08-13-2014, 08:47 PM
InterOil Streamlines Business in Q2 2014
Focus on exploration and production
Canada NewsWire
SINGAPORE and PORT MORESBY, Papua New Guinea, Aug. 13, 2014
SI NGAPORE and PORT MORESBY, Papua New Guinea, Aug. 13, 2014 /CNW/ --
-- Net profit for the quarter of $52.3 million
-- Refinery and downstream businesses sold to Puma Energy
-- $885 million available at June 30, 2014
-- Preparation well advanced for Antelope appraisal wells
-- Chris Finlayson, ex-CEO of FTSE100 BG Group appointed Chairman-designate
InterOil Corporation (NYSE:IOC; POMSoX:IOC) has announced another significant quarter with the sale of its refinery and downstream businesses, continued drilling in Papua New Guinea's largest exploration campaign, and with preparations well advanced for appraisal of the Elk-Antelope gas field.
Net profit for the quarter ended June 30, 2014 was $52.3 million, compared with a net loss of $13.2 million for the same quarter in 2013.
The increase of $65.5 million was mainly attributable to a one-time gain of $49.5 million from the sale of the refinery and downstream businesses to Singapore-based Puma Energy Group Pte.
Net profit for the six months ended June 30, 2014 was $370.9 million, compared with a net loss of $9.2 million for the same period in 2013, an increase of $380.1 million.
At June 30, 2014, InterOil had access to $885 million, including $585 million in cash and an undrawn credit facility of $300 million.
The company's only long-term debt was $70 million from the convertible notes that mature in November 2015.
Focused and funded
InterOil's Chief Executive, Dr Michael Hession, who has now been in the role for a year, said the company's strategy was paying off.
"A year ago, we set out to stabilize the business, monetize our resource base, and secure our exploration portfolio for the future," Dr Hession said.
"We have done that -- we now have a streamlined business with a strong balance sheet, a multi-billion-dollar agreement for our largest gas resource, Elk-Antelope, and a highly promising exploration drilling campaign.
"Our strategy has been clear and we are pleased with progress on its execution as we continue to transform the company.
"We are also delighted that Chris Finlayson has joined the board as Chairman-designate.
"His appointment is a sign of InterOil's growing maturity."
Highlights
Refinery and downstream assets sold for $525.6 million
On June 30, 2014, InterOil completed the sale of companies holding its refinery and downstream businesses in Papua New Guinea to Puma Energy Group Pte for $525.6 million, which included adjustments for cash and working capital.
The downstream businesses included the Napa Napa refinery in Port Moresby, 52 service stations, and 30 fuel depots, terminals a nd aviation sites.
The sale ensured the transition to Puma Energy of all InterOil staff in the refinery and downstream businesses.
New $300 million credit facility
On June 17, 2014, InterOil signed a new $300 million syndicated, senior secured capital expenditure facility through a consortium of banks led by Credit Suisse AG.
The facility, which has an annual interest rate of LIBOR plus 5%, matures at the end of 2015 and along with existing cash balances, will fund InterOil's key capital and operating expenditure for exploration and appraisal in the Eastern Papuan Basin of Papua New Guinea.
If the facility is drawn down, InterOil expects to repay it at maturity using the variable resource payments that Total SA is obliged to make on certification of Elk-Antelope reserves as part of Total's purchase of an interest in Petroleum Retention Lease 15.
PRL15 update
Prepar ations are well advanced for spudding the Antelope-4 and Antelope-5 appraisal wells with well pads and camps complete.
Antelope-4 will test the southern extremity of the Antelope field and Antelope-5 will test the western front.
The wells will provide key information for certification of the Elk-Antelope field and for continued planning of a potential two-train LNG development, which includes concept selection, basis of design and front-end engineering and design.
Certification is expected to be completed in 2015.
Exploration update
Drilling of Raptor-1 in PPL 475 and Bobcat-1 in PPL 476 continues.
Subsequent to quarter end, on July 14, 2014, InterOil announced the suspension of drilling in Wahoo-1 in PPL 474 after intersecting gas and higher-than expected pressures that could compromise rig safety.
Significant concentrations of methane, ethane, propane and butane had been recorded and were believed to be entering the well bore from permeable zones above the predicted reservoir, which was yet to be penetrated.
The PNG Department of Petroleum and Energy approved the suspension to enable InterOil to re-evaluate the drilling plan.
InterOil will advise of drilling results as soon as they become available.
Key events subsequent to quarter end
On July 21, 2014, InterOil announced it would buy up to $50 million of its own common shares. The buyback program is an effective tool to minimize the cost or equity dilution effect from the $70 million convertible senior notes that are due for redemption in November 2015 with a conversion price of $95.625 per share.
As of August 12, 2014, the company had purchased approximately $41 million of shares at an average weighted cost of $57.17 per share.
On August 10, 2014, InterOil announced the appointment of C hris Finlayson as Chairman-designate.
Mr Finlayson is the former Chief Executive Officer of FTSE100 company BG Group and a former long-serving Shell executive.
He joins the board immediately, and will replace Dr Gaylen Byker, after an appropriate handover.
Financial reporting of discontinued operations
InterOil's refinery and downstream businesses that were sold to Puma were previously included in InterOil's midstream refining and downstream segments.
In addition, the shipping business, which was previously included within the corporate segment, has also been transferred to Puma.
Following the Puma transaction, the results of these operations have been classified as "discontinued operations" and InterOil is no longer organized as separate segments for reporting purposes.
The continuing operations are considered to be a consolidated Upstream -- Exploration and Produ ction business.
InterOil has also reclassified prior year information to conform to current period presentation.
Full details can be found in Note 4 of the Condensed Consolidated Interim Financial Statements for the quarter and six months ended June 30, 2014 and 2013.
Conference call information
The full text of the media release and accompanying financials are available on the company's website at www.interoil.com.
A conference call will be held on August 13, 2014 at 8am US Eastern time (8pm Singapore) to discuss the results and the company's outlook.
The conference call can be heard through a live audio web cast on the company's website at www.interoil.com or accessed by dialing 877) 260-8898">(877) 260-8898 in the US, or +1 (612) 332-0932 from outside the US.
A replay of the broadcast will be available soon afterwards on the website.
***
Summary of Con solidated Quarterly Financial Results
for Past Eight QuartersFinancial Statements
Quarters ended 2014 2013 2012
($ thousands except
per share data)
Jun-30 Mar-31 Dec-31 Sep-30 Jun-30 Mar-31 Dec-31 Sep-30 (2)
& nbsp; (2) (2) (2) (2) (2) (2)
Total revenues 13,689 1,903 712 617 831 602 8,188 2,235
EBITDA (1) (10,252) 316,949 (27,272) (99) (11,293) (5,138) (22,452) (2,528)
Net profit/(loss) 52,266 318,637 (24,812) (6,317) (13,230) & nbsp; 4,003 (3,732) 5,336
From continuing
operations (15,764) 310,825 (32,024) (3,555) (15,240) (8,096) (27,512) (4,975)
From discontinued
operations 68,030 7,812 7,212 (2,762) 2,010 12,099 23,780 10,311
Basic
earnings/(loss) per
share 1.05 6.46 (0.50) (0.13) (0.27) 0.08 (0.08)&nbs p; 0.11
From continuing
operations (0.31) 6.30 (0.65) (0.07) (0.31) (0.17) (0.57) (0.10)
From discontinued
operations 1.36 0.16 0.15 (0.06) 0.04 0.25 0.49 0.21
Diluted
earnings/(loss) per
share 1.05 6.38 (0.50) (0.13)& nbsp; (0.27) 0.08 (0.09) 0.11
From continuing
operations (0.31) 6.22 (0.65) (0.07) (0.31) (0.17) (0.57) (0.10)
From discontinued
operations 1.36 0.16 0.15 (0.06) 0.04 0.25 0.48 0.21
(1) EBITDA is a non-GAAP measure and is reconciled
to IFRS under the heading "Non-GAAP Measures and Reconciliation".
(2) Revised to effect reclas sification of discontinued
operations -- refer to Note 4 of the Condensed Consolidated
Interim Financial Statements for the quarter and six
months ended June 30, 2014 and 2013 for further details.
About InterOil
InterOil Corporation is an independent oil and gas business with a primary focus on Papua New Guinea. InterOil's assets include one of Asia's largest undeveloped gas fields, Elk-Antelope, in the Gulf Province, and exploration licences covering about 16,000sqkm. The company employs more than 2000 staff and contractors. Its main offices are in Singapore and Port Moresby. InterOil is listed on the New York and Port Moresby stock exchanges.
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