TORONTO, Nov. 16 /PRNewswire-FirstCall/ -- InterOil Corporation
(TSX-V: IOL) (Amex: IOC) (ASX: IOC; POMSoX), a Canadian company with
operations in Papua New Guinea today reported financial results for the three
months ended September 30, 2004.
Key Financial Highlights include:
-- Assets increased to US$376.8 million at September 30, 2004 compared to
$260.3 million at December 31, 2003;
-- Cash and equivalents of approximately US$37.8 million at September 30,
2004 compared to US$34.0 million at December 31, 2003; and
-- Generated operating revenue of US$47.7 million for a total of US$60.5
million for the year to date.
"The third quarter of 2004 was a major challenge for InterOil as our
company transformed from a construction project to an operational industrial
facility with full commissioning activities underway." said Mr. Phil Mulacek,
Chief Executive Officer of InterOil. "This first step towards sustained
production began with the arrival of crude into our Port Moresby refinery
followed by progressively placing various components of the refinery into
service, and then production and sale of refined product to client
specifications. While this commissioning process is not perfect, we have not
yet encountered any major obstacles that would prevent the refinery to reach
full production in 2005. The start-up of the catalytic reformer unit will
provide us the platform to begin freight and product optimization and proceed
to target sales from the refinery."
InterOil's Management Discussion and Analysis and the Consolidated
Financial Statements are available on our web site at http://www.interoil.com.
An update of InterOil's recent business activities by segment follows:
Corporate
-- On July 14, 2004 InterOil graduated to the Toronto Stock Exchange
trading under the symbol IOL.
-- On September 8, 2004 InterOil shares began trading on the American
Stock Exchange under the symbol IOC.
-- On November 11, 2004, InterOil filed a preliminary shelf prospectus
related to the registration of certain common shares underlying the
US$45 million convertible debentures and warrants issued by InterOil on
August 27, 2004 and September 3, 2004.
-- As a result of higher crude prices, InterOil has successfully increased
its working capital facility with BNP Paribas Singapore for refinery
operations from US$60.0 million to US$100.0 million.
-- InterOil continues to expect a full-year target net income (annualized)
of US$40.0 million for its combined Midstream and Downstream business
segments to be achieved by mid-year 2005. This target is based on a
historical average for InterOil's anticipated product slate from the
refinery and full-year operations from both its operated and leased
Downstream assets.
Upstream
-- During the 3rd quarter InterOil suspended drilling operations pending
the identification and acquisition of additional drilling equipment.
Seismic activity has started on the Moose and Elk structures to confirm
targets and locations. Recording of seismic data on the Elk and Moose
structures was completed in October 2004 and intermediate processing
results have been obtained and are being interpreted with final results
expected mid-December.
-- InterOil is currently reviewing and finalizing the following 3 pronged
strategy for its 2005 exploration program:
1. Company owned equipment - InterOil has advanced a work order with a
US engineering firm to provide a quotation to build a new heli-
portable rig. This rig is a "double", i.e. capable of lifting two
lengths of oilfield drill pipe at once, with a hook load capacity
of 150 tons and is designed to drill to 4,000 meters. The majority
of the equipment for this rig will come from the US. InterOil has
already purchased long lead support equipments, including pumps and
power units, which will be a part of this rig package. Delivery of
the new rig is expected to take place in the second quarter 2005.
2. Modify existing contractor contracts - InterOil is working with
existing contractors to utilize in-country equipment on shallow
target structures.
3. Engage new contractors for the deepest structures and targets -
InterOil is evaluating options for direct contracting with
operators with rigs capable of reaching our deepest structures and
targets.
-- InterOil is actively engaged in funding opportunities to accelerate the
exploration activity to early 2005. Final exploration plans will be
driven by available funding from either internal cash resources or
external resources. Funding from external sources could be through the
sale of a limited, indirect percentage in our planned drilling program.
Additional details will be provided as they are finalized and may be
different than described above.
Midstream
-- Commissioning activities are well advanced and are expected to be
completed by the end of the fourth quarter 2004 or early first quarter
2005. The catalytic reformer was placed into service in mid-November.
Blendstock for production of finished gasoline will be produced as the
unit reaches normal operating conditions.
-- InterOil's first sales of refined product to the local PNG market
occurred on August 10, 2004 and the first export sales on September 4,
2004. Refined product to contract specifications continues to be
produced and sold into both the local and export markets during
commissioning. Incoming crude supply and refined products are
independently certified on site to contractual specifications.
-- Refined product quality of rundown streams from the refinery crude
distillation unit are of a high standard and refined product sales have
been certified to contractual specifications by the on-site,
independent laboratory. There has been an increase in production to a
current daily average of 32,000 barrels and InterOil anticipates these
levels to increase when the refinery is in full operation.
-- Refined product sales in the quarter, both domestic and export, have
been irregular due to production fluctuations encountered during the
commissioning phase. This has resulted in non-optimized freight and
logistics, which resulted in delays, prompt export sales, crude cargo
advances or trade outs and associated demurrage costs. It is planned
that following commissioning freight can be scheduled without the
unpredictable commissioning events. This should reduce our future
freight and logistics costs significantly from those incurred during
the commissioning activities.
-- InterOil's historical average margins (January 2000 to May 2004) for
the expected product slate would have generated an average margin per
barrel of input to the refinery of approximately US$4.85 per barrel.
-- Since the current refined product market is slightly different than
when the refinery was designed over five years ago, minor modifications
to the refinery processes will be implemented over the next few
quarters to optimise the product stream to reach target margins. The
costs incurred in the commissioning of the catalytic reformer along
with the irregular production fluctuations have made it necessary to
increase the total refinery project budget by 7.3% (US$15.6 million) to
US$230.0 million.
-- The anticipated product split is approximately 50% domestic and 50%
export at a throughput of 36,500 barrels per day.
Downstream
-- On September 24, 2004, InterOil re-branded its first retail outlet to
the InterOil Products Limited name. The re-branding program will be an
ongoing project expected to be completed by year-end 2004.
-- Operating revenue for the 3rd quarter was US$21.1 million compared to
US$33.7 million since the acquisition date of April 29, 2004.
-- The introduction of a new pricing template by the PNG Independent
Consumer & Competition Commission in August 2004. The implications of
the new pricing template for the downstream sector have been the
capping of available refined product margins for the upcoming year
starting September 8, 2004, to 24 toea (US$0.07) per liter. The new
pricing template provides for an overall improvement in the ability to
recover sea and road transportation costs incurred in the supply and
distribution chain. We had planned for a reduction in available
margins under the pricing review that was expected post commencement of
supply from the refinery and we are well placed to maintain a
competitive position in the PNG market.
InterOil is developing a vertically integrated energy company whose
primary focus is Papua New Guinea and the surrounding region. Its assets
comprise an oil refinery, upstream petroleum exploration licenses, and retail
and commercial distribution assets. The majority of the refined products from
InterOil's refinery are secured by off-take contracts with Shell and
InterOil's wholly-owned subsidiary, InterOil Products Limited. BP Singapore
is InterOil's agent for crude oil supplied to the refinery. InterOil is also
undertaking an extensive petroleum exploration program within its eight
million acre license area located in Papua New Guinea.
InterOil's common shares trade on the Toronto Stock Exchange under the
symbol IOL in Canadian dollars; on the American Stock Exchange under the
symbol IOC in US dollars; and on the Australian Stock Exchange in CHESS
Depositary Interests in Australian dollars under the symbol IOC which trade on
a 10:1 basis to common shares. For more information please see the InterOil
website at: http://www.interoil.com .
FOR FURTHER INFORMATION:
Gary M Duvall Anesti Dermedgoglou
V.P., Corporate Development V.P., Investor Relations
InterOil Corporation InterOil Corporation
gary.duvall@interoil.com anesti@interoil.com
Houston, TX USA Cairns, Qld Australia
Phone: +1 281 292 1800 Phone: +617 4046 4600
Cautionary Statements
This press release contains forward-looking statements. All statements,
other than statements of historical facts, included in this release, including
without limitation, statements regarding our drilling plans, business
strategy, plans and objectives of management for future operations and those
statements preceded by, followed by or that otherwise include the words
"believe", "expects", "anticipates", "intends", "estimates" or similar
expressions or variations on such expressions are forward-looking statements.
The Company can give no assurances that such forward-looking statements will
prove to be correct. Risks and uncertainties include, but are not limited to,
the existence of underground deposits of commercial quantities of oil and gas;
fluctuations in prices for oil and gas production; curtailments or delays in
development due to mechanical, operating, marketing or other problems; capital
expenditures that are either significantly higher or lower than anticipated
because the actual cost of identified projects varied from original estimates;
and from the number of exploration and development opportunities being greater
or fewer than currently anticipated.
The Company currently has no reserves as defined under Canadian National
Instrument 51-101 reserve definitions. See the Company's filings with the
Canadian securities regulators for additional risks and information about the
Company's business.
SOURCE InterOil Corporation
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Related links:
http://www.interoil.com
CONTACT:
Gary M Duvall, V.P., Corporate Development,
gary.duvall@interoil.com or +1-281-292-1800, or Anesti
Dermedgoglou, V.P., Investor Relations, anesti@interoil.com or
+617 4046 4600, both of InterOil Corporation
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