PORT MORESBY, Papua New Guinea and HOUSTON, Nov. 15, 2012
/PRNewswire/ -- InterOil Corporation (NYSE:IOC) (POMSoX:IOC) today
announced financial and operating results for the third quarter ended
September 30, 2012 and also certain recent developments.
Third Quarter 2012 Highlights and Recent Developments
As to the Antelope-3 well, Mr. Mulacek noted that, "We are very encouraged by the progress in drilling the Antelope-3 well to near the top of the reservoir. This well is expected to further appraise our resourses.
"Our prospect inventory is maturing and we anticipate that it will support our goal of a multi-year, multi-well exploration program. We believe that these achievements, combined with our strong balance sheet, support our continued growth and operational success."
Corporate Financial Results
Net profit for the quarter ended September 30, 2012 was $5.3 million compared with a net loss of $19.8 million for the same period in 2011, an increase of $25.1 million. Operating segments of Corporate, Midstream Refining and Downstream collectively derived a net profit for the quarter of $16.8 million, while the investments in the development segments of Upstream and Midstream Liquefaction resulted in a net loss of $11.5 million during the quarter.
The improvement in net profit for the quarter was mainly due to a $29.4 million increase in gross margin attributable to the positive crude oil and refined product price movements during the quarter and higher margins from export cargos, among other items.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter ended September 30, 2012 was a gain of $19.0 million versus a loss of $11.5 million for the same period in 2011.
Total revenues increased by $45.0 million from $281.9 million in the quarter ended September 30, 2011 to $326.9 million in the third quarter of 2012, primarily due to higher sales volumes during the period. The total volume of all products sold by us was 2.2 million barrels for quarter ended September 30, 2012, compared with 1.8 million barrels in the same quarter of 2011.
Business Segment Results as of September 30, 2012
Upstream - On July 27, 2012, InterOil executed a farm in agreement with Pacific Rubiales Energy Corp. ("PRE") for PRE to be able to earn a 10.0% net (12.9% gross) participating interest in the PPL 237 onshore Papua New Guinea, including the Triceratops structure located within that license. Rig release from the Triceratops-2 well was received from PNG Department of Petroleum & Energy on August 13, 2012. The Triceratops-2 well has been suspended as a new discovery for recompletion at a later date as a future production well. Demobilization of Rig 2 began immediately for relocation to the Antelope-3 location. As of September 30, 2012, PRE has paid $40.0 million of the $116 million of staged up-front cash payments. Planning of new seismic and drilling location is in progress, and will be finalized once the remapping is complete.
The Antelope-3 well was spud on September 30, 2012. Subsequent to the quarter end, the well was drilled to a depth of 3,642 feet, (1,110 meters), at which depth the 13 ¾ inch casing was set and cemented. Following which, drilling resumed with a 12 ¼ inch bit to the current depth of 5,013 feet (1,528 meters). Forward plan is to drill to the top of the Antelope reservoir estimated at 5,545 feet (1,690 meters), set the second casing string and then continue on to total depth of 8,366 feet (2,550 meters), followed by wireline logging, rotary sidewall coring and drill stem testing.
Pre-spud preparation at the Elk-3 delineation well site is nearing completion. We have begun mobilization of our Rig 3 to the field. All components of Rig 3 have shipped out of Port Moresby by barge to Hou Creek. The objective of the Elk-3 delineation well is to test the Early Miocene to Late Oligocene limestone section above the gas water contact in the Elk fault block. The Early Miocene to Late Oligocene interval in the Elk-2 well was comprised of shallow marine and reefoid facies below the gas water contact. This lower interval exhibited better porosity and permeability than the shallower facies penetrated in the upper reservoir.
Our Hou Creek northern wharf and field access roadway are progressing to completion, and a permanent camp location is under construction. The wharf and crane are functioning and ready to accept materials and equipment. InterOil has also completed the upstream field development camp near the Antelope-3 wellsite and drilling crews are utilizing those accommodations.
InterOil's Upstream business realized a net loss of $10.9 million in the third quarter of 2012 compared to a net loss of $15.1 million in the comparable period a year ago. The decrease in the loss in 2012 was mainly due to reduced exploration costs incurred for seismic activity coupled with an increase in gain on the sale of oil and gas properties due to the gain recognized on sale of interest in PPL 237 to PRE. The positive variance was partially offset by higher interest expense due to an increase in inter-company loan balances.
Midstream Refining – Total refinery throughput for the quarter ended September 30, 2012 was 23,980 barrels per operating day, compared with 23,797 barrels per operating day during quarter ended September 30, 2011.
Capacity utilization of the refinery for the quarter ended September 30, 2012, based on 36,500 barrels per day operating capacity, was 61% compared with 56% for the same quarter in 2011. During the quarters ended September 30, 2012 and 2011, our refinery was shut down for 9 days and 15 days, respectively, for general maintenance activities.
Subsequent to quarter end, on October 16, 2012, the Company entered into a five year amortizing $100 million secured term loan facility with BNP Paribas Singapore, Bank South Pacific Limited, and Australia and New Zealand Banking Group (PNG) Limited. On November 9, 2012, borrowings under the facility were used to repay all outstanding amounts under the term loan granted by OPIC and the remaining funds will be used for general corporate purposes. The loan is secured by the assets of the refinery and bears interest at LIBOR plus 6.5%.
The Company's Midstream Refining operations generated a net profit of $5.4 million in the third quarter of 2012 versus a loss of $1.2 million in the prior year period. The positive variance is largely due to an improvement in gross margin resulting from improved crude oil and refined product prices, which were partially offset by higher derivative losses incurred for commodity contracts settled during the periods, a decrease in foreign exchange gains and increased income tax expense.
Midstream Liquefaction – Following receipt of the required PNG Government approvals, InterOil believes it will be able to conclude the LNG partnering process. We have made significant progress with FEED engineering studies, construction of roads and camps, social mapping and genealogical studies, which will assist in the partnering and execution of the project.
The Company's Midstream Liquefaction business generated a net loss of $0.6 million in the third quarter of 2012 compared with a loss of $4.0 million in the same period a year ago. The positive variance is largely due to a decrease in office, administration and other expenses related to the midstream facilities of the LNG Project development which are not capitalized.
Downstream - Total Downstream sales volumes for the quarter ended September 30, 2012 were 185.0 million litres, an increase of 22.5 million litres, or 13.8%, over the same quarter in 2011.
We believe that the PNG economy remains strong with continued robust activity in the resource sector although this is tempered by certain construction projects for the ExxonMobil LNG project now nearing an end. For this reason and with the completion of many construction projects in the commercial office and residential sectors, it is believed that demands will flatten in the short term for diesel and jet A1.
Our retail business sector continues to grow with the roll out of new electronic systems for our retail pumps and truck stops, and it is our intention to start operating our first retail site during the fourth quarter 2012.
InterOil's Downstream operations generated a net profit of $5.6 million in the third quarter of 2012, an improvement of $4.5 million versus a profit of $1.1 million in the previous year. The positive variance is largely due to an increase in gross margins mainly due to an increase in domestic sales volumes, which was partially offset by reduced foreign exchange gains and increased income tax expense.
Corporate – The Corporate segment generated a net profit of $7.8 million in the third quarter of 2012, compared to a net loss of $0.5 million in the same period of 2011. The positive variance is largely the result of a decreased loss on FLEX LNG investment, a decrease in office and administration expense, and higher interest income, which was partially offset by a decrease in inter-segment recharges.
Summary of Consolidated Quarterly Financial Results for Past Eight Quarters
Balance Sheet and Liquidity InterOil
closed the third quarter ended September 30, 2012 with cash, cash
equivalents and cash restricted totaling $96.9 million (September 30,
2011 - $144.4 million), of which $39.6 million is restricted (September
30, 2011 - $30.1 million).
We also had aggregate working capital facilities of $307.3 million, with $21.1 million available for use in our Midstream Refining operations, and $49.4 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 13.0% as of September 30, 2012 which compares to 12.7% as of September 30, 2011.
Subsequent to the close of the third quarter, on October 16, 2012, we entered into a five year amortizing $100 million secured term loan facility with BNP Paribas Singapore, Bank South Pacific Limited, and Australia and New Zealand Banking Group (PNG) Limited. On November 9, 2012, borrowings under the facility were used to repay all outstanding amounts under the term loan granted by OPIC, and the remaining funds will be used for general corporate purposes. The loan is secured by the assets of the refinery and bears interest at LIBOR plus 6.5%.
Summary of Debt Facilities Summarized below are the debt facilities available to us and the balances outstanding as at September 30, 2012.
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.
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 covering 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.
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 drilling
plans, objectives of drilling plans, timing of drilling plans, further
testing of wells, development activities including plans to deploy
InterOil's rigs, the development of the proposed LNG processing
facility, the ability to attract a strategic LNG partner, timing and
success of the LNG partnering process, approval by the PNG Government of
InterOil's LNG project, satisfaction of the State of InterOil's
development plans and satisfaction of the terms of the 2009 LNG Project
Agreement with the State, benefits to stakeholders, the relationship
with PRE, characteristics of our resources, completion of the farm-in
transaction with PRE, satisfaction and timing of conditions to
completion of the farm-in transaction with PRE, timing of FEED on the
liquefaction facilities, the economic conditions of PNG and demand for
InterOil's products, growth of InterOil's retail business sector and
timing of such growth, initiatives and timing of such initiatives,
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. These statements are based on certain
assumptions made by the Company based on its experience and perception
of current conditions, expected future developments, agreements with
third parties, bids received in respect of the LNG partnering process
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, 2011 on Form 40-F and its Annual
Information Form for the year ended December 31, 2011. 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, Antelope and Triceratops 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.
SOURCE InterOil Corporation
Third Quarter 2012 Highlights and Recent Developments
- Net profit for the quarter ended September 30, 2012 was $5.3 million. Operating segments of Corporate, Midstream Refining and Downstream collectively derived a net profit for the quarter of $16.8 million, while the investments in the development segments of Upstream and Midstream Liquefaction resulted in a net loss of $11.5 million.
- After successfully running and cementing 13 3/8 inch casing at 3,632 feet (1,107 meters) at Antelope-3, InterOil's rig 2 has drilled the well to a depth of 5,013 feet (1,528 meters). Forward plan is to drill to the top of the Antelope reservoir estimated at 5,545 feet (1,690 meters) and then continue on to total depth of 8,366 feet (2,550 meters), followed by wireline logging, rotary sidewall coring and drill stem testing.
- Rig 3 is being mobilized 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 the second of two obligation wells in Petroleum Retention License (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 to access to the proposed drilling locations are underway.
- Subsequent to quarter end, on October 16, 2012, the Company entered into a five year amortizing $100 million secured term loan facility with BNP Paribas Singapore, Bank South Pacific Limited, and Australia and New Zealand Banking Group (PNG) Limited which was used to repay indebtedness under the OPIC loan, with the remaining amount to be used for general corporate purposes. The loan is secured by the assets of the refinery and bears interest at LIBOR plus 6.5%.
As to the Antelope-3 well, Mr. Mulacek noted that, "We are very encouraged by the progress in drilling the Antelope-3 well to near the top of the reservoir. This well is expected to further appraise our resourses.
"Our prospect inventory is maturing and we anticipate that it will support our goal of a multi-year, multi-well exploration program. We believe that these achievements, combined with our strong balance sheet, support our continued growth and operational success."
Corporate Financial Results
Net profit for the quarter ended September 30, 2012 was $5.3 million compared with a net loss of $19.8 million for the same period in 2011, an increase of $25.1 million. Operating segments of Corporate, Midstream Refining and Downstream collectively derived a net profit for the quarter of $16.8 million, while the investments in the development segments of Upstream and Midstream Liquefaction resulted in a net loss of $11.5 million during the quarter.
The improvement in net profit for the quarter was mainly due to a $29.4 million increase in gross margin attributable to the positive crude oil and refined product price movements during the quarter and higher margins from export cargos, among other items.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for the quarter ended September 30, 2012 was a gain of $19.0 million versus a loss of $11.5 million for the same period in 2011.
Total revenues increased by $45.0 million from $281.9 million in the quarter ended September 30, 2011 to $326.9 million in the third quarter of 2012, primarily due to higher sales volumes during the period. The total volume of all products sold by us was 2.2 million barrels for quarter ended September 30, 2012, compared with 1.8 million barrels in the same quarter of 2011.
Business Segment Results as of September 30, 2012
Upstream - On July 27, 2012, InterOil executed a farm in agreement with Pacific Rubiales Energy Corp. ("PRE") for PRE to be able to earn a 10.0% net (12.9% gross) participating interest in the PPL 237 onshore Papua New Guinea, including the Triceratops structure located within that license. Rig release from the Triceratops-2 well was received from PNG Department of Petroleum & Energy on August 13, 2012. The Triceratops-2 well has been suspended as a new discovery for recompletion at a later date as a future production well. Demobilization of Rig 2 began immediately for relocation to the Antelope-3 location. As of September 30, 2012, PRE has paid $40.0 million of the $116 million of staged up-front cash payments. Planning of new seismic and drilling location is in progress, and will be finalized once the remapping is complete.
The Antelope-3 well was spud on September 30, 2012. Subsequent to the quarter end, the well was drilled to a depth of 3,642 feet, (1,110 meters), at which depth the 13 ¾ inch casing was set and cemented. Following which, drilling resumed with a 12 ¼ inch bit to the current depth of 5,013 feet (1,528 meters). Forward plan is to drill to the top of the Antelope reservoir estimated at 5,545 feet (1,690 meters), set the second casing string and then continue on to total depth of 8,366 feet (2,550 meters), followed by wireline logging, rotary sidewall coring and drill stem testing.
Pre-spud preparation at the Elk-3 delineation well site is nearing completion. We have begun mobilization of our Rig 3 to the field. All components of Rig 3 have shipped out of Port Moresby by barge to Hou Creek. The objective of the Elk-3 delineation well is to test the Early Miocene to Late Oligocene limestone section above the gas water contact in the Elk fault block. The Early Miocene to Late Oligocene interval in the Elk-2 well was comprised of shallow marine and reefoid facies below the gas water contact. This lower interval exhibited better porosity and permeability than the shallower facies penetrated in the upper reservoir.
Our Hou Creek northern wharf and field access roadway are progressing to completion, and a permanent camp location is under construction. The wharf and crane are functioning and ready to accept materials and equipment. InterOil has also completed the upstream field development camp near the Antelope-3 wellsite and drilling crews are utilizing those accommodations.
InterOil's Upstream business realized a net loss of $10.9 million in the third quarter of 2012 compared to a net loss of $15.1 million in the comparable period a year ago. The decrease in the loss in 2012 was mainly due to reduced exploration costs incurred for seismic activity coupled with an increase in gain on the sale of oil and gas properties due to the gain recognized on sale of interest in PPL 237 to PRE. The positive variance was partially offset by higher interest expense due to an increase in inter-company loan balances.
Midstream Refining – Total refinery throughput for the quarter ended September 30, 2012 was 23,980 barrels per operating day, compared with 23,797 barrels per operating day during quarter ended September 30, 2011.
Capacity utilization of the refinery for the quarter ended September 30, 2012, based on 36,500 barrels per day operating capacity, was 61% compared with 56% for the same quarter in 2011. During the quarters ended September 30, 2012 and 2011, our refinery was shut down for 9 days and 15 days, respectively, for general maintenance activities.
Subsequent to quarter end, on October 16, 2012, the Company entered into a five year amortizing $100 million secured term loan facility with BNP Paribas Singapore, Bank South Pacific Limited, and Australia and New Zealand Banking Group (PNG) Limited. On November 9, 2012, borrowings under the facility were used to repay all outstanding amounts under the term loan granted by OPIC and the remaining funds will be used for general corporate purposes. The loan is secured by the assets of the refinery and bears interest at LIBOR plus 6.5%.
The Company's Midstream Refining operations generated a net profit of $5.4 million in the third quarter of 2012 versus a loss of $1.2 million in the prior year period. The positive variance is largely due to an improvement in gross margin resulting from improved crude oil and refined product prices, which were partially offset by higher derivative losses incurred for commodity contracts settled during the periods, a decrease in foreign exchange gains and increased income tax expense.
Midstream Liquefaction – Following receipt of the required PNG Government approvals, InterOil believes it will be able to conclude the LNG partnering process. We have made significant progress with FEED engineering studies, construction of roads and camps, social mapping and genealogical studies, which will assist in the partnering and execution of the project.
The Company's Midstream Liquefaction business generated a net loss of $0.6 million in the third quarter of 2012 compared with a loss of $4.0 million in the same period a year ago. The positive variance is largely due to a decrease in office, administration and other expenses related to the midstream facilities of the LNG Project development which are not capitalized.
Downstream - Total Downstream sales volumes for the quarter ended September 30, 2012 were 185.0 million litres, an increase of 22.5 million litres, or 13.8%, over the same quarter in 2011.
We believe that the PNG economy remains strong with continued robust activity in the resource sector although this is tempered by certain construction projects for the ExxonMobil LNG project now nearing an end. For this reason and with the completion of many construction projects in the commercial office and residential sectors, it is believed that demands will flatten in the short term for diesel and jet A1.
Our retail business sector continues to grow with the roll out of new electronic systems for our retail pumps and truck stops, and it is our intention to start operating our first retail site during the fourth quarter 2012.
InterOil's Downstream operations generated a net profit of $5.6 million in the third quarter of 2012, an improvement of $4.5 million versus a profit of $1.1 million in the previous year. The positive variance is largely due to an increase in gross margins mainly due to an increase in domestic sales volumes, which was partially offset by reduced foreign exchange gains and increased income tax expense.
Corporate – The Corporate segment generated a net profit of $7.8 million in the third quarter of 2012, compared to a net loss of $0.5 million in the same period of 2011. The positive variance is largely the result of a decreased loss on FLEX LNG investment, a decrease in office and administration expense, and higher interest income, which was partially offset by a decrease in inter-segment recharges.
Summary of Consolidated Quarterly Financial Results for Past Eight Quarters
| Quarters ended ($ thousands except per share data) | 2012 | 2011 | 2010 | |||||
| Sep-30 | Jun-30 | Mar-31 | Dec-31 | Sep-30 | Jun-30 | Mar-31 | Dec-31 | |
| Upstream | 2,216 | 1,727 | 2,284 | 1,891 | 2,645 | 4,638 | 668 | 245 |
| Midstream – Refining | 274,671 | 236,006 | 302,310 | 237,640 | 231,455 | 262,111 | 217,743 | 158,092 |
| Midstream – Liquefaction | - | - | - | - | - | - | - | - |
| Downstream | 201,749 | 223,620 | 218,974 | 209,678 | 186,304 | 191,431 | 157,709 | 143,364 |
| Corporate | 26,880 | 24,742 | 24,757 | 21,831 | 25,078 | 26,548 | 18,659 | 15,213 |
| Consolidation entries | (178,652) | (186,990) | (210,174) | (181,428) | (163,584) | (180,945) | (151,125) | (122,545) |
| Total revenues | 326,864 | 299,105 | 338,151 | 289,612 | 281,898 | 303,783 | 243,654 | 194,369 |
| Upstream | 956 | (5,730) | (6,374) | 665 | (6,169) | 593 | (10,957) | (41,681) |
| Midstream – Refining | 13,417 | (42,647) | 18,933 | 2,604 | 3,461 | 27,967 | 26,632 | 13,780 |
| Midstream – Liquefaction | 11 | 676 | (1,406) | (4,123) | (3,602) | (4,035) | (2,375) | (1,959) |
| Downstream | 9,275 | 11,102 | 21,414 | 6,808 | 3,570 | 5,777 | 8,744 | 4,709 |
| Corporate | 9,841 | 9,975 | 9,188 | 10,134 | 1,548 | 13,940 | 5,223 | 4,566 |
| Consolidation entries | (14,503) | (9,871) | (14,216) | (11,280) | (10,263) | (5,269) | (9,200) | (7,004) |
| EBITDA (1) | 18,997 | (36,495) | 27,539 | 4,808 | (11,455) | 38,973 | 18,067 | (27,589) |
| Upstream | (10,936) | (15,532) | (17,244) | (9,402) | (15,080) | (6,703) | (17,949) | (47,845) |
| Midstream – Refining | 5,358 | (32,969) | 11,320 | 15,684 | (1,201) | 17,314 | 14,894 | 9,504 |
| Midstream – Liquefaction | (573) | 93 | (1,969) | (4,574) | (3,980) | (4,309) | (2,604) | (2,114) |
| Downstream | 5,626 | 6,045 | 13,195 | 3,621 | 1,146 | 2,306 | 4,491 | 2,643 |
| Corporate | 7,849 | 8,445 | 6,270 | 7,616 | (473) | 11,275 | 3,463 | 3,381 |
| Consolidation entries | (1,988) | 2,205 | (2,136) | 252 | (190) | 3,657 | (1,596) | (401) |
| Net profit/(loss) | 5,336 | (31,713) | 9,436 | 13,197 | (19,778) | 23,540 | 699 | (34,832) |
| Net profit/(loss) per share (dollars) | ||||||||
| Per Share – Basic | 0.11 | (0.66) | 0.20 | 0.27 | (0.41) | 0.49 | 0.01 | (0.76) |
| Per Share – Diluted | 0.11 | (0.66) | 0.19 | 0.27 | (0.41) | 0.48 | 0.01 | (0.76) |
| (1) | EBITDA is a non-GAAP measure, please refer to "Non-GAAP EBITDA Reconciliation" in this press release. |
We also had aggregate working capital facilities of $307.3 million, with $21.1 million available for use in our Midstream Refining operations, and $49.4 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 13.0% as of September 30, 2012 which compares to 12.7% as of September 30, 2011.
Subsequent to the close of the third quarter, on October 16, 2012, we entered into a five year amortizing $100 million secured term loan facility with BNP Paribas Singapore, Bank South Pacific Limited, and Australia and New Zealand Banking Group (PNG) Limited. On November 9, 2012, borrowings under the facility were used to repay all outstanding amounts under the term loan granted by OPIC, and the remaining funds will be used for general corporate purposes. The loan is secured by the assets of the refinery and bears interest at LIBOR plus 6.5%.
Summary of Debt Facilities Summarized below are the debt facilities available to us and the balances outstanding as at September 30, 2012.
| Organization | Facility | Balance outstanding Sept 31, 2012 | Effective interest rate | Maturity date |
| OPIC secured loan (1) | $31,000,000 | $31,000,000 | 7.06% | December 2015 |
| BNP Paribas working capital facility | $240,000,000 | $69,174,302 (2) | 2.70% | January 2013 |
| Westpac PGK working capital facilityfacility | $43,245,000 | $10,898,580 | 10.0% | November 2014 |
| BSP PGK working capital facility | $24,025,000 | $7,003,404 | 9.95% | August 2013 |
| Westpac secured loan | $12,857,000 | $12,857,000 | 4.77% | September 2015 |
| 2.75% convertible notes | $70,000,000 | $70,000,000 | 7.91%(3) | November 2015 |
| Mitsui unsecured loan (4) | $11,912,297 | $11,912,297 | 6.25% | See detail below |
| (1) | Subsequent to the end of the quarter we entered into a new $100 million loan facility and on November 9,2012, used a portion of the proceeds from this facility to repay all amounts under the OPIC facility |
| (2) | Excludes letters of credit totaling 149.7 million, which reduce the available balance of the facility to $21.1 million at September 30, 2012. |
| (3) | Effective rate after bifurcating the equity and debt components of the $70 million principal amount of 2.75% convertible senior notes due 2015. |
| (4) | Facility is to fund our share of the Condensate Stripping Project costs as they are incurred pursuant to the JVOA with Mitsui ("CSP JVOA"). |
| InterOil Corporation | ||||
| Consolidated Income Statements | ||||
| (Unaudited, Expressed in United States dollars) | ||||
| Quarter ended | Nine months ended | |||
| September 30, | September 30, | September 30, | September 30, | |
| 2012 | 2011 | 2012 | 2011 | |
| $ | $ | $ | $ | |
| Revenue | ||||
| Sales and operating revenues | 324,109,090 | 278,499,694 | 956,335,547 | 819,484,250 |
| Interest | 23,381 | 368,768 | 226,360 | 952,421 |
| Other | 2,732,247 | 3,029,088 | 7,557,014 | 8,898,772 |
| 326,864,718 | 281,897,550 | 964,118,921 | 829,335,443 | |
| Changes in inventories of finished goods and work in progress | (35,607,503) | (31,631,324) | (6,263,770) | 43,859,762 |
| Raw materials and consumables used | (250,722,505) | (238,480,416) | (896,694,438) | (787,256,505) |
| Administrative and general expenses | (11,213,365) | (11,809,956) | (31,174,931) | (33,119,377) |
| Derivative (losses)/gains | (4,929,234) | 1,914,207 | (4,715,186) | 1,498,275 |
| Legal and professional fees | (1,656,287) | (1,538,559) | (3,877,763) | (4,498,526) |
| Exploration costs, excluding exploration impairment (note 6) | (2,056,367) | (6,568,147) | (14,660,051) | (16,636,215) |
| Finance costs | (4,209,765) | (4,448,608) | (13,646,887) | (13,185,060) |
| Depreciation and amortization | (5,435,498) | (5,168,473) | (15,449,807) | (13,980,789) |
| Gain on sale of oil and gas properties (note 11) | 2,895,000 | - | 2,895,000 | - |
| Loss on available-for-sale investment | - | (6,048,537) | - | (1,834,279) |
| Foreign exchange (losses)/gains | (3,495,353) | 1,918,158 | 3,990,338 | 17,696,737 |
| (316,430,877) | (301,861,655) | (979,597,495) | (807,455,977) | |
| Profit/(loss) before income taxes | 10,433,841 | (19,964,105) | (15,478,574) | 21,879,466 |
| Income taxes | ||||
| Current tax expense | (2,561,068) | (116,517) | (11,623,696) | (4,488,623) |
| Deferred tax (expense)/benefit | (2,537,251) | 302,687 | 10,160,813 | (12,930,404) |
| (5,098,319) | 186,170 | (1,462,883) | (17,419,027) | |
| Profit/(loss) for the period | 5,335,522 | (19,777,935) | (16,941,457) | 4,460,439 |
| Profit/(loss) is attributable to: | ||||
| Owners of InterOil Corporation | 5,335,522 | (19,777,694) | (16,941,457) | 4,454,238 |
| Non-controlling interest | - | (241) | - | 6,201 |
| 5,335,522 | (19,777,935) | (16,941,457) | 4,460,439 | |
| Basic profit/(loss) per share | 0.11 | (0.41) | (0.35) | 0.09 |
| Diluted profit/(loss) per share | 0.11 | (0.41) | (0.35) | 0.09 |
| Weighted average number of common shares outstanding | ||||
| Basic (Expressed in number of common shares) | 48,445,397 | 47,993,229 | 48,271,469 | 47,936,721 |
| Diluted (Expressed in number of common shares) | 48,785,877 | 47,993,229 | 48,271,469 | 48,857,182 |
| See accompanying notes to the consolidated financial statements | ||||
| InterOil Corporation | ||||
| Consolidated Balance Sheets | ||||
| (Unaudited, Expressed in United States dollars) | ||||
| As at | ||||
| September 30, | December 31, | September 30, | ||
| 2012 | 2011 | 2011 | ||
| $ | $ | $ | ||
| Assets | ||||
| Current assets: | ||||
| Cash and cash equivalents | 57,291,559 | 68,846,441 | 114,330,510 | |
| Cash restricted | 33,610,455 | 32,982,001 | 23,543,921 | |
| Short term treasury bills - held-to-maturity | - | 11,832,110 | 11,324,929 | |
| Trade and other receivables | 149,852,154 | 135,273,600 | 105,377,991 | |
| Derivative financial instruments | - | 595,440 | 413,093 | |
| Other current assets | 906,644 | 867,967 | 755,309 | |
| Inventories (note 5) | 164,808,029 | 171,071,799 | 170,997,122 | |
| Prepaid expenses | 5,891,713 | 5,477,596 | 2,361,925 | |
| Total current assets | 412,360,554 | 426,946,954 | 429,104,800 | |
| Non-current assets: | ||||
| Cash restricted | 5,980,832 | 6,268,762 | 6,530,817 | |
| Goodwill | 6,626,317 | 6,626,317 | 6,626,317 | |
| Plant and equipment | 251,556,473 | 246,043,948 | 237,330,322 | |
| Oil and gas properties (note 6) | 472,077,713 | 362,852,766 | 330,346,730 | |
| Deferred tax assets | 47,585,649 | 35,965,273 | 742,379 | |
| Available-for-sale investments | 5,462,570 | 3,650,786 | 5,644,478 | |
| Total non-current assets | 789,289,554 | 661,407,852 | 587,221,043 | |
| Total assets | 1,201,650,108 | 1,088,354,806 | 1,016,325,843 | |
| Liabilities and shareholders' equity | ||||
| Current liabilities: | ||||
| Trade and other payables | 172,929,668 | 159,882,177 | 91,957,476 | |
| Income tax payable | 9,592,164 | 4,085,137 | 2,883,220 | |
| Derivative financial instruments | 371,143 | 11,457 | 318,736 | |
| Working capital facilities (note 7) | 87,076,286 | 16,480,503 | 48,085,248 | |
| Unsecured loan and current portion of secured loans (note 9) | 25,198,297 | 19,393,023 | 19,393,023 | |
| Current portion of Indirect participation interest (note 10) | 13,770,156 | 540,002 | 540,002 | |
| Total current liabilities | 308,937,714 | 200,392,299 | 163,177,705 | |
| Non-current liabilities: | ||||
| Secured loans (note 9) | 30,238,125 | 26,037,166 | 30,481,180 | |
| 2.75% convertible notes liability | 58,175,245 | 55,637,630 | 54,816,599 | |
| Deferred gain on contributions to LNG project | 746,834 | 5,810,775 | 7,263,210 | |
| Indirect participation interest (note 10) | 20,904,686 | 34,134,840 | 34,134,387 | |
| Other non-current liabilities (note 11) | 20,000,000 | - | - | |
| Asset retirement obligations | 4,947,101 | 4,562,269 | 4,289,444 | |
| Deferred tax liabilities | - | 1,889,391 | - | |
| Total non-current liabilities | 135,011,991 | 128,072,071 | 130,984,820 | |
| Total liabilities | 443,949,705 | 328,464,370 | 294,162,525 | |
| Equity: | ||||
| Equity attributable to owners of InterOil Corporation: | ||||
| Share capital (note 12) | 927,913,817 | 905,981,614 | 902,114,261 | |
| Authorized - unlimited | ||||
| Issued and outstanding - 48,587,461 | ||||
| (Dec 31, 2011 - 48,121,071) | ||||
| (Sep 30, 2011 - 48,000,131) | ||||
| 2.75% convertible notes | 14,298,036 | 14,298,036 | 14,298,036 | |
| Contributed surplus | 20,107,937 | 25,644,245 | 24,552,456 | |
| Accumulated Other Comprehensive Income | 27,736,411 | 29,380,882 | 24,164,391 | |
| Conversion options | 12,150,880 | 12,150,880 | 12,150,880 | |
| Accumulated deficit | (244,506,678) | (227,565,221) | (255,143,006) | |
| Total equity attributable to owners of InterOil Corporation | 757,700,403 | 759,890,436 | 722,137,018 | |
| Non-controlling interest | - | - | 26,300 | |
| Total equity | 757,700,403 | 759,890,436 | 722,163,318 | |
| Total liabilities and equity | 1,201,650,108 | 1,088,354,806 | 1,016,325,843 | |
| See accompanying notes to the consolidated financial statements | ||||
| InterOil Corporation | ||||
| Consolidated Statements of Cash Flows | ||||
| (Unaudited, Expressed in United States dollars) | ||||
| Quarter ended | Nine months ended | |||
| September 30, | September 30, | September 30, | September 30, | |
| 2012 | 2011 | 2012 | 2011 | |
| $ | $ | $ | $ | |
| Cash flows generated from (used in): | ||||
| Operating activities | ||||
| Net profit/(loss) for the period | 5,335,522 | (19,777,935) | (16,941,457) | 4,460,439 |
| Adjustments for non-cash and non-operating transactions | ||||
| Depreciation and amortization | 5,435,498 | 5,168,473 | 15,449,807 | 13,980,789 |
| Deferred tax | 2,872,882 | (66,555) | (13,509,767) | 13,355,749 |
| Gain on sale of exploration assets | (2,895,000) | - | (2,895,000) | - |
| Accretion of convertible notes liability | 858,478 | 808,915 | 2,537,615 | 2,391,110 |
| Amortization of deferred financing costs | 36,986 | 55,986 | 129,959 | 167,958 |
| Timing difference between derivatives recognized | ||||
| and settled | 1,122,929 | (89,857) | 955,126 | (272,935) |
| Stock compensation expense, including restricted stock | 2,112,932 | 4,029,821 | 5,777,472 | 11,728,248 |
| Movement in inventory write down | (24,636,489) | (3,255,318) | - | 3,417,882 |
| Accretion of asset retirement obligation liability | 82,774 | 79,678 | 248,322 | 79,678 |
| Oil and gas properties expensed | 2,056,367 | 6,568,147 | 14,660,051 | 16,636,215 |
| Loss on Flex LNG investment | - | 6,048,537 | - | 1,834,279 |
| Unrealized foreign exchange loss/(gain) | 22,277 | (3,763,825) | (876,631) | (1,847,242) |
| Change in operating working capital | ||||
| (Increase)/decrease in trade and other receivables | (31,466,298) | 4,515,067 | (23,460,485) | (35,290,574) |
| Decrease/(increase) in other current assets and prepaid expenses | 2,360,590 | 637,017 | (452,794) | 981,399 |
| Decrease/(increase) in inventories | 59,593,399 | 35,072,018 | 4,014,645 | (37,484,446) |
| Increase in trade and other payables | 6,708,330 | 13,422,313 | 6,017,991 | 23,754,298 |
| Net cash generated from/(used in) operating activities | 29,601,177 | 49,452,482 | (8,345,146) | 17,892,847 |
| Investing activities | ||||
| Expenditure on oil and gas properties | (46,034,941) | (35,025,246) | (149,275,108) | (98,420,370) |
| Proceeds from IPI cash calls | - | 91,138 | 3,497,542 | 91,138 |
| Expenditure on plant and equipment | (12,526,263) | (10,442,871) | (26,026,273) | (23,691,596) |
| Proceeds from Pacific Rubiales Energy (conveyance accounted portion) | - | - | 20,000,000 | - |
| Maturity of short term treasury bills | - | (11,324,929) | 11,832,110 | (11,324,929) |
| Acquisition of Flex LNG Ltd shares, including transaction costs | - | - | - | (7,478,756) |
| Decrease/(increase) in restricted cash held as security on | ||||
| borrowings | 906,997 | 6,453,266 | (340,524) | 17,203,331 |
| Change in non-operating working capital | ||||
| Increase in trade and other receivables | - | (10,000,000) | - | (10,000,000) |
| Increase/(decrease) in trade and other payables | 14,342,166 | (916,001) | 22,892,495 | (10,763,171) |
| Net cash used in investing activities | (43,312,041) | (61,164,643) | (117,419,758) | (144,384,353) |
| Financing activities | ||||
| Repayments of OPIC secured loan | - | - | (4,500,000) | (4,500,000) |
| Proceeds from Mitsui for Condensate Stripping Plant | 3,578,489 | 551,562 | 3,578,489 | 9,872,532 |
| Proceeds from Westpac secured loan | - | - | 15,000,000 | - |
| Repayments of Westpac secured loan | (2,143,000) | - | (2,143,000) | - |
| Proceeds from Pacific Rubiales Energy for interest in PPL237 | 20,000,000 | - | 20,000,000 | - |
| Proceeds from working capital facility | 24,188,225 | (45,633,592) | 70,595,783 | (3,169,078) |
| Proceeds from issue of common shares, net of transaction costs | 4,757,023 | 192,550 | 10,618,423 | 2,549,000 |
| Net cash generated from financing activities | 50,380,737 | (44,889,480) | 113,149,695 | 4,752,454 |
| Increase/(decrease) in cash and cash equivalents | 36,669,873 | (56,601,641) | (12,615,209) | (121,739,052) |
| Cash and cash equivalents, beginning of period | 20,623,574 | 168,439,410 | 68,846,441 | 233,576,821 |
| Exchange gains on cash and cash equivalents | (1,888) | 2,492,741 | 1,060,327 | 2,492,741 |
| Cash and cash equivalents, end of period | 57,291,559 | 114,330,510 | 57,291,559 | 114,330,510 |
| Comprising of: | ||||
| Cash on Deposit | 56,656,729 | 23,684,485 | 56,656,729 | 23,684,485 |
| Term Deposits | 634,830 | 90,646,025 | 634,830 | 90,646,025 |
| Total cash and cash equivalents, end of period | 57,291,559 | 114,330,510 | 57,291,559 | 114,330,510 |
| See accompanying notes to the consolidated financial statements | ||||
The following table reconciles net income (loss), a GAAP measure, to EBITDA, a non-GAAP measure for each of the last eight quarters.
| Quarters ended ($ thousands) | 2012 | 2011 | 2010 | |||||
| Sep-30 | Jun-30 | Mar-31 | Dec-31 | Sep-30 | Jun-30 | Mar-31 | Dec-31 | |
| Upstream | 956 | (5,730) | (6,374) | 665 | (6,169) | 593 | (10,957) | (41,681) |
| Midstream – Refining | 13,417 | (42,647) | 18,933 | 2,604 | 3,461 | 27,967 | 26,632 | 13,780 |
| Midstream – Liquefaction | 11 | 676 | (1,406) | (4,123) | (3,602) | (4,035) | (2,375) | (1,959) |
| Downstream | 9,275 | 11,102 | 21,414 | 6,808 | 3,570 | 5,777 | 8,744 | 4,709 |
| Corporate | 9,841 | 9,975 | 9,188 | 10,134 | 1,548 | 13,940 | 5,223 | 4,566 |
| Consolidation Entries | (14,503) | (9,871) | (14,214) | (11,280) | (10,263) | (5,270) | (9,200) | (7,004) |
| Earnings before interest, taxes, depreciation and amortization | 18,997 | (36,495) | 27,541 | 4,808 | (11,455) | 38,972 | 18,067 | (27,589) |
| Subtract: | ||||||||
| Upstream | (11,438) | (10,517) | (9,408) | (8,712) | (7,806) | (7,142) | (6,352) | (5,481) |
| Midstream – Refining | (1,654) | (2,011) | (2,771) | (3,285) | (2,494) | (2,211) | (1,675) | (1,509) |
| Midstream – Liquefaction | (584) | (579) | (559) | (445) | (372) | (268) | (223) | (184) |
| Downstream | (394) | (909) | (1,233) | (1,170) | (1,233) | (1,116) | (826) | (835) |
| Corporate | (1,540) | (1,535) | (1,510) | (1,498) | (1,477) | (1,641) | (1,395) | (1,158) |
| Consolidation Entries | 12,482 | 12,044 | 12,045 | 11,500 | 10,041 | 8,894 | 7,572 | 6,571 |
| Interest expense | (3,128) | (3,507) | (3,436) | (3,610) | (3,341) | (3,484) | (2,899) | (2,596) |
| Upstream | - | - | - | - | - | - | - | - |
| Midstream – Refining | (3,484) | 14,580 | (1,948) | 19,243 | 678 | (5,677) | (7,298) | (65) |
| Midstream – Liquefaction | - | - | - | - | - | - | - | 36 |
| Downstream | (1,791) | (2,907) | (5,746) | (595) | (297) | (1,449) | (2,623) | (495) |
| Corporate | 177 | 535 | (880) | (493) | (195) | (629) | 71 | (11) |
| Consolidation Entries | - | - | - | - | - | - | - | (2) |
| Income taxes | (5,098) | 12,208 | (8,574) | 18,155 | 186 | (7,755) | (9,850) | (537) |
| Upstream | (454) | 715 | (1,462) | (1,355) | (1,105) | (154) | (641) | (683) |
| Midstream – Refining | (2,921) | (2,891) | (2,894) | (2,878) | (2,846) | (2,764) | (2,765) | (2,700) |
| Midstream – Liquefaction | 0 | (4) | (4) | (6) | (6) | (6) | (6) | (7) |
| Downstream | (1,464) | (1,241) | (1,240) | (1,422) | (894) | (906) | (804) | (737) |
| Corporate | (629) | (530) | (528) | (527) | (349) | (395) | (435) | (16) |
| Consolidation Entries | 33 | 32 | 33 | 32 | 32 | 32 | 32 | 33 |
| Depreciation and amortisation | (5,435) | (3,919) | (6,095) | (6,156) | (5,168) | (4,193) | (4,619) | (4,110) |
| Upstream | (10,936) | (15,532) | (17,244) | (9,402) | (15,080) | (6,703) | (17,949) | (47,845) |
| Midstream – Refining | 5,358 | (32,969) | 11,320 | 15,684 | (1,201) | 17,314 | 14,894 | 9,504 |
| Midstream – Liquefaction | (573) | 93 | (1,969) | (4,574) | (3,980) | (4,309) | (2,604) | (2,114) |
| Downstream | 5,626 | 6,045 | 13,195 | 3,621 | 1,146 | 2,306 | 4,491 | 2,643 |
| Corporate | 7,849 | 8,445 | 6,270 | 7,616 | (473) | 11,275 | 3,463 | 3,381 |
| Consolidation Entries | (1,988) | 2,205 | (2,136) | 252 | (190) | 3,657 | (1,596) | (401) |
| Net profit/(loss) per segment | 5,336 | (31,713) | 9,436 | 13,197 | (19,778) | 23,540 | 699 | (34,832) |
InterOil's common shares trade on the NYSE in US dollars.
| Investor Contacts for InterOil | |
| Wayne Andrews | Meg LaSalle |
| Vice President 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 |
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.
SOURCE InterOil Corporation
Read more here: http://www.heraldonline.com/2012/11/15/4417246/interoil-announces-2012-third.html#storylink=cpy
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