InterOil Logs Net Loss in Q3 (USA)

InterOil Corporation 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, the Company retained Morgan Stanley & Co. LLC, Macquarie Capital ( USA ) Inc. and UBS AG as joint financial advisors to assist the Company with soliciting and evaluating proposals from potential strategic partners.  The Company anticipates 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 the Company’s 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 the Company in locating its next well in these license areas which the Company is required to drill before the end of March 2013 in compliance with the Company’s 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 .

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LNG World News Staff, November 15, 2011; Image: InterOil