InterOil Announces 2010 Financial and Operating Results

Mar 22, 2011, 14:44 ET from InterOil Corporation

CAIRNS, Australia and HOUSTON, March 22, 2011 /PRNewswire/ -- InterOil Corporation (NYSE: IOC) (POMSoX:IOC) today announced financial and operating results for the fourth quarter and full year ended December 31, 2010.

Fourth Quarter 2010 Highlights and Recent Developments

  • On November 10, 2010, InterOil completed public offerings of 2.8 million common shares at US$75 per share and US$70 million aggregate principal amount of 2.75% Convertible Senior Notes due 2015. InterOil has received total combined net proceeds from the offerings of approximately $266 million, after deducting underwriting discounts, commissions and estimated offering expenses. InterOil closed 2010 with cash, cash equivalents and restricted cash totalling $280.9 million.
  • During the fourth quarter, the seismic program focused on further delineation of the Bwata and Wolverine structures on Petroleum Prospecting License (PPL) 237.  At the end of the 2010, the seismic program for PPL 236 was well advanced.  The PPL 236 seismic program totals 70 kilometers comprising 6 dip lines which transect the Whale, Tuna, Barracuda, Wahoo, Mako and Shark leads.
  • InterOil recorded a consolidated net loss for the year ended December 31, 2010 of $45.5 million.  The operating segments returned a net profit of $41.4 million. This was offset by $12.0 million settlement of litigation, investments in development, including $30.6 million expensed for buyback of indirect participation interests (IPI), $8.7 million expensed seismic activity, $8.4 million expensed liquefied natural gas (LNG) project costs, and $8.3 million expensed for rig maintenance.
  • Subsequent to the quarter, InterOil announced a Project Funding and Construction Agreement and a Shareholder Agreement with Energy World Corporation Ltd. setting forth the parameters in respect of the development, construction, financing and operation of a planned three million tonne per annum (mtpa) land-based modular LNG facility in the Gulf Province of Papua New Guinea.

InterOil Chief Executive Officer Phil Mulacek commented, "We continue to advance our effort to monetize our resources.  We believe that our delineation drilling and the resultant annual resource estimate further demonstrates the value of our reservoirs at Elk and Antelope.  Our partners, Mitsui & Co., Ltd. and Energy World Corporation, Ltd. continue to progress our project toward a final investment decisions with respect to our planned condensate stripping and LNG facilities, respectively.  These achievements, combined with our strong balance sheet, support our continued growth and operational success."

Corporate Financial Results

InterOil recorded a net loss for the year ended December 31, 2010 of $45.5 million, compared with a net profit of $6.1 million for the same period in 2009, a reduction of $51.6 million.  The operating segments of Corporate, Midstream Refining and Downstream collectively returned a net profit for the year of $41.4 million.  The development segments of Upstream and Midstream Liquefaction yielded a net loss of $86.9 million for an aggregate net loss of $45.5 million.  The net loss from the development segments was the result of a number of unusual/one time charges.  The main items contributing to the consolidated loss for the year were: 1) loss on extinguishment of IPI liability of $30.6 million, 2) settlement of litigation for $12.0 million, and 3) seismic activity and rig maintenance costs expensed for $17.0 million.

Inclusive of $59.6 million in non-operating expenses, InterOil's earnings before interest, taxes, depreciation and amortization ("EBITDA") for the year ended December 31, 2010 was a loss of $16.5 million, compared with a gain of $19.3 million in 2009, an reduction of $35.8 million.  Total revenue increased by $113.9 million from $693.1 million in 2009 to $807.0 million for the full year ended December 30, 2010.  

Business Segment Results

Upstream - During the fourth quarter, the seismic program focused on further delineation of the Bwata and Wolverine structures, apportioned into 58 kilometers for Bwata (consisting of 3 dip lines and 1 strike line) and 45.4 kilometers for Wolverine (consisting of 3 dip lines and a strike line running north-south).  The data is being processed and interpreted.  

At the end of the 2010, the initial preparatory work on a seismic program for PPL 236 was well advanced with social mapping and construction of the base camp initiated.  Work on the PPL 236 seismic comprises 70 kilometers comprising 6 dip lines which transect the Whale, Tuna, Barracuda, Wahoo, Mako and Shark leads.  The seismic program will fulfill our license commitment for the first 2-year extension period in PPL 236.  

On November 30, 2010, we were granted Petroleum Retention License ("PRL") 15, covering blocks including and surrounding the Elk and Antelope fields, unifying the fields into a single license separate from our exploration acreage and specifying minimum work commitment activities over the next five years. We have initiated work on the application and associated information to be submitted to the State in support of a Petroleum Development License ("PDL"), which is required to be able to produce hydrocarbons.

During the last quarter of 2010, drilling equipment underwent maintenance, and our drilling and associated equipments crew were on standby.  All costs in relation to the maintenance and standby time has been expensed. InterOil Rig #2 is ready to resume drilling.

InterOil's Upstream business realized a net loss of $78.6 million in 2010 compared to a loss of $39.5 million in the comparable period a year ago. The increase in the loss in 2010 was mainly due to a $16.8 million increase in exploration costs, $9.2 million higher intercompany interest charges, and a $5.2 million reduction in the gain on sale of exploration assets in 2010 compared with 2009.

Midstream Refining – Total refinery throughput for the year ended December 31, 2010 was 24,682 barrels per operating day, compared with 21,155 barrels per operating day during 2009. Capacity utilization for 2010, based on 36,500 barrels per day operating capacity, was 53% compared with 47% in 2009.

The Company's Midstream Refining operations generated a net profit of $32.5 million in 2010 versus a profit of $41.8 million in the prior year. The $9.3 million negative variance is largely due to the initial recognition in 2009 of $14.3 million of deferred tax assets which is partly offset by an increase in gross margins.

Midstream Liquefaction – InterOil advanced the process of monetizing its discovered natural gas resources by signing a heads of agreement with Energy World Corporation ("EWC") to construct a three million tonne per annum land based LNG facility in the Gulf Province of Papua New Guinea.  Following this agreement, and subsequent to year end, on February 2, 2011, the parties signed certain conditional agreements defining certain parameters for the aforementioned development, construction, financing and the operation of the planned land-based modular LNG facilities.

Further engineering and planning work was undertaken to design the LNG and condensate stripping facilities, and appropriate supporting infrastructure, including a jetty and loading facilities together with pipelines for both gas and condensate.

The Company's Midstream Liquefaction business generated a loss of $8.4 million in 2010 compared with a loss of $8.4 million a year ago. The segment results benefited from capitalizing direct project related costs since the LNG project agreement with the government of Papua New Guinea was signed in December of 2009, which were offset by higher management expenses and share compensation costs related to the LNG Project development which are not capitalized.

Downstream - Total Downstream sales volumes for 2010 were 626.5 million liters, compared with 588.8 million liters in 2009.  Volume growth continued throughout the year, mainly due to increased construction activity in the latter half of the year associated with Exxon Mobil's LNG project in Papua New Guinea.  

InterOil's Downstream operations generated a net profit of $6.7 million in 2010, a reduction of $1.8 million versus a profit of $8.5 million in the previous year.  Higher lease and administrative costs were partially offset by higher margins on increased sales.

Corporate - The Corporate segment generated a net profit of $3.3 million in 2010, compared to a net loss of $4.3 million in 2009, primarily caused by increased intercompany interest charges and reduced corporate interest expense which was partially offset by a $12 million litigation settlement expense.

Summary of Consolidated Quarterly Financial Results for Past Eight Quarters

Quarters ended

2010

2009

($ thousands except per share data)

Dec-31

Sep-30

Jun-30

Mar-31

Dec-31

Sep-30

Jun-30

Mar-31

Upstream

245

714

1,349

998

1,027

1,011

660

611

Midstream – Refining

158,092

173,379

194,016

152,093

173,438

141,295

114,347

145,523

Midstream – Liquefaction

0

0

0

0

0

1

2

4

Downstream

143,364

133,508

119,300

109,687

118,270

107,712

85,472

78,572

Corporate

15,213

18,295

11,321

12,093

10,539

10,087

8,640

7,753

Consolidation entries

(122,545)

(117,437)

(100,637)

(96,052)

(93,971)

(86,509)

(60,625)

(70,801)

Total revenues

194,369

208,459

225,349

178,819

209,303

173,597

148,496

161,662

Upstream

(41,681)

(11,753)

(3,498)

(1,964)

574

(29,097)

(669)

(469)

Midstream – Refining

13,780

15,785

16,962

4,402

8,492

8,199

14,134

14,747

Midstream – Liquefaction

(1,959)

(4,588)

(3)

(563)

(1,200)

(2,119)

(1,379)

(2,361)

Downstream

4,709

1,674

7,060

4,492

4,391

6,542

4,150

3,241

Corporate

4,566

(4,510)

1,751

4,402

1,765

1,980

1,897

3,051

Consolidation entries

(7,005)

(5,229)

(7,384)

(5,910)

(4,884)

(4,092)

(278)

(7,285)

EBITDA (1)

(27,590)

(8,621)

14,888

4,859

9,138

(18,587)

17,855

10,924

Upstream

(47,845)

(16,585)

(7,943)

(6,182)

(3,626)

(31,392)

(2,382)

(2,133)

Midstream – Refining

8,531

11,998

12,056

(74)

18,070

3,762

9,624

10,350

Midstream – Liquefaction

(2,114)

(4,970)

(360)

(911)

(1,591)

(2,481)

(1,765)

(2,552)

Downstream

2,642

(325)

3,719

671

2,371

3,440

1,742

964

Corporate

3,381

(5,398)

1,796

3,544

3,036

1,602

(677)

349

Consolidation entries

(403)

908

(1,438)

(191)

1,047

(237)

2,894

(4,332)

Net (loss)/profit

(35,808)

(14,372)

7,830

(3,143)

19,307

(25,306)

9,436

2,646

Net (loss)/profit per share (dollars)

Per Share – Basic

(0.78)

(0.33)

0.18

(0.07)

0.45

(0.60)

0.25

0.07

Per Share – Diluted

(0.78)

(0.33)

0.17

(0.07)

0.43

(0.60)

0.24

0.07

(1)

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

Balance Sheet and Liquidity

InterOil closed 2010 with cash, cash equivalents and cash restricted totalling $280.9 million (December 2009 - $75.8 million), of which $47.3 million is restricted (December 2009 - $29.3 million).  We also had aggregate working capital facilities of $239.2 million, with $46.3 million available for use in our Midstream Refining operations, and $48.0 million available for use in our Downstream operations.

On November 10, 2010, the Company closed a public offering of 2.8 million common shares at US$75 per share and US$70 million aggregate principal amount of 2.75% convertible senior notes due 2015.  InterOil has received total combined net proceeds from the offerings of approximately $266 million, after deducting underwriting discounts, commissions and estimated offering expenses.

Our debt-to-capital ratio (debt / (shareholders' equity + debt)) was increased to 13% in December 2010 from 11% in December 2009.  This increase in gearing was mainly due to the 2.75% convertible senior notes issued in November of 2010.

Summary of Debt Facilities  

Summarized below are the debt facilities available to us and the balances outstanding as at December 31, 2010.

Organization

Facility

Balance outstanding December 31, 2010

Effective interest rate

Maturity date

OPIC secured loan

$44,500,000

$44,500,000

6.80%

December 2015

BNP Paribas working capital facility

$190,000,000 (2)

$50,023,559 (1)

2.69%

Subsequent to year end, this was renewed until January 31, 2012

Westpac PGK working capital facility

$30,280,000

$1,230,767

9.50%

October 2011

BSP PGK working capital facility

$18,925,000

$0

9.20%

October 2011

2.75% convertible notes

$70,000,000

$70,000,000

7.91%(4)

November 2015

Mitsui unsecured loan (3)

$5,456,757

$5,456,757

6.26%

See detail below

(1)

Excludes letters of credit totaling $93.7 million, which reduce the available balance of the facility to $46.3 million at December 31, 2010.

(2)

Subsequent to the year end, the facility has been increased by $30.0 million for a total facility of $220.0 million.

(3)

Facility is to fund our share of the condensate strippng project costs as they are incurred pursuant to the joint venture operating agreement.  

(4)

Effective rate after bifurcating the equity and debt components of the convertible note offering.

InterOil Corporation

Consolidated Balance Sheets

(Expressed in United States dollars)

As at

December 31,

December 31,

December 31,

2010

2009

2008

$

$

$

Assets

Current assets:

   Cash and cash equivalents (note 6)

233,576,821

46,449,819

48,970,572

   Cash restricted (note 8)

40,664,995

22,698,829

25,994,258

   Trade receivables (note 9)

48,047,496

61,194,136

42,887,823

   Derivative contracts receivables (note 8)

-

-

31,335,050

   Other assets

505,059

639,646

167,885

   Inventories (note 10)

127,137,360

70,127,049

83,037,326

   Prepaid expenses

3,593,574

6,964,950

4,489,574

Total current assets

453,525,305

208,074,429

236,882,488

Non-current assets:

   Cash restricted (note 8)

6,613,074

6,609,746

290,782

   Goodwill (note 16)

6,626,317

6,626,317

-

   Plant and equipment (note 11)

229,331,842

221,046,709

223,585,559

   Oil and gas properties (note 12)

255,294,738

172,483,562

128,013,959

   Future income tax benefit (note 13)

14,098,128

16,912,969

3,070,182

Total non-current assets

511,964,099

423,679,303

354,960,482

Total assets

965,489,404

631,753,732

591,842,970

Liabilities and shareholders' equity

Current liabilities:

   Accounts payable and accrued liabilities (note 14)

76,087,954

59,372,354

78,147,736

   Derivative contracts (note 8)

178,578

-

-

   Working capital facilities (note 17)

51,254,326

24,626,419

68,792,402

   Current portion of secured and unsecured loans (note 20)

14,456,757

9,000,000

9,000,000

   Current portion of Indirect participation interest (note 21)

540,002

540,002

540,002

Total current liabilities

142,517,617

93,538,775

156,480,140

Non-current liabilities:

   Secured loan (note 20)

34,813,222

43,589,278

52,365,333

   8% subordinated debenture liability (note 24)

-

-

65,040,067

   2.75% convertible notes liability (note 25)

52,425,489

-

-

   Deferred gain on contributions to LNG project (note 15)

13,076,272

13,076,272

17,497,110

   Indirect participation interest (note 21)

34,134,387

39,559,718

73,321,158

Total non-current liabilities

134,449,370

96,225,268

208,223,668

Total liabilities

276,966,987

189,764,043

364,703,808

Non-controlling interest (note 22)

20,099

13,596

5,235

Shareholders' equity:

   Share capital (note 23)

895,651,052

613,361,363

373,904,356

       Authorised - unlimited

       Issued and outstanding - 47,800,552

       (Dec 31, 2009 - 43,545,654)

       (Dec 31, 2008 - 35,923,692)

   8% subordinated debentures (note 24)

-

-

10,837,394

   2.75% convertible notes (note 25)

14,298,036

-

-

   Contributed surplus

16,738,417

21,297,177

15,621,767

   Warrants (note 27)

-

-

2,119,034

   Accumulated Other Comprehensive Income

9,261,177

8,150,976

27,698,306

   Conversion options (note 21)

12,150,880

13,270,880

17,140,000

   Accumulated deficit

(259,597,244)

(214,104,303)

(220,186,930)

Total shareholders' equity

688,502,318

441,976,093

227,133,927

Total liabilities and shareholders' equity

965,489,404

631,753,732

591,842,970

See accompanying notes to the consolidated financial statements. Commitments and contingencies (note 29), Going Concern (note 2(b))

On behalf of the Board - Phil Mulacek, Director    Christian Vinson, Director

InterOil Corporation

Consolidated Statement of Operations

(Expressed in United States dollars)

Year ended

December 31,

December 31,

December 31,

2010

2009

2008

$

$

$

Revenue

 Sales and operating revenues

802,374,399

688,478,965

915,578,709

 Interest

150,816

350,629

931,785

 Other

4,470,048

4,228,415

3,216,445

806,995,263

693,058,009

919,726,939

Expenses

 Cost of sales and operating expenses

701,556,650

601,983,432

888,623,109

 Administrative and general expenses

41,047,949

33,254,708

31,227,627

 Derivative losses/(gains)

1,065,188

(1,008,585)

(24,038,550)

 Legal and professional fees

6,902,241

9,067,413

11,523,045

 Exploration costs, excluding exploration impairment (note 12)

16,981,929

208,694

995,532

 Exploration impairment (note 12)

-

-

107,788

 Short term borrowing costs

7,568,550

3,776,590

6,514,060

 Long term borrowing costs

4,496,432

8,788,041

17,459,186

 Depreciation and amortization

14,274,922

14,321,775

14,142,546

 Gain on sale of oil and gas properties (note 12)

(2,140,783)

(7,364,468)

(11,235,084)

 Loss on extinguishment of IPI liability (note 21)

30,568,710

31,710,027

-

 Litigation settlement expense (note 29)

12,000,000

-

-

 Foreign exchange losses/(gains)

10,776,823

3,305,383

(3,878,150)

845,098,611

698,043,010

931,441,109

Loss before income taxes and non-controlling interest

(38,103,348)

(4,985,001)

(11,714,170)

Income taxes

 Current expense

(3,898,067)

(2,272,645)

(1,564,038)

 Future (expense)/benefit

(3,485,024)

13,348,634

1,482,074

(7,383,091)

11,075,989

(81,964)

(Loss)/profit before non-controlling interest

(45,486,439)

6,090,988

(11,796,134)

Non-controlling interest (note 22)

(6,502)

(8,361)

(943)

Net (loss)/profit

(45,492,941)

6,082,627

(11,797,077)

Basic (loss)/earnings per share (note 28)

(1.03)

0.15

(0.35)

Diluted (loss)/earnings per share (note 28)

(1.03)

0.15

(0.35)

Weighted average number of common shares outstanding

Basic (Expressed in number of common shares)

44,329,670

39,900,583

33,632,390

Diluted (Expressed in number of common shares)

44,329,670

40,681,586

33,632,390

See accompanying notes to the consolidated financial statements

InterOil Corporation

Consolidated Statement of Cash Flows

(Expressed in United States dollars)

Year ended

December 31,

December 31,

December 31,

2010

2009

2008

$

$

$

Cash flows provided by (used in):

Operating activities

   Net (loss)/income

(45,492,941)

6,082,627

(11,797,077)

   Adjustments for non-cash and non-operating transactions

     Non-controlling interest

6,502

8,361

943

     Depreciation and amortization

14,274,922

14,321,775

14,142,546

     Future income tax asset

2,814,841

(13,842,787)

(202,870)

     Gain on sale of plant and equipment

-

-

(16,250)

     Gain on sale of exploration assets

(2,140,783)

(7,364,468)

(11,235,084)

     Accretion of convertible notes/debentures liability

432,632

1,212,262

1,915,910

     Amortization of deferred financing costs

1,223,944

223,945

260,400

     (Gain)/loss on hedge contracts

-

(851,500)

851,500

     Timing difference between derivatives recognised

        and settled

178,578

15,074,050

(17,034,350)

     Stock compensation expense, including restricted stock

11,804,000

8,290,681

5,741,086

     Inventory revaluation

-

140,278

8,379,587

     Non-cash interest on secured loan facility

-

-

2,189,907

     Non-cash interest settlement on preference shares

-

-

372,950

     Non-cash interest settlement on debentures

-

2,352,084

2,620,628

     Oil and gas properties expensed

16,981,929

208,694

1,103,320

     Loss on extinguishment of IPI Liability

30,568,710

31,710,027

-

     Non-cash litigation settlement expense

12,000,000

-

-

     Loss/(gain) on proportionate consolidation of LNG project

-

724,357

(811,765)

     Unrealized foreign exchange gain

(72,456)

(574,778)

(3,728,721)

   Change in operating working capital

     (Increase)/decrease in trade receivables

(9,224,005)

(9,523,370)

18,684,422

     (Decrease)/increase in unrealised hedge gains

-

(900,000)

900,000

      Decrease/(increase) in other assets and prepaid expenses

3,505,963

(2,947,137)

592,073

     (Increase)/decrease in inventories

(56,115,637)

12,226,616

(3,189,859)

     Increase/(decrease) in accounts payable and accrued liabilities

5,692,543

(12,071,350)

5,846,860

   Net cash (used in)/from operating activities

(13,561,258)

44,500,367

15,586,156

Investing activities

   Expenditure on oil and gas properties

(113,128,916)

(91,788,438)

(63,890,512)

   Proceeds from IPI cash calls

23,723,752

15,406,022

18,323,365

   Expenditure on plant and equipment, net of disposals

(22,560,055)

(11,782,925)

(5,172,133)

   Proceeds received on sale of assets

-

-

312,500

   Proceeds received on sale of exploration assets

15,544,465

-

6,500,000

   Increase in restricted cash held as security on

      borrowings

(17,969,494)

(3,023,535)

(3,900,680)

   Change in non-operating working capital

     Increase in accounts payable and accrued liabilities

3,232,029

5,621,530

436,775

   Net cash used in investing activities

(111,158,219)

(85,567,346)

(47,390,685)

Financing activities

   Repayments of OPIC secured loan

(9,000,000)

(9,000,000)

(9,000,000)

   Proceeds from Mitsui for Condensate Stripping Plant

11,913,514

-

-

   Proceeds from/(repayments of) Clarion Finanz secured loan,

      net of transaction costs (note 20)

(1,000,000)

-

-

   Repayments of bridging facility, net of transaction costs

-

-

(70,000,000)

   Proceeds from PNG LNG cash call

866,600

-

9,447,250

   Proceeds from Clarion Finanz for Elk option agreement

-

3,577,288

5,500,000

   Proceeds from Petromin for Elk and Antelope field development

5,000,000

6,435,000

4,000,000

   Proceeds from/(repayments of) working capital facility

26,627,907

(44,165,983)

2,291,030

   Proceeds from issue of common shares/conversion of debt,

      net of transaction costs

211,147,565

81,699,921

(104,975)

   Proceeds from issue of convertible notes/debentures,

      net of transaction costs

66,290,893

-

94,780,034

 Net cash from financing activities

311,846,479

38,546,226

36,913,339

Increase/(decrease) in cash and cash equivalents

187,127,002

(2,520,753)

5,108,810

Cash and cash equivalents, beginning of period

46,449,819

48,970,572

43,861,762

Cash and cash equivalents, end of period (note 6)

233,576,821

46,449,819

48,970,572

See accompanying notes to the consolidated financial statements

See note 7 for non cash financing and investing activities

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 United States or Canadian generally accepted accounting principles 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 GAAP.  Further, EBITDA is not a measure of cash flow under GAAP and should not be considered as such.  For reconciliation of EBITDA to the net income (loss) under GAAP, 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

2010

2009

($ thousands)

Dec-31

Sep-30

Jun-30

Mar-31

Dec-31

Sep-30

Jun-30

Mar-31

Upstream

(41,681)

(11,753)

(3,498)

(1,964)

574

(29,097)

(669)

(469)

Midstream – Refining

13,780

15,785

16,962

4,402

8,492

8,199

14,134

14,747

Midstream – Liquefaction

(1,959)

(4,588)

(3)

(563)

(1,200)

(2,119)

(1,379)

(2,361)

Downstream

4,709

1,674

7,060

4,492

4,391

6,542

4,150

3,241

Corporate

4,566

(4,510)

1,751

4,402

1,765

1,980

1,897

3,051

Consolidation Entries

(7,005)

(5,229)

(7,384)

(5,910)

(4,884)

(4,092)

(278)

(7,285)

Earnings before interest, taxes, depreciation and amortization

(27,590)

(8,621)

14,888

4,859

9,138

(18,587)

17,855

10,924

Subtract:

Upstream

(5,481)

(4,600)

(4,367)

(4,080)

(4,056)

(2,164)

(1,563)

(1,552)

Midstream – Refining

(1,509)

(1,693)

(1,651)

(1,731)

(1,973)

(1,682)

(1,709)

(1,786)

Midstream – Liquefaction

(184)

(376)

(351)

(342)

(379)

(348)

(333)

(158)

Downstream

(835)

(938)

(1,167)

(800)

(930)

(1,045)

(1,013)

(1,142)

Corporate

(1,158)

(342)

(20)

(20)

(27)

-

(1,600)

(2,325)

Consolidation Entries

6,571

6,107

5,916

5,687

5,905

3,823

3,141

2,923

Interest expense

(2,596)

(1,842)

(1,640)

(1,286)

(1,460)

(1,416)

(3,077)

(4,040)

Upstream

-

-

-

-

-

-

-

-

Midstream – Refining

(1,040)

101

(366)

(173)

14,316

-

-

-

Midstream – Liquefaction

36

-

-

-

(8)

(3)

(32)

(12)

Downstream

(495)

(322)

(1,524)

(2,361)

(411)

(1,398)

(733)

(485)

Corporate

(11)

(529)

97

(797)

1,340

(339)

(800)

(359)

Consolidation Entries

(2)

(2)

(2)

-

(3)

(1)

(2)

(2)

Income taxes and non-controlling interest

(1,512)

(752)

(1,795)

(3,331)

15,234

(1,741)

(1,567)

(858)

Upstream

(683)

(232)

(78)

(138)

(144)

(132)

(150)

(112)

Midstream – Refining

(2,700)

(2,195)

(2,888)

(2,572)

(2,765)

(2,755)

(2,801)

(2,611)

Midstream – Liquefaction

(7)

(6)

(6)

(6)

(7)

(10)

(20)

(20)

Downstream

(737)

(739)

(651)

(660)

(679)

(658)

(662)

(651)

Corporate

(16)

(17)

(32)

(41)

(43)

(40)

(174)

(18)

Consolidation Entries

33

32

32

32

33

33

32

32

Depreciation and amortisation

(4,110)

(3,157)

(3,623)

(3,385)

(3,605)

(3,562)

(3,775)

(3,380)

Upstream

(47,845)

(16,585)

(7,943)

(6,182)

(3,626)

(31,392)

(2,382)

(2,134)

Midstream – Refining

8,531

11,998

12,056

(74)

18,071

3,762

9,624

10,349

Midstream – Liquefaction

(2,114)

(4,970)

(360)

(911)

(1,593)

(2,481)

(1,764)

(2,551)

Downstream

2,642

(325)

3,718

671

2,371

3,440

1,742

964

Corporate

3,381

(5,398)

1,796

3,544

3,034

1,601

(677)

350

Consolidation Entries

(403)

908

(1,437)

(191)

1,050

(236)

2,893

(4,332)

Net (loss)/profit per segment

(35,808)

(14,372)

7,830

(3,143)

19,307

(25,306)

9,436

2,646

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.  

FOR INVESTOR RELATIONS ENQUIRIES:

Wayne Andrews

Meg Hunt 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: 281-292-1800

Phone: 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 further seismic-related exploration activities, the potential execution of definitive agreements with Energy World Corporation and/or Mitsui & Co. Ltd in relation to the proposed LNG and condensate stripping projects, respectively, progress to and achievement of Final Investment Decisions in such projects, the construction and development of the proposed LNG plant and condensate stripping plant, anticipated financial conditions and performance, business prospects, strategies, regulatory developments, the ability to obtain financing on acceptable terms, 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 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, 2010 on Form 40-F and its Annual Information Form for the year ended December 31, 2010. 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 and its Annual Information Form available on SEDAR at www.sedar.com.

The United States Securities and Exchange Commission permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves. We include in this press release resource estimates other than proved reserves, that the SEC's guidelines strictly prohibit us from including in filings with the SEC.

SOURCE InterOil Corporation



RELATED LINKS

http://www.interoil.com