InterOil has reported its financial results for the 2009 full year and fourth quarter.
2009 Annual Highlights
Profits from InterOil's refining and distribution businesses more than offset losses incurred in our developing upstream and liquefaction businesses. Net profit for the year ended December 31, 2009 was $6.1 million, compared with a net loss of $11.8 million for the same period in 2008, an improvement of $17.9 million. This profit figure includes a significant expense item amounting to $31.7 million for a 'loss on extinguishment of indirect participation interest liability' and which relates to an exchange transaction entered into with certain indirect participation interest ('IPI') holders when their interests were exchanged for a certain number of InterOil's common shares. On December 17, 2009, InterOil announced adoption of the extinguishment of the liability model to account for this transaction, with the difference between fair value and book value of the IPI liability for this interest being expensed. InterOil today re-filed its third quarter results to reflect this treatment.
InterOil petroleum products sold in Papua New Guinea totalled 6.5 million barrels for fiscal year 2009 compared with 6.6 million barrels in 2008, a steady result in light of the global economic backdrop. Total revenue for the year was $693.1 million, compared with $919.7 million for 2008. The difference is primarily explained by lower crude oil prices giving rise to commensurately lower product pricing in the current year.
InterOil's earnings before interest taxes, depreciation and amortization ("EBITDA") for the year ended December 31, 2009 was $19.3 million, a reduction of $3.1 million from $22.4 million for 2008. This EBITDA figure would be $51.0 million if the $31.7 million 'loss on extinguishment' of the IPI liability, as noted above, was excluded.
Upstream Business Segment
InterOil's Upstream business generated a net loss of $39.5 million in 2009 (2008 - profit of $2.2 million) mainly due to the $31.7 million loss on extinguishment of the IPI liability noted above, and $5.3 million higher inter-company interest charges on higher loan balances owed to the InterOil Corporation, the parent.
An Improvement in Our Balance Sheet and Liquidity
InterOil closed the year with cash, cash equivalents and cash restricted totalling $75.8 million, of which $29.3 million was restricted (in accordance with its BNP working capital facility utilization requirements and the terms of its OPIC secured loan facility). We also had working capital facilities in the aggregate of $238.1 million, with $116.5 million available for use in our Midstream Refining operations, and $36.6 million available for use in our Downstream operations.
Our debt-to-capital ratio (long term debt/(shareholders' equity + long term debt)) was reduced to 11% in December 2009 from 36% in December 2008. This reduction in gearing was mainly due to the conversion during 2009 of the remaining $65 million outstanding of the $95.0 million principal amount 8% convertible subordinated debentures issued in May 2008, plus the registered direct offering of 2,013,815 common shares in June 2009 raising gross proceeds of $70.4 million.
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