InterOil Announces 2012 Financial And Operating Results
PORT MORESBY, Papua New Guinea and HOUSTON, Feb. 27, 2013 /PRNewswire/ — InterOil Corporation (NYSE:IOC) (POMSoX:IOC) today announced financial and operating results for the fourth quarter and full year ended December 31, 2012.
Year End 2012 Highlights and Recent Developments
- During the year, InterOil drilled both the Triceratops-2 and Antelope-3 wells to total depth and completed initial logging and testing. The Triceratops-2 well established the Triceratops field as the third significant discovery to date on the Company’s licenses in Papua New Guinea. The Antelope-3 well results compare favourably with the Antelope-1 and Antelope-2 wells. The GLJ Report, prepared by our independent qualified reserves evaluator, effective as of December 31, 2012, indicated a 10% increase to 10.3 trillion cubic feet of gas equivalents (Tcfe) in the gross contingent best case resource estimate on our licenses in PNG compared to the 2011 year-end estimate of GLJ of 9.4 Tcfe.
- On November 16, 2012, we were notified by the Prime Minister of Papua New Guinea Hon. Peter O’Neill that the National Executive Committee had conditionally approved our LNG development project in the Gulf Province. We believe that this decision clears the way for us to complete the LNG partnering process and proceed with our plans for the development of an LNG plant in the Gulf Province with initial planned output of a minimum of 3.8 million tonnes per annum.
- Net profit for the quarter ended December 31, 2012 was $18.5 million, which contributed to our achievement of an annual net profit for the year ended December 31, 2012 of $1.6 million. Our comparative profit for the annual period in 2011 was a net profit of $17.7 million. The operating segments of Corporate, Midstream Refining and Downstream collectively returned a net profit for the year of $61.2 million. The development segments of Upstream and Midstream Liquefaction yielded a net loss of $59.6 million.
- Subsequent to year end, on January 24, 2013, we announced that we have advised parties with which we have been in discussions that the final binding bid solicitation period for the LNG partnering process currently being undertaken will close on February 28, 2013. Our Board of Directors intends to meet our advisors during March 2013 for the purpose of evaluating bids received and selecting our partner(s) for the development of the LNG Project utilizing gas from the Elk and Antelope fields.
InterOil’s Chief Executive Officer Phil Mulacek commented, “The recent approval of our 3.8 mtpa LNG project in the Gulf Province by the National Executive Council of PNG paves the way to completing our LNG partnering process, including a sell down of our interest in the Elk and Antelope fields. The success of our delineation drilling at Triceratops and Antelope has positively impacted our 2012 year-end resource estimate. Our prospect inventory is maturing and we anticipate that it will support our goal of a multi-year, multi-well exploration program. I am pleased to confirm that the fifth annual resource evaluation of the Elk and Antelope fields, and our first estimate at the Triceratops field, continues to support our development plans. We look forward to progressing commercialization of these resources. We believe that these achievements, combined with a successful completion of our LNG partnering process, support our continued growth and operational success.”
Corporate Financial Results
InterOil recorded a net profit for the year ended December 31, 2012 of $1.6 million, compared with a profit of $17.7 million for the same period in 2011, a decrease of $16.1 million. The operating segments of Corporate, Midstream Refining and Downstream collectively returned a net profit for the year of $61.2 million. The development segments of Upstream and Midstream Liquefaction yielded a net loss of $59.6 million for an aggregate net profit of $1.6 million.
EBITDA for the year ended December 31, 2012 was $35.9 million, a decrease of $14.5 million compared to EBITDA of $50.4 million for the same period in 2011, the decrease was mainly due to a $25.1 million decrease in foreign exchange gain, due to the PGK being relatively stable in the year ended December 31, 2012.
Total revenues for the year ended December 31, 2012 were $1,320.6 million compared with $1,118.9 million and $807.0 million respectively for the same periods in 2011 and 2010. This increase in the year ended 2012 compared to the same period in 2011 was due to higher sales volumes and higher export prices during the period. The total volume of all products sold by us was 8.5 million barrels for fiscal year 2012, compared with 7.4 million barrels in 2011.
Business Segment Results
Upstream – During the year, InterOil drilled and tested the Triceratops-2 well in Petroleum Prospecting License (“PPL”) 237 to confirm the presence of gas and condensate, and test for the presence of reefal carbonate reservoir. Following successful flow from DST#9 of 27 MMSCFPD on June 6, 2012, the Triceratops-2 well was declared a discovery on June 14, 2012 by Department of Petroleum and Energy (the “DPE”). Triceratops seismic data indicates there is a large attic in terms of height and areal extent to the south, west and northwest of the Triceratops-2 well, which will be our focus during future seismic acquisition and well programs in this field.
On April 18, 2012, InterOil signed a binding heads of agreement (HOA) with Pacific Rubiales Energy (PRE) for PRE to be able to earn a 10.0% net (12.9% gross) participating interest in the PPL 237 onshore PNG, including the Triceratops structure located within that license. On November 29, 2012, we executed the PRE joint venture operating agreement and related documents associated with the Farm-In Agreement with PRE. Subsequent to year end, on January 24, 2013, the DPE approved and registered the transfer of interest in PPL 237 to PRE. The PPL 237 JV Operating Committee established with PRE will review and approve the forward work program, and submit an application for a PRL over the Triceratops discovery.
During the fourth quarter, InterOil drilled the Antelope-3 well to total depth and completed the initial wireline logging program. The top of the reservoir at the Antelope-3 well was penetrated at a depth of 5,328 feet (1,624 meters). This was 217 feet (66 meters) above the pre-drill estimate and 92 feet (28 meters) higher than the Antelope-1 well. The preliminary independent analysis of the wireline log results demonstrated a carbonate reservoir (limestone and dolomite) with similar reefal reservoir character and quality as the offset Antelope-1 and Antelope-2 wells.
InterOil continued appraising its exploration licenses during the year by acquiring Phase 3 seismic data on PPL 236 in addition to airborne gravity data acquired over PPL 236 and PPL 237. Analysis of the newly acquired gravity data generated additional leads to be assessed for further seismic acquisition. Proposed well locations have currently been selected for Tuna and Wahoo prospects. Given the success of the Triceratops-2 well and the better than expected results of the Antelope-3 well, we have had discussions with the DPE on our future focus and priorities. We believe that a clear mutual objective is to focus on progressing the LNG Project. To progress development of our core assets, we have applied for variations to modify the well commitments for PPL 236 and PPL 238. We are awaiting formal approval of variations in relation to our commitments.
InterOil’s Upstream business realized a net loss of $56.8 million in 2012 compared to a loss of $49.1 million in the comparable period a year ago. The increase in the loss in 2012 was mainly due to higher interest expense due to an increase in inter-company loan balance which was partially offset by reduced exploration costs incurred for seismic activity.
InterOil’s Annual Information Form includes the details of the independent engineering evaluation prepared by GLJ Petroleum Consultants Ltd. (2012 GLJ Report), which evaluated the Company’s contingent resources at the Elk, Antelope and Triceratops fields in Papua New Guinea effective as at December 31, 2012, and was prepared in accordance with the definitions and guidelines in the COGE Handbook and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (NI 51-101).
The 2012 GLJ Report provides a best case estimate of contingent resources of 9.45 trillion cubic feet (Tcf) of natural gas and 143.6 million barrels of condensate (MMBbls), or 10.3 trillion cubic feet of natural gas equivalents (Tcfe).
This compares to GLJ’s year-end 2011 best case contingent resources estimate of 8.59 Tcf of natural gas and 128.9 MMBbls of condensate, or 9.4 Tcfe. The 2012 GLJ Report noted an increase of 10%, or 157.8 MMBOE, in the combined gross resource estimate for Elk, Antelope and Triceratops fields from the 2011 year-end estimate of Elk and Antelope fields. All resources estimated in the 2012 GLJ Report are classified as contingent resources – economic status undetermined, as follows:
Total Contingent Resources Estimate for Gas and Condensate for the Elk, Antelope and Triceratops Fields*
As at
December
31,
2012 Low Case High
Best
--- --- ---
Contingent
Gas
Resources
(Tcf) 6.95 9.45 11.75
---------- ---- ---- -----
Contingent
Condensate
Resources
(MMBbls) 114.2 143.6 175.8
---------- ----- ----- -----
Contingent
Resources
MMBOE 1,273.3 1,718.2 2,134.2
---------- ------- ------- -------
*These estimates represent 100% of the Elk, Antelope and Triceratops
Fields.
--------------------------------------------------------------------
Contingent Resource Estimate for Gas and Condensate at the Elk, Antelope and Triceratops Fields – Net to InterOil*
As at December 31, 2012 Low Case High
Best
--- ----
Contingent Gas Resources (Tcf) 4.07 5.51 6.84
----------------------------- ---- ---- ----
Contingent Condensate Resources
(MMBbls) 66.8 83.7 101.9
------------------------------- ---- ---- -----
Contingent Resources MMBOE 744.8 1,002.8 1,241.2
-------------------------- ----- ------- -------
*These estimates are based upon
InterOil holding a 58.5988% working
interest in the Elk and Antelope
fields and a 53.0364% working
interest in PPL 237 (Triceratops
field), which assumes that: (i) the
State and landowners elect to
participate in the Elk and Antelope
fields to the full extent provided
under applicable PNG oil and gas
legislation after PDLs have been
granted in relation to the Elk and
Antelope fields and the Triceratops
field and (ii) all elections are
made to participate in such fields
by all investors pursuant to
relevant indirect participation
interest agreements with InterOil,
including to participate fully and
directly in the PDLs.
There is no certainty that it will be
commercially viable to produce any
portion of the resources.
InterOil currently has no production
or reserves as defined in Canadian
NI 51-101 or under the definitions
established by the United States
Securities and Exchange Commission.
Midstream Refining – Total refinery throughput for the year ended December 31, 2012 was 24,483 barrels per operating day, compared with 24,856 barrels per operating day during 2011. Capacity utilization for 2012, based on 36,500 barrels per day operating capacity, was 58% compared with 54% in 2011.
On October 16, 2012, the Company entered into a five year amortizing $100.0 million secured term loan facility with BNP, BSP, and ANZ. The loan is secured over the fixed assets of our refinery and bears interest at LIBOR plus 6.5%. On November 9, 2012, part of the borrowings under the new term loan facility was used to repay all outstanding amounts under the term loan granted by OPIC.
The Company’s Midstream Refining operations generated a net loss of $2.9 million in 2012 versus a profit of $46.7 million in the prior year. The $49.6 million negative variance is primarily due to a decrease in gross margin resulting from negative crude and product price movements and a decrease in foreign exchange gains compared to the previous year, which were partially offset by an increase in income tax benefits for the 2012 year.
Midstream Liquefaction – Throughout the year, investment bankers led by Morgan Stanley & Company LLC, Macquarie Capital (USA) Inc. and UBS AG continued working on the bid process to seek a strategic partner to acquire an interest in the Elk and Antelope fields, the LNG Project and certain exploration licenses. Interested parties include major oil companies, national oil companies, and global utilities.
On November 16, 2012, we were notified by the Prime Minister of Papua New Guinea Hon. Peter O’Neill that the NEC had conditionally approved our LNG development project in the Gulf Province. We believe that this decision clears the way for us to proceed with our plans for the development of an LNG plant in the Gulf Province with initial planned output of a minimum of 3.8 million tonnes per annum. The PNG Cabinet also approved the establishment of the Ministerial Gas Committee comprised of key economic ministers to fast track commercialization of the LNG Project.
Subsequent to year end, on January 24, 2013, we announced that we have advised potential bidders with whom we have been in discussions that the final binding bid solicitation period for the partnering process currently being undertaken will close on February 28, 2013. Our Board of Directors intends to meet our advisors during March 2013 for the purpose of evaluating bids received and selecting our partner(s) for the development of the LNG Project utilizing gas from the Elk and Antelope fields.
The Company’s Midstream Liquefaction business generated a loss of $2.8 million in 2012 compared with a loss of $15.5 million a year ago. The positive variance is largely due to a decrease in office, administration and other expenses resulting from lower management expenses and share compensation costs related to the midstream facilities of the LNG Project development which are not capitalized.
Downstream - The PNG economy continued to grow strongly throughout 2012 largely due to resource development projects, which has also led to growth in our aviation and retail businesses within our downstream segment. Total Downstream sales volumes for 2012 were 752.5 million liters, compared with 678.0 million liters in 2011.
Investments have been made over the last three years in new electronic systems for both pumps and the forecourt control units to support the further development of this business. During 2012, one new retail site was opened as well as a commercial truck stop site. One existing retail site was purchased to secure tenure, and additional land was purchased for a future retail site.
InterOil’s Downstream operations generated a net profit of $32.6 million in 2012, an improvement of $21.0 million versus a profit of $11.6 million in the previous year. Gross margins increased in 2012 as compared to the prior year mainly due to an increase in domestic sales volumes resulting from various development projects being undertaken in Papua New Guinea.
Corporate – InterOil Corporate PNG Limited is incorporated under the laws of PNG, as a 100% subsidiary of InterOil Corporation to employ all corporate staff in PNG and to capture their associated costs. In addition, this entity has taken over the operation of the Napa Napa camp and all costs associated with the operation of the camp are now captured in this entity. All costs incurred by this entity will be recharged to relevant InterOil entities based on an equitable driver basis. This entity began transacting in October 2012.
The Corporate segment generated a net profit of $33.1 million in 2012, compared to a net profit of $21.9 million in 2011. The positive variance is largely due to higher interest income resulting from an increase in inter-company loan balances.
Quarterly Comparative
Our net profit for the quarter ended December 31, 2012 was $18.5 million compared with a net profit of $13.2 million for the same quarter of 2011, an increase of $5.3 million. The operating segments of Corporate, Midstream Refining and Downstream collectively derived a net profit for the quarter of $32.0 million, while the investments in development segments of Upstream and Midstream Liquefaction resulted in a net loss of $13.5 million.
The improvement in net profit for the fourth quarter in 2012 as compared to 2011 was mainly due to a $26.0 million increase in gross margin attributable to the improved crude and product price movements, a $2.6 million reduction of exploration costs incurred for seismic activity for PPL 236; a $1.6 million decrease in the loss on available-for-sale investment in the shares in FLEX LNG, and a $1.6 million increase in gain on conveyance of oil and gas properties recognized due to the waiver or forfeiture of 1.5% indirect participation interest (IPI) interest conversion rights into common shares. These increases in profit was partly offset by a $11.4 million reduction in foreign exchange gain, a $9.5 million increase in borrowing costs and a $6.0 million decrease in income tax benefit.
Total revenues increased by $66.8 million from $289.6 million in the quarter ended December 31, 2011 to $356.4 million in the quarter ended December 31, 2012, primarily due to higher sales volumes made during the year. The total volume of all products sold by us was 2.3 million barrels for quarter ended December 31, 2012, compared with 1.9 million barrels in the same quarter of 2011.
Summary of Consolidated Quarterly Financial Results for Past Eight Quarters
Quarters ended 2012 2011
($ thousands except per share data)
Dec-31 Sep-30 Jun-30 Mar-31 Dec-31 Sep-30 Jun-30 Mar-31
------ ------ ------ ------ ------ ------ ------
Upstream 4,136 2,216 1,727 2,284 1,891 2,645 4,638 668
Midstream - Refining 301,925 274,671 236,006 302,310 237,640 231,455 262,111 217,743
Midstream - Liquefaction - - - - - - - -
Downstream 220,512 201,749 223,620 218,974 209,678 186,304 191,431 157,709
Corporate 37,552 26,880 24,742 24,757 21,831 25,078 26,548 18,659
Consolidation entries (207,686) (178,652) (186,991) (210,174) (181,428) (163,584) (180,945) (151,125)
Total revenues 356,439 326,864 299,104 338,151 289,612 281,898 303,783 243,654
-------------- ------- ------- ------- ------- ------- ------- ------- -------
Upstream (873) 956 (5,730) (6,374) 665 (6,169) 593 (10,957)
Midstream - Refining 12,370 13,417 (42,647) 18,933 2,604 3,461 27,967 26,632
Midstream - Liquefaction 192 11 676 (1,406) (4,123) (3,602) (4,035) (2,375)
Downstream 12,258 9,275 11,102 21,414 6,808 3,570 5,777 8,744
Corporate 14,133 9,841 9,975 9,188 10,134 1,548 13,940 5,223
Consolidation entries (12,199) (14,503) (9,871) (14,216) (11,280) (10,263) (5,269) (9,200)
EBITDA (1) 25,881 18,997 (36,495) 27,539 4,808 (11,455) 38,973 18,067
--------- ------ ------- ----- ------- ------ ------
Upstream (13,081) (10,936) (15,532) (17,244) (9,402) (15,080) (6,703) (17,949)
Midstream - Refining 13,401 5,358 (32,969) 11,320 15,684 (1,201) 17,314 14,894
Midstream - Liquefaction (394) (573) 93 (1,969) (4,574) (3,980) (4,309) (2,604)
Downstream 7,716 5,626 6,045 13,195 3,621 1,146 2,306 4,491
Corporate 10,519 7,849 8,445 6,270 7,616 (473) 11,275 3,463
Consolidation entries 384 (1,988) 2,205 (2,136) 252 (190) 3,657 (1,596)
Net profit/(loss) 18,545 5,336 (31,713) 9,436 13,197 (19,778) 23,540 699
----------------- ------ ----- ------- ----- ------ ------- ------ ---
Net profit/(loss) per share (dollars)
-------------------------------------
Per Share - Basic 0.38 0.11 (0.66) 0.20 0.27 (0.41) 0.49 0.01
Per Share - Diluted 0.38 0.11 (0.66) 0.19 0.27 (0.41) 0.48 0.01
------------------- ---- ---- ----- ---- ---- ----- ---- ----
((1) )(EBITDA is a non-GAAP measure, please refer to “Non-GAAP EBITDA Reconciliation” in this press release.)
Balance Sheet and Liquidity
InterOil closed 2012 with cash, cash equivalents and cash restricted totaling $98.9 million
(December 2011 – $108.1 million), of which $49.0 million is restricted (December 2010 – $39.3 million).
We also had aggregate working capital facilities of $307.3 million, with $6.2 million available for use in our Midstream Refining operations, and $67.3 million available for use in our Downstream operations.
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 19% in December 2012 from 12% in December 2011.
InterOil has no obligation to execute exploration activities within a set timeframe and therefore has the ability to select the timing of these activities as long as the minimum license commitments in relation to the Company’s PPLs and Petroleum Retention Licenses (“PRL”) are met. Additionally, we have applied for variations to modify the well commitments for PPL 236 and PPL 238. We are awaiting formal approval of variations in relation to our commitments.
Summary of Debt Facilities
Summarized below are the debt facilities available to us and the balances outstanding as at December 31, 2012.
Organization Facility Balance outstanding Effective interest rate Maturity date
December 31, 2012
--- -----------------
ANZ, BSP and BNP
syndicated secured
loan facility $100,000,000 $100,000,000 6.81% November 2017
------------------- ------------ ------------ ---- -------------
BNP working capital
facility $240,000,000 $94,290,479(1) 2.67% See detail below(4)
------------------- ------------ ------------- ---- ------------------
Westpac PGK working
capital facility $43,245,000 - - November 2014
facility
--------
BSP PGK working
capital facility $24,025,000 - - August 2013
----------------- ----------- --- --- -----------
Westpac secured loan $12,857,000 $12,857,000 4.73% September 2015
-------------------- ----------- ----------- ---- --------------
2.75% convertible
notes $70,000,000 $70,000,000 7.91%(3) November 2015
----------------- ----------- ----------- ------- -------------
Mitsui unsecured loan
(2) $11,912,297 $11,912,297 6.24% See detail below
--------------------- ----------- ----------- ---- ----------------
Excludes letters of credit
totaling $139.5 million, which
reduces the available borrowings
under the facility to $6.2
(1) million at December 31, 2012.
Facility is to fund our share of
the Condensate Stripping Project
costs as they are incurred
pursuant to the CSP JVOA with
(2) Mitsui.
Effective rate after bifurcating
the equity and debt components of
the $70 million principal amount
of 2.75% convertible senior notes
(3) due 2015.
In October 2012, the BNP Paribas
working capital facility
agreement with a maximum
availability of $240,000,000 was
amended so that the facility was
made evergreen and the annual
(4) renewal requirement removed.
NON-GAAP EBITDA Reconciliation
EBITDA represents our net income/(loss) plus total interest expense (excluding amortization of debt issuance costs), income tax expense, depreciation and amortization expense. EBITDA is used by us to analyze operating performance. EBITDA does not have a standardized meaning prescribed by GAAP (i.e., IFRS) and, therefore, may not be comparable with the calculation of similar measures for other companies. The items excluded from EBITDA are significant in assessing our operating results. Therefore, EBITDA should not be considered in isolation or as an alternative to net earnings, operating profit, net cash provided from operating activities and other measures of financial performance prepared in accordance with IFRS. Further, EBITDA is not a measure of cash flow under IFRS and should not be considered as such. For reconciliation of EBITDA to the net income (loss) under IFRS, refer to the following table.
The following table reconciles net income (loss), a GAAP measure, to EBITDA, a non-GAAP measure for each of the last eight quarters. Our IFRS transition date was January 1, 2010 and as such, the 2010 comparative information has been restated in accordance with IFRS.
Quarters ended 2012 2011
($ thousands)
Dec-31 Sep-30 Jun-30 Mar-31 Dec-31 Sep-30 Jun-30 Mar-31
------ ------
Upstream (873) 956 (5,730) (6,374) 665 (6,169) 593 (10,957)
Midstream - Refining 12,370 13,417 (42,647) 18,933 2,604 3,461 27,967 26,632
Midstream - Liquefaction 192 11 676 (1,406) (4,123) (3,602) (4,035) (2,375)
Downstream 12,258 9,275 11,102 21,414 6,808 3,570 5,777 8,744
Corporate 14,133 9,841 9,975 9,188 10,134 1,548 13,940 5,223
Consolidation Entries (12,199) (14,503) (9,871) (14,214) (11,280) (10,263) (5,270) (9,200)
Earnings before interest, taxes, depreciation and
amortization 25,881 18,997 (36,495) 27,541 4,808 (11,455) 38,972 18,067
------------------------------------------------- ------ ------ ------- ------ ----- ------- ------ ------
Subtract:
---------
Upstream (11,734) (11,438) (10,517) (9,408) (8,712) (7,806) (7,142) (6,352)
Midstream - Refining (11,390) (1,654) (2,011) (2,771) (3,285) (2,494) (2,211) (1,675)
Midstream - Liquefaction (586) (584) (579) (559) (445) (372) (268) (223)
Downstream (337) (394) (909) (1,233) (1,170) (1,233) (1,116) (826)
Corporate (1,601) (1,540) (1,535) (1,510) (1,498) (1,477) (1,641) (1,395)
Consolidation Entries 12,552 12,482 12,044 12,045 11,500 10,041 8,894 7,572
Interest expense (13,096) (3,128) (3,507) (3,436) (3,610) (3,341) (3,484) (2,899)
---------------- ------- ------ ------ ------ ------ ------ ------ ------
Upstream - - - - - - - -
Midstream - Refining 16,574 (3,484) 14,580 (1,948) 19,243 678 (5,677) (7,298)
Midstream - Liquefaction - - - - - - - -
Downstream (3,070) (1,791) (2,907) (5,746) (595) (297) (1,449) (2,623)
Corporate (1,330) 177 535 (880) (493) (195) (629) 71
Consolidation Entries - - - - - - - -
Income taxes 12,174 (5,098) 12,208 (8,574) 18,155 186 (7,755) (9,850)
------------ ------ ------ ------ ------ ------ --- ------ ------
Upstream (474) (454) 715 (1,462) (1,355) (1,105) (154) (641)
Midstream - Refining (4,153) (2,921) (2,891) (2,894) (2,878) (2,846) (2,764) (2,765)
Midstream - Liquefaction 0 0 (4) (4) (6) (6) (6) (6)
Downstream (1,135) (1,464) (1,241) (1,240) (1,422) (894) (906) (804)
Corporate (683) (629) (530) (528) (527) (349) (395) (435)
Consolidation Entries 31 33 32 33 32 32 32 32
Depreciation and amortisation (6,414) (5,435) (3,919) (6,095) (6,156) (5,168) (4,193) (4,619)
----------------------------- ------ ------ ------ ------ ------ ------ ------ ------
Upstream (13,081) (10,936) (15,532) (17,244) (9,402) (15,080) (6,703) (17,949)
Midstream - Refining 13,401 5,358 (32,969) 11,320 15,684 (1,201) 17,314 14,894
Midstream - Liquefaction (394) (573) 93 (1,969) (4,574) (3,980) (4,309) (2,604)
Downstream 7,716 5,626 6,045 13,195 3,621 1,146 2,306 4,491
Corporate 10,519 7,849 8,445 6,270 7,616 (473) 11,275 3,463
Consolidation Entries 384 (1,988) 2,205 (2,136) 252 (190) 3,657 (1,596)
Net profit/(loss) per segment 18,545 5,336 (31,713) 9,436 13,197 (19,778) 23,540 699
----------------------------- ------ ----- ------- ----- ------ ------- ------ ---
InterOil Corporation
Consolidated Income Statements
(Expressed in United States dollars)
Year ended
----------
December 31, December 31, December 31,
2012 2011 2010
$ $ $
--- --- ---
Revenue
Sales and operating
revenues 1,308,051,816 1,106,533,853 802,374,399
Interest 248,261 1,356,124 150,816
Other 12,257,833 11,058,090 4,470,048
1,320,557,910 1,118,948,067 806,995,263
------------- ------------- -----------
Changes in
inventories of
finished goods and
work in progress 23,799,540 43,934,439 57,010,311
Raw materials and
consumables used (1,242,987,054) (1,064,866,361) (758,566,961)
Administrative and
general expenses (40,825,612) (41,160,824) (41,047,949)
Derivative
(losses)/gains (note
9) (4,229,190) 2,006,321 (1,065,188)
Legal and
professional fees (5,418,210) (6,801,334) (6,902,241)
Exploration costs,
excluding
exploration
impairment (note 14) (13,901,558) (18,435,150) (16,981,929)
Finance costs (28,614,981) (18,163,769) (12,064,982)
Depreciation and
amortization (21,863,367) (20,136,649) (14,274,922)
Gain on conveyance of
oil and gas
properties (note 14) 4,418,170 - 2,140,783
Loss on
extinguishment of
liability - - (30,568,710)
Litigation settlement
expense - - (12,000,000)
Loss on available-
for-sale investment - (3,420,406) -
Foreign exchange
(losses)/gains (43,148) 25,018,661 (10,776,823)
(1,329,665,410) (1,102,025,072) (845,098,611)
-------------- -------------- ------------
(Loss)/profit before
income taxes (9,107,500) 16,922,995 (38,103,348)
Income taxes
Current tax expense
(note 16) (15,883,469) (5,512,842) (3,898,067)
Deferred tax benefit/
(expense) (note 16) 26,594,678 6,248,509 (2,511,656)
---------------------
10,711,209 735,667 (6,409,723)
---------- ------- ----------
Profit/(loss) for
the period 1,603,709 17,658,662 (44,513,071)
----------------- --------- ---------- -----------
Profit/(loss) is attributable to:
Owners of InterOil
Corporation 1,603,709 17,652,461 (44,519,573)
Non-controlling
interest - 6,201 6,502
1,603,709 17,658,662 (44,513,071)
--------- ---------- -----------
Basic profit/(loss)
per share 0.03 0.37 (1.00)
Diluted profit/
(loss) per share 0.03 0.36 (1.00)
Weighted average number of common shares outstanding
Basic (Expressed in
number of common
shares) 48,352,822 47,977,478 44,329,670
Diluted (Expressed in
number of common
shares) 49,357,256 49,214,190 44,329,670
--------------------- ---------- ---------- ----------
See accompanying notes to the consolidated financial statements
InterOil Corporation
Consolidated Balance Sheets
(Expressed in United States dollars)
As at
December 31, December 31, December 31,
2012 2011 2010
$ $ $
--- --- ---
Assets
Current assets:
Cash and cash equivalents (note 6) 49,860,044 68,846,441 233,576,821
Cash restricted (note 9) 37,340,631 32,982,001 40,664,995
Short term treasury bills - held-to-
maturity (note 8) - 11,832,110 -
Trade and other receivables (note 10) 146,948,227 135,273,600 48,047,496
Derivative financial instruments (note
9) 233,922 595,440 -
Other current assets 832,936 867,967 505,059
Inventories (note 11) 194,871,339 171,071,799 127,137,360
Prepaid expenses 8,517,340 5,477,596 3,593,574
Total current assets 438,604,439 426,946,954 453,525,305
-------------------- ----------- ----------- -----------
Non-current assets:
Cash restricted (note 9) 11,670,463 6,268,762 6,613,074
Goodwill (note 12) 6,626,317 6,626,317 6,626,317
Plant and equipment (note 13) 255,031,703 246,043,948 225,205,427
Oil and gas properties (note 14) 515,055,288 362,852,766 255,294,738
Deferred tax assets (note 16) 63,526,458 35,965,273 28,477,690
Other non-current receivables (note 22) 5,000,000 - -
Available-for-sale investments (note
15) 4,304,176 3,650,786 -
Total non-current assets 861,214,405 661,407,852 522,217,246
Total assets 1,299,818,844 1,088,354,806 975,742,551
------------ ------------- ------------- -----------
Liabilities and shareholders' equity
Current liabilities:
Trade and other payables (note 17) 180,026,381 159,882,177 75,132,880
Income tax payable 11,977,681 4,085,137 955,074
Derivative financial instruments (note
9) - 11,457 178,578
Working capital facilities (note 18) 94,290,479 16,480,503 51,254,326
Unsecured loan and current portion of
secured loans (note 19) 31,383,115 19,393,023 14,456,757
Current portion of Indirect
participation interest (note 20) 15,246,397 540,002 540,002
Total current liabilities 332,924,053 200,392,299 142,517,617
------------------------- ----------- ----------- -----------
Non-current liabilities:
Secured loans (note 19) 89,446,137 26,037,166 34,813,222
2.75% convertible notes liability (note
26) 59,046,581 55,637,630 52,425,489
Deferred gain on contributions to LNG
project (note 21) - 5,810,775 8,949,857
Indirect participation interest (note
20) 16,405,393 34,134,840 34,134,387
Other non-current liabilities (note 22) 20,961,380 - -
Asset retirement obligations (note 23) 4,978,334 4,562,269 -
Deferred tax liabilities (note 16) - 1,889,391 -
Total non-current liabilities 190,837,825 128,072,071 130,322,955
----------------------------- ----------- ----------- -----------
Total liabilities 523,761,878 328,464,370 272,840,572
----------------- ----------- ----------- -----------
Equity:
Equity attributable to owners of
InterOil Corporation:
Share capital (note 25) 928,659,756 905,981,614 895,651,052
Authorized - unlimited
Issued and outstanding - 48,607,398
(Dec 31, 2011 - 48,121,071)
(Dec 31, 2010 - 47,800,552)
2.75% convertible notes (note 26) 14,298,036 14,298,036 14,298,036
Contributed surplus (note 27) 21,876,853 25,644,245 16,738,417
Accumulated Other Comprehensive Income 25,032,953 29,380,882 9,261,177
Conversion options (note 20) 12,150,880 12,150,880 12,150,880
Accumulated deficit (225,961,512) (227,565,221) (245,217,682)
Total equity attributable to owners of
InterOil Corporation 776,056,966 759,890,436 702,881,880
Non-controlling interest (note 24) - - 20,099
--------------------------------- --- --- ------
Total equity 776,056,966 759,890,436 702,901,979
Total liabilities and equity 1,299,818,844 1,088,354,806 975,742,551
---------------------------- ------------- ------------- -----------
See accompanying notes to the consolidated financial statements
InterOil Corporation
Consolidated Statements of Cash Flows
(Expressed in United States dollars)
Year ended
----------
December 31, December 31, December 31,
2012 2011 2010
$ $ (revised) $ (revised)
--- ---------- ----------
Cash flows generated from (used in):
Operating activities
Net profit/(loss) for the period 1,603,709 17,658,662 (44,513,071)
Adjustments for non-cash and non-operating transactions
Depreciation and amortization 21,863,367 20,136,649 14,274,922
Deferred tax (29,450,576) (5,598,192) 1,841,473
Gain on conveyance of exploration
assets (4,418,170) - (2,140,783)
Accretion of convertible notes
liability 3,408,951 3,212,141 432,632
Amortization of deferred
financing costs 598,698 223,944 1,223,944
Timing difference between derivatives recognized
and settled 350,061 (762,561) 178,578
Stock compensation expense,
including restricted stock 7,882,067 14,721,387 11,804,000
Inventory write down 322,535 259,406 -
Accretion of asset retirement
obligation liability 331,096 159,356 -
Loss on extinguishment of IPI
Liability - - 30,568,710
Non-cash litigation settlement
expense - - 12,000,000
Loss on Flex LNG investment - 3,420,406 -
Gain on proportionate
consolidation of LNG project - (555,030) -
Unrealized foreign exchange gain (1,070,269) (2,618,814) (72,456)
Change in operating working capital
Increase in trade and other
receivables (31,472,316) (53,064,305) (9,224,005)
(Increase)/decrease in other
current assets and prepaid
expenses (3,004,713) (2,246,930) 3,505,963
Increase in inventories (28,886,641) (28,003,484) (56,115,637)
Increase in trade and other
payables 25,912,734 77,291,915 5,692,543
---------------------------
Net cash (used in)/generated from
operating activities (36,029,467) 44,234,550 (30,543,187)
--------------------------------- ----------- ---------- -----------
Investing activities
Expenditure on oil and gas
properties (184,165,722) (116,492,551) (96,146,987)
Proceeds from IPI cash calls 3,497,542 749,794 23,723,752
Expenditure on plant and
equipment (36,661,897) (42,050,435) (22,560,055)
Proceeds received on sale of
exploration assets - - 15,544,465
Proceeds from Pacific Rubiales
Energy (conveyance accounted
portion) 20,000,000 - -
Maturity of/(investment in)
short term treasury bills 11,832,110 (11,832,110) -
Acquisition of Flex LNG Ltd
shares, including transaction
costs - (7,478,756) -
(Increase)/decrease in restricted
cash held as security on
borrowings (9,760,331) 8,027,306 (17,969,494)
Change in non-operating working capital
Decrease/(increase) in trade and
other receivables 5,000,000 (10,000,000) -
Increase/(decrease) in trade and
other payables 20,545,509 (6,727,960) 3,232,029
--------------------------------
Net cash used in investing
activities (169,712,789) (185,804,712) (94,176,290)
-------------------------- ------------ ------------ -----------
Financing activities
Repayments of OPIC secured loan (35,500,000) (9,000,000) (9,000,000)
Proceeds from Mitsui for
Condensate Stripping Plant 3,578,489 9,872,532 11,913,514
Proceeds from/(repayments of)
Clarion Finanz secured loan, net
of transaction costs - - (1,000,000)
Proceeds from Westpac secured
loan 15,000,000 - -
Repayments of Westpac secured
loan (2,143,000) - -
Proceeds from PNG LNG cash call - 2,247,533 866,600
Proceeds from Pacific Rubiales
Energy for interest in PPL237 20,000,000 - -
Proceeds from Petromin for Elk
and Antelope field development - - 5,000,000
Proceeds from/(repayments of)
working capital facility 77,809,976 (34,773,823) 26,627,907
Proceeds from ANZ, BSP & BNP
syndicated loan (net of
transaction costs) 95,924,091 - -
Proceeds from issue of common
shares, net of transaction costs 11,028,683 4,488,703 211,147,565
Proceeds from issue of
convertible notes, net of
transaction costs - - 66,290,893
Net cash generated from/(used
in) financing activities 185,698,239 (27,165,055) 311,846,479
----------------------------- ----------- ----------- -----------
(Decrease)/increase in cash and
cash equivalents (20,044,017) (168,735,217) 187,127,002
Cash and cash equivalents,
beginning of period 68,846,441 233,576,821 46,449,819
Exchange gains on cash and cash
equivalents 1,057,620 4,004,837 -
Cash and cash equivalents, end of
period 49,860,044 68,846,441 233,576,821
--------------------------------- ---------- ---------- -----------
Comprising of:
Cash on Deposit 49,225,717 18,758,288 233,576,821
Term Deposits 634,327 50,088,153 -
------------- ------- ---------- ---
Total cash and cash equivalents,
end of period 49,860,044 68,846,441 233,576,821
================================ ========== ========== ===========
See accompanying notes to the consolidated financial statements
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 c overing 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 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
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.
Oil and Gas and Resource Information
InterOil currently has no production or reserves as defined in Canadian NI 51-101 or under the definitions established by the United States Securities and Exchange Commission.
The resources information set forth in this press release is based on the 2012 GLJ Report, which was prepared in accordance with NI 51-101 and is included in InterOil’s annual information form for the year ended December 31, 2012, a copy of which has been filed on SEDAR (www.SEDAR.com) and on InterOil’s website (www.interoil.com).
Contingent resources are those quantities of natural gas and condensate estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies. The economic status of the resources is undetermined and there is no certainty that it will be commercially viable to produce any portion of the resources. The following contingencies must be met before the resources can be classified as reserves: (i) sanctioning of the facilities required to process and transport marketable natural gas to market, (ii) confirmation of a market for the marketable natural gas and condensate and (iii) determination of economic viability. Although a final project has not yet been sanctioned, pre-FEED studies are ongoing for the LNG Project and FEED studies conducted for the Condensate Stripping Project as options for potential monetization of the gas and condensate.
The “low” estimate is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will exceed the low estimate. With the probabilistic methods used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the low estimate. The “best” estimate is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the best estimate. With the probabilistic methods used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will equal or exceed the best estimate. The “high” estimate is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will exceed the high estimate. With the probabilistic methods used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed the high estimate.
The accuracy of resource estimates is in part a function of the quality and quantity of the available data and of engineering and geological interpretation and judgment. Other factors in the classification as a resource include a requirement for more delineation wells, detailed design estimates and near term development plans. The size of the resource estimate could be positively impacted, potentially in a material amount, if additional delineation wells determined that the aerial extent, reservoir quality and/or the thickness of the reservoir is larger than what is currently estimated based on the interpretation of the seismic and well data. The size of the resource estimate could be negatively impacted, potentially in a material amount, if additional delineation wells determined that the aerial extent, reservoir quality and/or the thickness of the reservoir are less than what is currently estimated based on the interpretation of the seismic and well data.
All calculations converting natural gas to crude oil equivalent have been made using a ratio of six mcf of natural gas to one barrel of crude equivalent. Boe’s may be misleading, particularly if used in isolation. A boe conversion ratio of six mcf of natural gas to one barrel of crude oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
SOURCE InterOil Corporation
