LNG project, the characteristics of our properties, the ability to commercially develop our resources, 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. Statements relating to 'resources' are forward looking, as they involve the applied assessment, based on certain estimates and assumptions, that the resources described exist in the quantities estimated. These statements are based on certain assumptions made by the Company based on its experience and perception of current conditions, expected future developments, the terms of agreements with its joint venture partners 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, 2012 on Form 40-F and its Annual Information Form for the year ended December 31, 2012. 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 and Antelope 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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