PNG: InterOil Reports 2Q Net Loss

InterOil reported net loss for the quarter ended June 30 of $31.7 million compared with a net profit of $23.5 million for the same period in 2011.

Second Quarter 2012 Highlights and Recent Developments

• InterOil announced confirmation of gas and an increased condensate ratio in an additional 131 feet (40 metres) of pay in the lower of two reservoir intervals based on cased hole testing in the Triceratops-2 well. InterOil believes that these test results along with the confirmation of gas in the upper limestone firmly establish the Triceratops structure as a significant discovery for PNG, InterOil, and its partners. Having tested only a small portion of a structure, InterOil, is looking forward to working with its partner Pacific Rubiales in integrating the new well and potential field data with the aim of designing a seismic data acquisition and six well delineation plan at the Triceratops structure.
• Net loss for the quarter ended June 30, 2012 was $31.7 million. The loss for the quarter includes a $23.8 million inventory write-down resulting from the decline in crude oil and related commodity prices during the period. Excluding the $23.8 million inventory write-down, operating segments of Corporate, Midstream Refining and Downstream collectively derived a net profit for the quarter of $7.5 million, while the investments in the development segments of Upstream and Midstream Liquefaction resulted in a net loss of $15.4 million.
• InterOil’s Rig#2 was released from the Triceratops-2 well on August 13, 2012, and is being mobilized to the Antelope-3 drilling location and Rig#3 is readying for deployment to the Elk-3 drilling location. With access roads from both the north and the south and a central upstream development camp in place, InterOil is set to begin drilling two obligation wells in PRL 15. The Company’s Tuna and Wahoo/Mako prospects targeting seismically defined reefal indications in PPLs 236 and 238 have matured to the drill ready stage and preparations are underway to access proposed drilling locations.

InterOil’s Chief Executive Officer Phil Mulacek commented, “We welcome the pleasure to work with both returning and new ministers of the 9th Parliament of Papua New Guinea to bring an LNG processing facility to Papua New Guinea of a nature and in a manner which will be satisfactory to the State and to the mutual benefit of all stakeholders.”

In regards to the ongoing LNG partnering process, Mr. Mulacek stated “With the sound backing of the new administration in PNG, we are continuing to work with our advisors to finalize selection of an LNG equity partner. The end result of the partnering process is expected to fully satisfy all the terms of the 2009 LNG Project Agreement.”

As to the Triceratops-2 well, Mr. Mulacek noted that, “We are very encouraged by the results of the Triceratops-2 well, the third discovery well. We believe that the Triceratops-2 well is a significant resource discovery. We look forward to continuing to work with the very capable management and technical team of Pacific Rubiales as we delineate Triceratops and further explore PPL 237. Our prospect inventory is maturing and we anticipate that it will support our goal of a multi-year, multiwell exploration program. We believe that these achievements, combined with our strong balance sheet, support our continued growth and operational success.”

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LNG World News Staff, August 14, 2012