InterOil Reports $9.2MM Net Profit

InterOil Corporation has reported its third quarter 2008 financial results.

Key financial and operational highlights:

  • InterOil's consolidated third quarter Earnings before Interest Taxes, Depreciation and Amortization ('EBITDA'), a non-GAAP measure, was $16.8 million(1) and net profit was $9.2 million. (1) All dollar amounts are in United States dollars unless otherwise stated.
  • Elk-4 well was completed as a potential producer and completion work ended on August 31, 2008.
  • On September 4, 2008, the Elk-4 well flowed at 105 mmscf per day which we believe to be the highest flow rate recorded for a gas well in Papua New Guinea.
  • Antelope-1 well preparation completed during the quarter and the well was spudded on October 15, 2008.
  • Subsequent to quarter end, we entered into an agreement with Petromin PNG Holdings Limited under which they will acquire a 20.5% working interest in the Elk/Antelope field on behalf of the Government of Papua New Guinea. The agreement is subject to certain conditions precedent.
  • Total refinery throughput for the quarter was 22,463 barrels per operating day compared with 21,045 barrels per operating day in the third quarter of 2007.
  • Subsequent to quarter end, we secured a domestic (Papua New Guinea) 150.0 million Kina (approximately $57.5 million) revolving working capital facility for our wholesale and retail petroleum products distribution business.

"We are pleased to record a solid set of results during the third quarter of 2008, particularly as during this period we experienced unprecedented volatility in trading conditions that continue to be experienced in the crude trading and financial markets," said Phil Mulacek, Chairman and Chief Executive Officer. "We have mitigated some of this volatility through the use of hedging strategies and long term financing. We continue to remain focussed on our core activities and in particular our exploration program where we are currently drilling the Antelope-1 appraisal well, where we are targeting a significant gas column and improved information on the Antelope structure."

Operational Highlights by Segment:

Upstream

  • Elk-4 well was completed as a potential producer and completion work ended on August 31, 2008.
  • On September 4, 2008, the Elk-4 well flowed at 105 mmscf per day which we believe to be the highest flow rate recorded for a gas well in Papua New Guinea. In addition, the well flowed 1,130 barrels per day of condensate.
  • Antelope-1 well preparation was completed during the quarter and the well was spudded on October 15, 2008.

Corporate

  • All outstanding Series A preference shares were converted into 517,777 common shares.
  • $15.0 million of the $95.0 million worth of 8% subordinated convertible debentures issued in May were converted into 600,000 common shares.
  • In August 2008, we completed filing of an omnibus shelf prospectus with the Ontario Securities Commission and a corresponding registration statement on Form F-10/A with the United States Securities and Exchange Commission which will enable us to issue, from time to time during the following 25 months, up to a total of $200.0 million of debt securities, common shares, preferred shares and/or warrants in one or more offerings.

"We are pleased to report a significant and continued improvement in the overall financial results achieved by our operating businesses in the third quarter and the nine preceding months when compared with the results of the same period in 2007. We continue to focus on our business improvement plans, the results of which are being reflected in our financial performance," stated Mr. Collin Visaggio, Chief Financial Officer.

"Notwithstanding uncertainty in the financial markets, we continue to optimise our funding in order to strengthen our balance sheet and mitigate risk. To this extent we recently established a working capital facility with two leading financial institutions in Papua New Guinea at attractive commercial borrowing rates. We also entered into arrangements with Petromin in which, amongst other things, Petromin have agreed to contribute 20.5% of the costs of the field's development.

 

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