InterOil Announces Third Quarter 2011 Financial and Operating Results

Nov 14, 2011, 16:45 ET from InterOil Corporation

PORT MORESBY, Papua New Guinea and HOUSTON, Nov. 14, 2011 /PRNewswire/ -- InterOil Corporation (NYSE: IOC) (POMSoX: IOC) today announced financial and operating results for the third quarter ended September 30, 2011.

Third Quarter 2011 Highlights and Recent Developments

  • InterOil recorded a consolidated net loss for the quarter ended September 30, 2011 of $19.8 million.  The operating segments of Corporate, Midstream Refining and Downstream collectively derived a net loss for the quarter of $0.7 million, while the development segments of Upstream and Midstream Liquefaction had a collective net loss of $19.1 million.
  • At the end of the quarter, we retained Morgan Stanley & Co. LLC, Macquarie Capital (USA) Inc. and UBS AG as joint financial advisors to assist us with soliciting and evaluating proposals from potential strategic partners.  We anticipate that these proposals will relate to obtaining an internationally recognized LNG operating partner for development of the Gulf LNG Project's gas liquefaction and associated facilities in the Gulf Province of Papua New Guinea, together with a sale of an interest in the Elk and Antelope fields, and in our other exploration tenements in Papua New Guinea.
  • Civil works on the road between the Purari river wharf and the Elk/Antelope fields continued during the year through the third quarter, with the connection to Antelope-2 completed towards the end of the quarter.  Work now involves cleaning up, grading, strengthening bridges and surfacing of the road.
  • Subsequent to the quarter end, a further phase of 50 kilometers of exploration seismic is currently underway to further delineate  identified leads in PPLs [236 and 238], which will assist us in locating our next well in these license areas which we are required to drill before the end of March 2013 in compliance with our license commitments.

InterOil Chief Executive Officer Phil Mulacek commented, "We are pleased to be working with internationally-recognized advisors to seek proposals from potential strategic partners.  While we look forward to a prompt conclusion to this process and to our discussions with the PNG Government concerning the Gulf LNG Project, we continue to pre-invest in our Gulf LNG Project and the civil works and the front-end engineering and design . We believe that the considerable strengthening of the Asian LNG market, the increased interest in exploration and investment in Papua New Guinea, as well as the Company's reservoir analysis and project design fundamentals, will yield a successful result from the partnering process. We continue to negotiate LNG offtake agreements and are working with a number of parties with this aim."

"We look forward to spudding the Triceratops 2 well and expect to do so towards the end of this fourth quarter. The phase three seismic program has improved our structural model of the prospect and increased our optimism for a successful confirmation with the drill bit. In addition, our exploration activities are maturing our prospect inventory."

Corporate Financial Results

The net loss for the quarter ended September 30, 2011 was $19.8 million compared with a net loss of $14.4 million for the same quarter of 2010, an increase in the loss of $5.4 million.  The results for the quarter ended September 30, 2011 were affected by lower gross margins of $13.4 million due to lower crack spreads on our export products during the quarter and inventory write downs due to a fall in crude and product prices at the end of the third quarter of 2011, expensed seismic costs were higher by $5.5 million compared with the prior year quarter, and the recognition of a loss on Flex LNG investment of $6.0 million due to fall in its quoted share price.  

InterOil's earnings before interest, taxes, depreciation and amortization ("EBITDA") for the quarter ended September 30, 2011 was a loss of $11.5 million, compared with a loss of $8.6 million for the same period in 2010, an increase in the loss of $2.9 million.  Total revenue increased by $73.4 million from $208.5 million in 2010 to $281.9 million for the third quarter ended September 30, 2011.

Business Segment Results

Upstream - Construction on the road between the Purari river wharf and the Elk and Antelope fields continued through the third quarter of 2011, with the connection to the Antelope-2 well completed towards the end of the quarter.  Work now involves cleaning up, grading, strengthening bridges and surfacing of the road.  During the third quarter of 2011, areas between the lay down area and the barge wharf near the Purari river were reclaimed and compacted.  The construction team commenced raising the lay down area, and the extension for the wharf in addition to civil works in the surrounding areas.

We contracted airborne magnetic, gravity and gamma ray prospecting over PPL236, PPL237 and PPL238. Five acquisition blocks were acquired for a total of 14,288.6 line kilometers of airborne data. A new airborne methane particulate detection tool was trialed over PPL238. Data processing of this airborne data is currently being undertaken.

Subsequent to the third quarter of 2011, a further phase of 50 kilometers of exploration seismic was ordered and is currently under way to further delineate identified leads, which will assist us in locating potential drilling locations in PPLs 236 and 238. We are required to drill a well on these licenses before the end of March 2013 in compliance with our license commitments.

InterOil's Upstream business realized a net loss of $15.1 million in the third quarter of 2011, compared with a net loss of $16.6 million in the comparable period a year ago. The positive variance was mainly due to the exclusion of an $8.8 million loss on extinguishment of IPI liability which was recorded in the comparable quarter of 2010 and a reduction in office and administration expenses in the current quarter.  The improvements were largely offset by higher exploration costs for seismic activity and higher interest expense due to an increase in inter-company loan balances.

Midstream Refining – Total refinery throughput for the quarter ended September 30, 2011, was 23,797 barrels per operating day, compared with 23,496 barrels per operating day during quarter ended June 30, 2011 and 27,515 barrels per operating day during quarter ended September 30, 2010. Capacity utilization of the refinery for the quarter, based on 36,500 barrels per day operating capacity, was 56% compared with 63% in same quarter of 2010. The capacity utilization of the refinery in the same quarter of 2010 was maximized to stockpile products in anticipation of an extended maintenance shutdown toward the end of the quarter.

The Company's Midstream Refining operations generated a net loss of $1.2 million in the third quarter of 2011 versus a profit of $12.0 million in the prior year. The $13.2 million negative variance is largely due to decreased crack spreads over export products and a refined products write down of $3.4 million due to price decreases at the end of September 2011.

Midstream Liquefaction – On August 3, 2011, InterOil completed another milestone in the development of its Gulf LNG Project, signing a Heads of Agreement with Noble Clean Fuels Limited, a wholly owned subsidiary of Noble Group Limited, for the supply of one mtpa of LNG from the Gulf LNG Project for a ten year period.  Definitive, binding agreements are currently being negotiated.

At the end of the quarter, InterOil retained Morgan Stanley & Co. LLC, Macquarie Capital (USA) Inc. and UBS AG as joint financial advisors to assist us with soliciting and evaluating proposals from potential strategic partners.  We anticipate that these proposals will relate to obtaining an internationally recognized LNG operating partner for development of the Gulf LNG Project's gas liquefaction and associated facilities in the Gulf Province of Papua New Guinea, together with a sale of an interest in the Elk and Antelope fields, and in our other exploration tenements in Papua New Guinea.

The Company's Midstream Liquefaction business generated a loss of $4.0 million in the third quarter of 2011 compared with a loss of $5.0 million in the same period a year ago. The positive variance resulted from a decrease in office, administration and other expenses for the quarter.

Downstream - Total Downstream sales volumes for the quarter ended September 30, 2011, were 162.5 million liters, compared with 163.2 million liters for the quarter ended June 30, 2011 and 166.6 million liters for the quarter ended September 30, 2010.  The volume of sales for this quarter was down compared with the same quarter of 2010 due to temporary mine closures for two of our mining customers during the third quarter of 2011.  However, the Papua New Guinea economy continued to remain generally buoyant over this period, driven mainly by the resource sector with the various oil, natural gas and mining projects that are being pursued in various parts of the country, together with a general flow on increase in business activity.

InterOil's Downstream operations generated a profit of $1.1 million in the third quarter of 2011, an improvement of $1.4 million versus a loss of $0.3 million in the same period a year ago.  Improved gross margins during the 2011 quarter were partially offset by increased office and administration and other expenses.

Corporate - The Corporate segment generated a net loss of $0.5 million in the quarter ended September 30, 2011 compared to a net loss of $5.4 million for the same period in 2010. Significant items in the two quarters were a $6.0 million loss recognized on the FLEX LNG investment in 2011 compared with a $12.0 million loss on litigation expense in 2010.

Summary of Consolidated Quarterly Financial Results for Past Eight Quarters

The following is a table containing the consolidated results for the eight quarters ended September 30, 2011 by business segment, and on a consolidated basis.  Our IFRS transition date was January 1, 2010. The 2010 comparative information has been stated in accordance with IFRS while 2009 comparative information has not been restated and was prepared in accordance with Canadian GAAP in operation during that year.

Quarters ended ($ thousands except per share data)

2011

2010

2009

Sep-30

Jun-30

Mar-31

Dec-31

Sep-30

Jun-30

Mar-31

Dec-31

Upstream

2,645

4,638

668

245

714

1,349

998

1,027

Midstream – Refining

231,455

262,111

217,743

158,092

173,379

194,016

152,093

173,438

Midstream – Liquefaction

-

-

-

-

-

-

-

-

Downstream

186,304

191,431

157,709

143,364

133,508

119,300

109,687

118,270

Corporate

25,078

26,548

18,659

15,213

18,295

11,321

12,093

10,539

Consolidation entries

(163,584)

(180,945)

(151,125)

(122,545)

(117,437)

(100,637)

(96,052)

(93,971)

Total revenues

281,898

303,783

243,654

194,369

208,459

225,349

178,819

209,303

Upstream

(6,169)

593

(10,957)

(41,681)

(11,753)

(3,498)

(1,964)

574

Midstream – Refining

3,461

27,967

26,632

13,780

15,785

16,962

4,402

8,492

Midstream – Liquefaction

(3,602)

(4,035)

(2,375)

(1,959)

(4,588)

(3)

(563)

(1,200)

Downstream

3,570

5,777

8,744

4,709

1,674

7,060

4,492

4,391

Corporate

1,548

13,940

5,223

4,566

(4,510)

1,751

4,402

1,765

Consolidation entries

(10,263)

(5,270)

(9,201)

(7,005)

(5,229)

(7,384)

(5,910)

(4,884)

EBITDA (1)

(11,455)

38,972

18,066

(27,590)

(8,621)

14,888

4,859

9,138

Upstream

(15,080)

(6,703)

(17,949)

(47,845)

(16,585)

(7,943)

(6,182)

(3,626)

Midstream – Refining

(1,201)

17,314

14,894

8,531

11,998

12,056

(74)

18,070

Midstream – Liquefaction

(3,980)

(4,309)

(2,604)

(2,114)

(4,970)

(360)

(911)

(1,591)

Downstream

1,146

2,306

4,491

2,642

(325)

3,719

671

2,371

Corporate

(473)

11,275

3,463

3,381

(5,398)

1,796

3,544

3,036

Consolidation entries

(190)

3,657

(1,597)

(403)

908

(1,435)

(193)

1,047

Net (loss)/profit

(19,778)

23,540

698

(35,808)

(14,372)

7,833

(3,145)

19,307

Net (loss)/profit per share (dollars)

Per Share – Basic

(0.41)

0.49

0.01

(0.78)

(0.33)

0.18

(0.07)

0.45

Per Share – Diluted

(0.41)

0.48

0.01

(0.78)

(0.33)

0.17

(0.07)

0.43

(1) EBITDA is a non-GAAP measure and is reconciled to IFRS in the section to this document entitled "Non-GAAP Measures and Reconciliation".

Balance Sheet and Liquidity

InterOil closed the third quarter of 2011 with cash, cash equivalents, and cash restricted of $144.4 million (September 2010$66.8 million), of which $30.1 million (September 2010 - $30.7 million) was restricted.  In addition, we also had $11.3 million equivalent of PGK in short term treasury bills issued by the Bank of Papua New Guinea.  We also had aggregate working capital facilities of $288.0 million, with $112.3 million available for use in our Midstream Refining operations, and $34.8 million available for use in Downstream operations.

As at September 30, 2011, our debt-to-capital ratio (being debt/[shareholders' equity + debt]) was 12.7% (10.0% as at September 30, 2010), well below our targeted maximum gearing level of 50%. The increase in gearing from 2010 was mainly due to the 2.75% convertible senior notes due 2015 issued in November of last year.

Summary of Debt Facilities  

Summarized below are the debt facilities available to us and the balances outstanding as at September 30, 2011.

Organization

Facility

Balance outstanding September 30, 2011

Effective interest rate

Maturity date

OPIC secured loan

$40,000,000

$40,000,000

6.89%

December 2015

BNP Paribas working capital facility

$230,000,000 (2)

$24,819,608 (1)

3.35%

January 2012

Westpac PGK working capital facility

$35,720,000

$19,290,041

9.50%

October 2011

BSP PGK working capital facility

$22,325,000

$3,975,600

9.31%

August 2012

2.75% convertible notes

$70,000,000

$70,000,000

7.91%(4)

November 2015

Mitsui unsecured loan (3)

$10,393,023

$10,393,023

6.20%

See detail below

(1) Excludes letters of credit totaling $92.9 million, which reduce the available balance of the facility to $112.3 million at September 30, 2011.

(2) The facility was increased by $30.0 million during the quarter ended March 31, 2011 from $190.0 million to $220.0 million, and was then increased by a further $10.0 million during the quarter ended June 30, 2011 to $230.0 million.

(3) Facility is to fund our share of the CS Project costs as they are incurred pursuant to the JVOA.

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

InterOil Corporation

Consolidated Income Statements

(Unaudited, Expressed in United States dollars)

Quarter ended

Nine months ended

September 30,

September 30,

September 30,

September 30,

2011

2010

2011

2010

$

$

$

$

Revenue

 Sales and operating revenues

278,499,694

207,476,650

819,484,250

608,695,372

 Interest

368,768

29,701

952,421

105,367

 Other

3,029,088

951,830

8,898,772

3,825,249

281,897,550

208,458,181

829,335,443

612,625,988

 Changes in inventories of finished goods and work in progress

(31,631,324)

38,523,557

43,859,762

50,736,222

 Raw materials and consumables used

(238,480,416)

(224,232,024)

(787,256,505)

(586,476,636)

 Administrative and general expenses

(11,809,956)

(9,923,150)

(33,119,377)

(27,524,377)

 Derivative gains/(losses)

1,914,207

541,728

1,498,275

(139,619)

 Legal and professional fees

(1,538,559)

(1,919,554)

(4,498,526)

(5,518,876)

 Exploration costs, excluding exploration impairment (note 9)

(6,568,147)

(1,058,762)

(16,636,215)

(3,372,325)

 Finance costs

(4,448,608)

(3,111,294)

(13,185,060)

(7,769,610)

 Depreciation and amortization

(5,168,473)

(3,156,596)

(13,980,789)

(10,164,707)

 Gain on sale of oil and gas properties

-

2,140,783

-

2,140,783

 Loss on extinguishment of IPI liability

-

(8,795,059)

-

(8,795,059)

 Litigation settlement expense

-

(12,000,000)

-

(12,000,000)

 Loss on Flex LNG investment (note 10)

(6,048,537)

-

(1,834,279)

-

 Foreign exchange gains/(losses)

1,918,158

911,406

17,696,737

(7,549,927)

(301,861,655)

(222,078,965)

(807,455,977)

(616,434,131)

(Loss)/profit before income taxes

(19,964,105)

(13,620,784)

21,879,466

(3,808,143)

Income taxes

 Current expense

(116,517)

60,338

(4,488,623)

(3,155,988)

 Future expense

302,687

(809,935)

(12,930,404)

(2,716,948)

186,170

(749,597)

(17,419,027)

(5,872,936)

(Loss)/profit for the period

(19,777,935)

(14,370,381)

4,460,439

(9,681,079)

(Loss)/profit is attributable to:

Owners of InterOil Corporation

(19,777,694)

(14,372,780)

4,454,238

(9,685,874)

Non-controlling interest

(241)

2,399

6,201

4,795

(19,777,935)

(14,370,381)

4,460,439

(9,681,079)

Basic (loss)/profit per share

(0.41)

(0.33)

0.09

(0.22)

Diluted (loss)/profit per share

(0.41)

(0.33)

0.09

(0.22)

Weighted average number of common shares outstanding

Basic (Expressed in number of common shares)

47,993,229

43,963,555

47,936,721

43,764,733

Diluted (Expressed in number of common shares)

47,993,229

43,963,555

48,857,182

43,764,733

See accompanying notes to the condensed consolidated interim financial statements

InterOil Corporation

Consolidated Balance Sheets

(Unaudited, Expressed in United States dollars)

As at

September 30,

December 31,

September 30,

2011

2010

2010

$

$

$

Assets

Current assets:

   Cash and cash equivalents

114,330,510

233,576,821

36,066,119

   Cash restricted

23,543,921

40,664,995

24,266,163

   Short term treasury bills (note 6)

11,324,929

-

-

   Trade receivables

105,377,991

48,047,496

54,035,914

   Derivative contracts receivables (note 7)

413,093

-

321,995

   Other assets

755,309

505,059

598,066

   Inventories (note 8)

170,997,122

127,137,360

120,863,271

   Prepaid expenses

2,361,925

3,593,574

1,253,048

Total current assets

429,104,800

453,525,305

237,404,576

Non-current assets:

   Cash restricted

6,530,817

6,613,074

6,457,867

   Goodwill

6,626,317

6,626,317

6,626,317

   Plant and equipment

237,330,322

225,205,427

219,143,322

   Oil and gas properties (note 9)

330,346,730

255,294,738

241,773,361

   Deferred tax assets

742,379

14,098,128

14,779,583

   Investments (note 10)

5,644,478

-

-

Total non-current assets

587,221,043

507,837,684

488,780,450

Total assets

1,016,325,843

961,362,989

726,185,026

Liabilities and shareholders' equity

Current liabilities:

   Accounts payable and accrued liabilities

94,840,696

76,087,954

90,553,035

   Derivative contracts (note 7)

318,736

178,578

66,090

   Working capital facilities (note 11)

48,085,248

51,254,326

50,903,936

   Unsecured loan and current portion of secured loan (note 13)

19,393,023

14,456,757

36,060,624

   Current portion of Indirect participation interest (note 14)

540,002

540,002

540,002

Total current liabilities

163,177,705

142,517,617

178,123,687

Non-current liabilities:

   Secured loan (note 13)

30,481,180

34,813,222

39,257,236

   2.75% convertible notes liability (note 17)

54,816,599

52,425,489

-

   Deferred gain on contributions to LNG project

7,263,210

8,949,857

9,506,363

   Indirect participation interest (note 14)

34,134,387

34,134,387

38,070,650

   Asset retirement obligations (note 15)

4,289,444

-

-

Total non-current liabilities

130,984,820

130,322,955

86,834,249

Total liabilities

294,162,525

272,840,572

264,957,936

Equity:

Equity attributable to owners of InterOil Corporation:

   Share capital (note 16)

902,114,261

895,651,052

639,066,307

       Authorized - unlimited

       Issued and outstanding - 48,000,131

       (Dec 31, 2010 - 47,800,552)

       (Sep 30, 2010 - 44,100,535)

   2.75% convertible notes (note 17)

14,298,036

14,298,036

-

   Contributed surplus

24,552,456

16,738,417

24,368,797

   Accumulated Other Comprehensive Income

24,164,391

9,261,177

8,612,891

   Conversion options (note 14)

12,150,880

12,150,880

12,950,880

   Accumulated deficit

(255,143,006)

(259,597,244)

(223,790,177)

Total equity attributable to owners of InterOil Corporation

722,137,018

688,502,318

461,208,698

Non-controlling interest

26,300

20,099

18,392

Total equity

722,163,318

688,522,417

461,227,090

Total liabilities and equity

1,016,325,843

961,362,989

726,185,026

See accompanying notes to the condensed consolidated interim financial statements

InterOil Corporation

Consolidated Statement of Cash Flows

(Unaudited, Expressed in United States dollars)

Quarter ended

Nine months ended

September 30,

September 30,

September 30,

September 30,

2011

2010

2011

2010

$

$

$

$

Cash flows provided by (used in):

Operating activities

   Net (loss)/profit

(19,777,935)

(14,370,381)

4,460,439

(9,681,079)

   Adjustments for non-cash and non-operating transactions

     Depreciation and amortization

5,168,473

3,156,596

13,980,789

10,164,707

     Deferred tax assets

(66,555)

393,247

13,355,749

2,133,386

     Gain on sale of exploration assets

-

(2,140,783)

-

(2,140,783)

     Accretion of convertible notes liability

808,915

-

2,391,110

-

     Amortization of deferred financing costs

55,986

389,320

167,958

501,292

     Timing difference between derivatives recognized

        and settled

(89,857)

90,791

(272,935)

(255,905)

     Stock compensation expense, including restricted stock

4,029,821

3,433,536

11,728,248

8,436,548

     Movement in net realizable value write down

(3,255,318)

(27,517)

3,417,882

-

     Accretion of asset retirement obligation liability

79,678

-

79,678

-

     Oil and gas properties expensed

6,568,147

1,058,762

16,636,215

3,372,325

     Loss on extinguishment of IPI Liability

-

8,795,059

-

8,795,059

     Non-cash litigation settlement expense

-

12,000,000

-

12,000,000

     Loss on Flex LNG investment

6,048,537

-

1,834,279

-

     Unrealized foreign exchange (gain)/loss

(3,763,825)

(1,108,707)

(1,847,242)

959,476

   Change in operating working capital

     (Increase)/decrease in trade receivables

4,515,067

27,044,253

(35,290,574)

(15,163,495)

     Decrease in other assets and prepaid expenses

637,017

1,598,128

981,399

5,753,482

     Decrease/(increase) in inventories

35,072,018

(35,585,073)

(37,484,446)

(50,316,870)

     Increase in accounts payable and accrued liabilities

13,422,313

7,611,475

23,754,298

12,237,391

   Net cash from/(used in) operating activities

49,452,482

12,338,706

17,892,847

(13,204,466)

Investing activities

   Expenditure on oil and gas properties

(35,025,246)

(27,461,204)

(98,420,370)

(88,959,186)

   Proceeds from IPI cash calls

91,138

367,521

91,138

15,538,441

   Expenditure on plant and equipment, net of disposals

(10,442,871)

(6,339,716)

(23,691,596)

(11,831,229)

   Proceeds received on sale of exploration assets

-

-

-

13,903,682

   Investment in short term treasury bills

(11,324,929)

-

(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

6,453,266

(5,144,171)

17,203,331

(1,415,455)

   Change in non-operating working capital

     Increase in trade receivables

(10,000,000)

-

(10,000,000)

-

     (Decrease)/increase in accounts payable and accrued liabilities

(916,001)

5,988,666

(10,763,171)

10,330,770

   Net cash used in investing activities

(61,164,643)

(32,588,904)

(144,384,353)

(62,432,977)

Financing activities

   Repayments of OPIC secured loan

-

-

(4,500,000)

(4,500,000)

   Proceeds from Mitsui for Condensate Stripping Plant

551,562

3,217,582

9,872,532

6,454,582

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

      net of transaction costs

-

24,000,000

-

24,000,000

   Proceeds from PNG LNG cash call

-

-

-

866,600

   Proceeds from Petromin for Elk and Antelope field development

-

500,000

-

3,500,000

   (Repayments of)/proceeds from working capital facility

(45,633,592)

(6,728,746)

(3,169,078)

26,277,517

   Proceeds from issue of common shares/conversion of debt,

      net of transaction costs

192,550

3,662,229

2,549,000

8,655,044

 Net cash from financing activities

(44,889,480)

24,651,065

4,752,454

65,253,743

(Decrease)/increase in cash and cash equivalents

(56,601,641)

4,400,867

(121,739,052)

(10,383,700)

Cash and cash equivalents, beginning of period

168,439,410

31,665,252

233,576,821

46,449,819

Exchange gains/(losses) on cash and cash equivalents

2,492,741

-

2,492,741

-

Cash and cash equivalents, end of period

114,330,510

36,066,119

114,330,510

36,066,119

Comprising of:

Cash on Deposit

23,684,485

36,066,119

23,684,485

36,066,119

Term Deposits

90,646,025

-

90,646,025

-

Total cash and cash equivalents, end of period

114,330,510

36,066,119

114,330,510

36,066,119

See accompanying notes to the condensed consolidated interim 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 analyse operating performance.  EBITDA does not have a standardized meaning prescribed by United States or Canadian GAAP 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 (i.e. IFRS) measure, to EBITDA, a non-GAAP measure for each of the last eight quarters.

Quarters ended ($ thousands)

2011

2010

2009

Sep-30

Jun-30

Mar-31

Dec-31

Sep-30

Jun-30

Mar-31

Dec-31

Upstream

(6,169)

593

(10,957)

(41,681)

(11,753)

(3,498)

(1,964)

574

Midstream – Refining

3,461

27,967

26,632

13,780

15,785

16,962

4,402

8,492

Midstream – Liquefaction

(3,602)

(4,035)

(2,375)

(1,959)

(4,588)

(3)

(563)

(1,200)

Downstream

3,570

5,777

8,744

4,709

1,674

7,060

4,492

4,391

Corporate

1,548

13,940

5,223

4,566

(4,510)

1,751

4,402

1,765

Consolidation Entries

(10,263)

(5,269)

(9,201)

(7,005)

(5,229)

(7,384)

(5,910)

(4,884)

Earnings before interest, taxes, depreciation and amortization

(11,455)

38,973

18,066

(27,590)

(8,621)

14,888

4,859

9,138

Subtract:

Upstream

(7,806)

(7,142)

(6,352)

(5,481)

(4,600)

(4,367)

(4,080)

(4,056)

Midstream – Refining

(2,494)

(2,211)

(1,675)

(1,509)

(1,693)

(1,651)

(1,731)

(1,973)

Midstream – Liquefaction

(372)

(268)

(223)

(184)

(376)

(351)

(342)

(379)

Downstream

(1,233)

(1,116)

(826)

(835)

(938)

(1,167)

(800)

(930)

Corporate

(1,477)

(1,641)

(1,395)

(1,158)

(342)

(20)

(20)

(27)

Consolidation Entries

10,041

8,894

7,572

6,571

6,107

5,916

5,687

5,905

Interest expense

(3,341)

(3,484)

(2,899)

(2,596)

(1,842)

(1,640)

(1,286)

(1,460)

Upstream

-

-

-

-

-

-

-

-

Midstream – Refining

678

(5,677)

(7,298)

(1,040)

101

(366)

(173)

14,316

Midstream – Liquefaction

0

-

-

36

-

-

-

(8)

Downstream

(297)

(1,449)

(2,623)

(495)

(322)

(1,524)

(2,361)

(411)

Corporate

(195)

(629)

71

(11)

(529)

97

(797)

1,340

Consolidation Entries

0

0

-

(2)

(2)

(2)

-

(3)

Income taxes

186

(7,755)

(9,850)

(1,512)

(752)

(1,795)

(3,331)

15,234

Upstream

(1,105)

(154)

(641)

(683)

(232)

(78)

(138)

(144)

Midstream – Refining

(2,846)

(2,765)

(2,765)

(2,700)

(2,195)

(2,888)

(2,572)

(2,765)

Midstream – Liquefaction

(6)

(6)

(6)

(7)

(6)

(6)

(6)

(7)

Downstream

(894)

(906)

(804)

(737)

(739)

(651)

(660)

(679)

Corporate

(349)

(395)

(435)

(16)

(17)

(32)

(41)

(43)

Consolidation Entries

32

32

32

33

32

32

32

33

Depreciation and amortisation

(5,168)

(4,194)

(4,619)

(4,110)

(3,157)

(3,623)

(3,385)

(3,605)

Upstream

(15,080)

(6,703)

(17,949)

(47,845)

(16,585)

(7,943)

(6,182)

(3,626)

Midstream – Refining

(1,201)

17,314

14,894

8,531

11,998

12,056

(74)

18,071

Midstream – Liquefaction

(3,980)

(4,309)

(2,604)

(2,114)

(4,970)

(360)

(911)

(1,593)

Downstream

1,146

2,306

4,491

2,642

(325)

3,718

671

2,371

Corporate

(473)

11,275

3,463

3,381

(5,398)

1,796

3,544

3,034

Consolidation Entries

(190)

3,657

(1,596)

(403)

908

(1,437)

(191)

1,050

Net (loss)/profit per segment

(19,778)

23,540

699

(35,808)

(14,372)

7,830

(3,143)

19,307

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 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 soliciting and evaluating proposals from and transacting with potential LNG strategic partners, discussions with the PNG government, further seismic-related and other exploration activities, spudding of the Triceratops 2 well, the potential execution of definitive agreements with Noble Clean Fuels Ltd or other parties in relation to the proposed Gulf LNG Project and the condensate stripping, transmission and distribution projects,  progress to and achievement of Final Investment Decisions in such projects, the construction and development of the proposed LNG plants 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 and monetize our resources and production through development and exploration activities.  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.

SOURCE InterOil Corporation



RELATED LINKS

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