InterOil Announces 2012 Financial And Operating Results

PORT MORESBY, Papua New Guinea and HOUSTON, Feb. 27, 2013 /CNW/ - InterOil 
Corporation (NYSE:IOC) (POMSoX:IOC) today announced financial and operating 
results for the fourth quarter and full year ended December 31, 2012. 
Year End 2012 Highlights and Recent Developments 


    --  During the year, InterOil drilled both the Triceratops-2 and
        Antelope-3 wells to total depth and completed initial logging
        and testing. The Triceratops-2 well established the Triceratops
        field as the third significant discovery to date on the
        Company's licenses in Papua New Guinea. The Antelope-3 well
        results compare favourably with the Antelope-1 and Antelope-2
        wells. The GLJ Report, prepared by our independent qualified
        reserves evaluator, effective as of December 31, 2012,
        indicated a 10% increase to 10.3 trillion cubic feet of gas
        equivalents (Tcfe) in the gross contingent best case resource
        estimate on our licenses in PNG compared to the 2011 year-end
        estimate of GLJ of 9.4 Tcfe.
    --  On November 16, 2012, we were notified by the Prime Minister of
        Papua New Guinea Hon. Peter O'Neill that the National Executive
        Committee had conditionally approved our LNG development
        project in the Gulf Province. We believe that this decision
        clears the way for us to complete the LNG partnering process
        and proceed with our plans for the development of an LNG plant
        in the Gulf Province with initial planned output of a minimum
        of 3.8 million tonnes per annum.
    --  Net profit for the quarter ended December 31, 2012 was $18.5
        million, which contributed to our achievement of an annual net
        profit for the year ended December 31, 2012 of $1.6 million.
        Our comparative profit for the annual period in 2011 was a net
        profit of $17.7 million. The operating segments of Corporate,
        Midstream Refining and Downstream collectively returned a net
        profit for the year of $61.2 million. The development segments
        of Upstream and Midstream Liquefaction yielded a net loss of
        $59.6 million.
    --  Subsequent to year end, on January 24, 2013, we announced that
        we have advised parties with which we have been in discussions
        that the final binding bid solicitation period for the LNG
        partnering process currently being undertaken will close on
        February 28, 2013. Our Board of Directors intends to meet our
        advisors during March 2013 for the purpose of evaluating bids
        received and selecting our partner(s) for the development of
        the LNG Project utilizing gas from the Elk and Antelope fields.

InterOil's Chief Executive Officer Phil Mulacek commented, "The recent 
approval of our 3.8 mtpa LNG project in the Gulf Province by the National 
Executive Council of PNG paves the way to completing our LNG partnering 
process, including a sell down of our interest in the Elk and Antelope fields. 
The success of our delineation drilling at Triceratops and Antelope has 
positively impacted our 2012 year-end resource estimate. Our prospect 
inventory is maturing and we anticipate that it will support our goal of a 
multi-year, multi-well exploration program. I am pleased to confirm that the 
fifth annual resource evaluation of the Elk and Antelope fields, and our first 
estimate at the Triceratops field, continues to support our development plans. 
We look forward to progressing commercialization of these resources. We 
believe that these achievements, combined with a successful completion of our 
LNG partnering process, support our continued growth and operational success."

Corporate Financial Results

InterOil recorded a net profit for the year ended December 31, 2012 of $1.6 
million, compared with a profit of $17.7 million for the same period in 2011, 
a decrease of $16.1 million. The operating segments of Corporate, Midstream 
Refining and Downstream collectively returned a net profit for the year of 
$61.2 million. The development segments of Upstream and Midstream Liquefaction 
yielded a net loss of $59.6 million for an aggregate net profit of $1.6 
million.

EBITDA for the year ended December 31, 2012 was $35.9 million, a decrease of 
$14.5 million compared to EBITDA of $50.4 million for the same period in 2011, 
the decrease was mainly due to a $25.1 million decrease in foreign exchange 
gain, due to the PGK being relatively stable in the year ended December 31, 
2012.

Total revenues for the year ended December 31, 2012 were $1,320.6 million 
compared with $1,118.9 million and $807.0 million respectively for the same 
periods in 2011 and 2010. This increase in the year ended 2012 compared to the 
same period in 2011 was due to higher sales volumes and higher export prices 
during the period. The total volume of all products sold by us was 8.5 million 
barrels for fiscal year 2012, compared with 7.4 million barrels in 2011.

Business Segment Results

Upstream – During the year, InterOil drilled and tested the Triceratops-2 
well in Petroleum Prospecting License ("PPL") 237 to confirm the presence of 
gas and condensate, and test for the presence of reefal carbonate reservoir. 
Following successful flow from DST#9 of 27 MMSCFPD on June 6, 2012, the 
Triceratops-2 well was declared a discovery on June 14, 2012 by Department of 
Petroleum and Energy (the "DPE"). Triceratops seismic data indicates there is 
a large attic in terms of height and areal extent to the south, west and 
northwest of the Triceratops-2 well, which will be our focus during future 
seismic acquisition and well programs in this field.

On April 18, 2012, InterOil signed a binding heads of agreement (HOA) with 
Pacific Rubiales Energy (PRE) for PRE to be able to earn a 10.0% net (12.9% 
gross) participating interest in the PPL 237 onshore PNG, including the 
Triceratops structure located within that license. On November 29, 2012, we 
executed the PRE joint venture operating agreement and related documents 
associated with the Farm-In Agreement with PRE. Subsequent to year end, on 
January 24, 2013, the DPE approved and registered the transfer of interest in 
PPL 237 to PRE. The PPL 237 JV Operating Committee established with PRE will 
review and approve the forward work program, and submit an application for a 
PRL over the Triceratops discovery.

During the fourth quarter, InterOil drilled the Antelope-3 well to total depth 
and completed the initial wireline logging program. The top of the reservoir 
at the Antelope-3 well was penetrated at a depth of 5,328 feet (1,624 meters). 
This was 217 feet (66 meters) above the pre-drill estimate and 92 feet (28 
meters) higher than the Antelope-1 well. The preliminary independent analysis 
of the wireline log results demonstrated a carbonate reservoir (limestone and 
dolomite) with similar reefal reservoir character and quality as the offset 
Antelope-1 and Antelope-2 wells.

InterOil continued appraising its exploration licenses during the year by 
acquiring Phase 3 seismic data on PPL 236 in addition to airborne gravity data 
acquired over PPL 236 and PPL 237. Analysis of the newly acquired gravity data 
generated additional leads to be assessed for further seismic acquisition. 
Proposed well locations have currently been selected for Tuna and Wahoo 
prospects. Given the success of the Triceratops-2 well and the better than 
expected results of the Antelope-3 well, we have had discussions with the DPE 
on our future focus and priorities. We believe that a clear mutual objective 
is to focus on progressing the LNG Project. To progress development of our 
core assets, we have applied for variations to modify the well commitments for 
PPL 236 and PPL 238. We are awaiting formal approval of variations in relation 
to our commitments.

InterOil's Upstream business realized a net loss of $56.8 million in 2012 
compared to a loss of $49.1 million in the comparable period a year ago. The 
increase in the loss in 2012 was mainly due to higher interest expense due to 
an increase in inter-company loan balance which was partially offset by 
reduced exploration costs incurred for seismic activity.

InterOil's Annual Information Form includes the details of the independent 
engineering evaluation prepared by GLJ Petroleum Consultants Ltd. (2012 GLJ 
Report), which evaluated the Company's contingent resources at the Elk, 
Antelope and Triceratops fields in Papua New Guinea effective as at December 
31, 2012, and was prepared in accordance with the definitions and guidelines 
in the COGE Handbook and National Instrument 51-101 – Standards of 
Disclosure for Oil and Gas Activities (NI 51-101).

The 2012 GLJ Report provides a best case estimate of contingent resources of 
9.45 trillion cubic feet (Tcf) of natural gas and 143.6 million barrels of 
condensate (MMBbls), or 10.3 trillion cubic feet of natural gas equivalents 
(Tcfe).

This compares to GLJ's year-end 2011 best case contingent resources estimate 
of 8.59 Tcf of natural gas and 128.9 MMBbls of condensate, or 9.4 Tcfe. The 
2012 GLJ Report noted an increase of 10%, or 157.8 MMBOE, in the combined 
gross resource estimate for Elk, Antelope and Triceratops fields from the 2011 
year-end estimate of Elk and Antelope fields. All resources estimated in the 
2012 GLJ Report are classified as contingent resources – economic status 
undetermined, as follows:

Total Contingent Resources Estimate for Gas and Condensate for the Elk, 
Antelope and Triceratops Fields*

 ________________________________________________________________
|                                        |       |Case   |       |
|As at December 31, 2012                 |Low    |       |High   |
|                                        |       |Best   |       |
|________________________________________|_______|_______|_______|
|Contingent Gas Resources (Tcf)          |6.95   |9.45   |11.75  |
|________________________________________|_______|_______|_______|
|Contingent Condensate Resources (MMBbls)|114.2  |143.6  |175.8  |
|________________________________________|_______|_______|_______|
|Contingent Resources MMBOE              |1,273.3|1,718.2|2,134.2|
|________________________________________|_______|_______|_______|
|*These estimates represent 100% of the Elk, Antelope and        |
|Triceratops Fields.                                             |
|________________________________________________________________|

Contingent Resource Estimate for Gas and Condensate at the Elk, Antelope and 
Triceratops Fields – Net to InterOil*

 ______________________________________________________________
|                                        |     |Case   |       |
|As at December 31, 2012                 |Low  |       |High   |
|                                        |     |Best   |       |
|________________________________________|_____|_______|_______|
|Contingent Gas Resources (Tcf)          |4.07 |5.51   |6.84   |
|________________________________________|_____|_______|_______|
|Contingent Condensate Resources (MMBbls)|66.8 |83.7   |101.9  |
|________________________________________|_____|_______|_______|
|Contingent Resources MMBOE              |744.8|1,002.8|1,241.2|
|________________________________________|_____|_______|_______|

 _____________________________________________________________________
|*These estimates are based upon InterOil holding a 58.5988% working  |
|interest in the Elk and Antelope fields and a 53.0364% working       |
|interest in PPL 237 (Triceratops field), which assumes that: (i) the |
|State and landowners elect to participate in the Elk and Antelope    |
|fields to the full extent provided under applicable PNG oil and gas  |
|legislation after PDLs have been granted in relation to the Elk and  |
|Antelope fields and the Triceratops field and (ii) all elections are |
|made to participate in such fields by all investors pursuant to      |
|relevant indirect participation interest agreements with InterOil,   |
|including to participate fully and directly in the PDLs.             |
|_____________________________________________________________________|
|                                                                     |
|_____________________________________________________________________|
|There is no certainty that it will be commercially viable to produce |
|any portion of the resources.                                        |
|_____________________________________________________________________|
|                                                                     |
|_____________________________________________________________________|
|InterOil currently has no production or reserves as defined in       |
|Canadian NI 51-101 or under the definitions established by the United|
|States Securities and Exchange Commission.                           |
|_____________________________________________________________________|

Midstream Refining – Total refinery throughput for the year ended December 
31, 2012 was 24,483 barrels per operating day, compared with 24,856 barrels 
per operating day during 2011. Capacity utilization for 2012, based on 36,500 
barrels per day operating capacity, was 58% compared with 54% in 2011.

On October 16, 2012, the Company entered into a five year amortizing $100.0 
million secured term loan facility with BNP, BSP, and ANZ. The loan is secured 
over the fixed assets of our refinery and bears interest at LIBOR plus 6.5%. 
On November 9, 2012, part of the borrowings under the new term loan facility 
was used to repay all outstanding amounts under the term loan granted by OPIC.

The Company's Midstream Refining operations generated a net loss of $2.9 
million in 2012 versus a profit of $46.7 million in the prior year. The $49.6 
million negative variance is primarily due to a decrease in gross margin 
resulting from negative crude and product price movements and a decrease in 
foreign exchange gains compared to the previous year, which were partially 
offset by an increase in income tax benefits for the 2012 year.

Midstream Liquefaction – Throughout the year, investment bankers led by 
Morgan Stanley & Company LLC, Macquarie Capital (USA) Inc. and UBS AG 
continued working on the bid process to seek a strategic partner to acquire an 
interest in the Elk and Antelope fields, the LNG Project and certain 
exploration licenses. Interested parties include major oil companies, national 
oil companies, and global utilities.

On November 16, 2012, we were notified by the Prime Minister of Papua New 
Guinea Hon. Peter O'Neill that the NEC had conditionally approved our LNG 
development project in the Gulf Province. We believe that this decision clears 
the way for us to proceed with our plans for the development of an LNG plant 
in the Gulf Province with initial planned output of a minimum of 3.8 million 
tonnes per annum. The PNG Cabinet also approved the establishment of the 
Ministerial Gas Committee comprised of key economic ministers to fast track 
commercialization of the LNG Project.

Subsequent to year end, on January 24, 2013, we announced that we have advised 
potential bidders with whom we have been in discussions that the final binding 
bid solicitation period for the partnering process currently being undertaken 
will close on February 28, 2013. Our Board of Directors intends to meet our 
advisors during March 2013 for the purpose of evaluating bids received and 
selecting our partner(s) for the development of the LNG Project utilizing gas 
from the Elk and Antelope fields.

The Company's Midstream Liquefaction business generated a loss of $2.8 million 
in 2012 compared with a loss of $15.5 million a year ago. The positive 
variance is largely due to a decrease in office, administration and other 
expenses resulting from lower management expenses and share compensation costs 
related to the midstream facilities of the LNG Project development which are 
not capitalized.

Downstream - The PNG economy continued to grow strongly throughout 2012 
largely due to resource development projects, which has also led to growth in 
our aviation and retail businesses within our downstream segment. Total 
Downstream sales volumes for 2012 were 752.5 million liters, compared with 
678.0 million liters in 2011.

Investments have been made over the last three years in new electronic systems 
for both pumps and the forecourt control units to support the further 
development of this business. During 2012, one new retail site was opened as 
well as a commercial truck stop site. One existing retail site was purchased 
to secure tenure, and additional land was purchased for a future retail site.

InterOil's Downstream operations generated a net profit of $32.6 million in 
2012, an improvement of $21.0 million versus a profit of $11.6 million in the 
previous year. Gross margins increased in 2012 as compared to the prior year 
mainly due to an increase in domestic sales volumes resulting from various 
development projects being undertaken in Papua New Guinea.

Corporate – InterOil Corporate PNG Limited is incorporated under the laws of 
PNG, as a 100% subsidiary of InterOil Corporation to employ all corporate 
staff in PNG and to capture their associated costs. In addition, this entity 
has taken over the operation of the Napa Napa camp and all costs associated 
with the operation of the camp are now captured in this entity. All costs 
incurred by this entity will be recharged to relevant InterOil entities based 
on an equitable driver basis. This entity began transacting in October 2012.

The Corporate segment generated a net profit of $33.1 million in 2012, 
compared to a net profit of $21.9 million in 2011. The positive variance is 
largely due to higher interest income resulting from an increase in 
inter-company loan balances.

Quarterly Comparative

Our net profit for the quarter ended December 31, 2012 was $18.5 million 
compared with a net profit of $13.2 million for the same quarter of 2011, an 
increase of $5.3 million. The operating segments of Corporate, Midstream 
Refining and Downstream collectively derived a net profit for the quarter of 
$32.0 million, while the investments in development segments of Upstream and 
Midstream Liquefaction resulted in a net loss of $13.5 million.

The improvement in net profit for the fourth quarter in 2012 as compared to 
2011 was mainly due to a $26.0 million increase in gross margin attributable 
to the improved crude and product price movements, a $2.6 million reduction of 
exploration costs incurred for seismic activity for PPL 236; a $1.6 million 
decrease in the loss on available-for-sale investment in the shares in FLEX 
LNG, and a $1.6 million increase in gain on conveyance of oil and gas 
properties recognized due to the waiver or forfeiture of 1.5% indirect 
participation interest (IPI) interest conversion rights into common shares. 
These increases in profit was partly offset by a $11.4 million reduction in 
foreign exchange gain, a $9.5 million increase in borrowing costs and a $6.0 
million decrease in income tax benefit.

Total revenues increased by $66.8 million from $289.6 million in the quarter 
ended December 31, 2011 to $356.4 million in the quarter ended December 31, 
2012, primarily due to higher sales volumes made during the year. The total 
volume of all products sold by us was 2.3 million barrels for quarter ended 
December 31, 2012, compared with 1.9 million barrels in the same quarter of 
2011.

Summary of Consolidated Quarterly Financial Results for Past Eight Quarters

Quarters      2012                                    2011
ended
($ thousands
except per    Dec-31    Sep-30    Jun-30    Mar-31    Dec-31    Sep-30    Jun-30    Mar-31
share data)

Upstream      4,136     2,216     1,727     2,284     1,891     2,645     4,638     668

Midstream
–       301,925   274,671   236,006   302,310   237,640   231,455   262,111   217,743
Refining

Midstream
–       -         -         -         -         -         -         -         -
Liquefaction

Downstream    220,512   201,749   223,620   218,974   209,678   186,304   191,431   157,709

Corporate     37,552    26,880    24,742    24,757    21,831    25,078    26,548    18,659

Consolidation (207,686) (178,652) (186,991) (210,174) (181,428) (163,584) (180,945) (151,125)
entries

Total         356,439   326,864   299,104   338,151   289,612   281,898   303,783   243,654
revenues

Upstream      (873)     956       (5,730)   (6,374)   665       (6,169)   593       (10,957)

Midstream
–       12,370    13,417    (42,647)  18,933    2,604     3,461     27,967    26,632
Refining

Midstream
–       192       11        676       (1,406)   (4,123)   (3,602)   (4,035)   (2,375)
Liquefaction

Downstream    12,258    9,275     11,102    21,414    6,808     3,570     5,777     8,744

Corporate     14,133    9,841     9,975     9,188     10,134    1,548     13,940    5,223

Consolidation (12,199)  (14,503)  (9,871)   (14,216)  (11,280)  (10,263)  (5,269)   (9,200)
entries

EBITDA ((1))  25,881    18,997    (36,495)  27,539    4,808     (11,455)  38,973    18,067

Upstream      (13,081)  (10,936)  (15,532)  (17,244)  (9,402)   (15,080)  (6,703)   (17,949)

Midstream
–       13,401    5,358     (32,969)  11,320    15,684    (1,201)   17,314    14,894
Refining

Midstream
–       (394)     (573)     93        (1,969)   (4,574)   (3,980)   (4,309)   (2,604)
Liquefaction

Downstream    7,716     5,626     6,045     13,195    3,621     1,146     2,306     4,491

Corporate     10,519    7,849     8,445     6,270     7,616     (473)     11,275    3,463

Consolidation 384       (1,988)   2,205     (2,136)   252       (190)     3,657     (1,596)
entries

Net profit/   18,545    5,336     (31,713)  9,436     13,197    (19,778)  23,540    699
(loss)

Net profit/
(loss) per
share
(dollars)

Per Share     0.38      0.11      (0.66)    0.20      0.27      (0.41)    0.49      0.01
– Basic

Per Share
–       0.38      0.11      (0.66)    0.19      0.27      (0.41)    0.48      0.01
Diluted

((1) )(EBITDA is a non-GAAP measure, please refer to "Non-GAAP EBITDA 
Reconciliation" in this press release.)

Balance Sheet and Liquidity

InterOil closed 2012 with cash, cash equivalents and cash restricted totaling 
$98.9 million (December 2011 - $108.1 million), of which $49.0 million is 
restricted (December 2010 - $39.3 million).

We also had aggregate working capital facilities of $307.3 million, with $6.2 
million available for use in our Midstream Refining operations, and $67.3 
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 19% in December 2012 from 12% in December 2011.

InterOil has no obligation to execute exploration activities within a set 
timeframe and therefore has the ability to select the timing of these 
activities as long as the minimum license commitments in relation to the 
Company's PPLs and Petroleum Retention Licenses ("PRL") are met. Additionally, 
we have applied for variations to modify the well commitments for PPL 236 and 
PPL 238. We are awaiting formal approval of variations in relation to our 
commitments.

Summary of Debt Facilities

Summarized below are the debt facilities available to us and the balances 
outstanding as at December 31, 2012.
                             Balance


                         outstanding  Effective
Organization    Facility                  interest rate Maturity date 
                         December 31, 


                             2012

ANZ, BSP and
BNP syndicated  $100,000,000 $100,000,000 6.81%         November 2017
secured loan
facility

BNP working                  $94,290,479(               See detail
capital         $240,000,000 (1))         2.67%         below((4))
facility

Westpac PGK
working capital
facility        $43,245,000  -            -             November 2014

facility

BSP PGK working
capital         $24,025,000  -            -             August 2013
facility

Westpac secured $12,857,000  $12,857,000  4.73%         September 2015
loan

2.75%
convertible     $70,000,000  $70,000,000  7.91%((3))    November 2015
notes

Mitsui                                                  See detail
unsecured loan  $11,912,297  $11,912,297  6.24%         below
((2))

 _____________________________________________________________________
|   |Excludes letters of credit totaling $139.5 million, which reduces|
|(1)|the available borrowings under the facility to $6.2 million at   |
|   |December 31, 2012.                                               |
|___|_________________________________________________________________|
|(2)|Facility is to fund our share of the Condensate Stripping Project|
|   |costs as they are incurred pursuant to the CSP JVOA with Mitsui. |
|___|_________________________________________________________________|
|   |Effective rate after bifurcating the equity and debt components  |
|(3)|of the $70 million principal amount of 2.75% convertible senior  |
|   |notes due 2015.                                                  |
|___|_________________________________________________________________|
|   |In October 2012, the BNP Paribas working capital facility        |
|(4)|agreement with a maximum availability of $240,000,000 was amended|
|   |so that the facility was made evergreen and the annual renewal   |
|   |requirement removed.                                             |
|___|_________________________________________________________________|

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. Our IFRS transition date 
was January 1, 2010 and as such, the 2010 comparative information has been 
restated in accordance with IFRS.

Quarters      2012                                2011
ended
($ thousands) Dec-31   Sep-30   Jun-30   Mar-31   Dec-31   Sep-30   Jun-30  Mar-31

Upstream      (873)    956      (5,730)  (6,374)  665      (6,169)  593     (10,957)

Midstream
–       12,370   13,417   (42,647) 18,933   2,604    3,461    27,967  26,632
Refining

Midstream
–       192      11       676      (1,406)  (4,123)  (3,602)  (4,035) (2,375)
Liquefaction

Downstream    12,258   9,275    11,102   21,414   6,808    3,570    5,777   8,744

Corporate     14,133   9,841    9,975    9,188    10,134   1,548    13,940  5,223

Consolidation (12,199) (14,503) (9,871)  (14,214) (11,280) (10,263) (5,270) (9,200)
Entries

Earnings
before
interest,
taxes,        25,881   18,997   (36,495) 27,541   4,808    (11,455) 38,972  18,067
depreciation
and
amortization

Subtract:

Upstream      (11,734) (11,438) (10,517) (9,408)  (8,712)  (7,806)  (7,142) (6,352)

Midstream
–       (11,390) (1,654)  (2,011)  (2,771)  (3,285)  (2,494)  (2,211) (1,675)
Refining

Midstream
–       (586)    (584)    (579)    (559)    (445)    (372)    (268)   (223)
Liquefaction

Downstream    (337)    (394)    (909)    (1,233)  (1,170)  (1,233)  (1,116) (826)

Corporate     (1,601)  (1,540)  (1,535)  (1,510)  (1,498)  (1,477)  (1,641) (1,395)

Consolidation 12,552   12,482   12,044   12,045   11,500   10,041   8,894   7,572
Entries

Interest      (13,096) (3,128)  (3,507)  (3,436)  (3,610)  (3,341)  (3,484) (2,899)
expense

Upstream      -        -        -        -        -        -        -       -

Midstream
–       16,574   (3,484)  14,580   (1,948)  19,243   678      (5,677) (7,298)
Refining

Midstream
–       -        -        -        -        -        -        -       -
Liquefaction

Downstream    (3,070)  (1,791)  (2,907)  (5,746)  (595)    (297)    (1,449) (2,623)

Corporate     (1,330)  177      535      (880)    (493)    (195)    (629)   71

Consolidation -        -        -        -        -        -        -       -
Entries

Income taxes  12,174   (5,098)  12,208   (8,574)  18,155   186      (7,755) (9,850)

Upstream      (474)    (454)    715      (1,462)  (1,355)  (1,105)  (154)   (641)

Midstream
–       (4,153)  (2,921)  (2,891)  (2,894)  (2,878)  (2,846)  (2,764) (2,765)
Refining

Midstream
–       0        0        (4)      (4)      (6)      (6)      (6)     (6)
Liquefaction

Downstream    (1,135)  (1,464)  (1,241)  (1,240)  (1,422)  (894)    (906)   (804)

Corporate     (683)    (629)    (530)    (528)    (527)    (349)    (395)   (435)

Consolidation 31       33       32       33       32       32       32      32
Entries

Depreciation
and           (6,414)  (5,435)  (3,919)  (6,095)  (6,156)  (5,168)  (4,193) (4,619)
amortisation

Upstream      (13,081) (10,936) (15,532) (17,244) (9,402)  (15,080) (6,703) (17,949)

Midstream
–       13,401   5,358    (32,969) 11,320   15,684   (1,201)  17,314  14,894
Refining

Midstream
–       (394)    (573)    93       (1,969)  (4,574)  (3,980)  (4,309) (2,604)
Liquefaction

Downstream    7,716    5,626    6,045    13,195   3,621    1,146    2,306   4,491

Corporate     10,519   7,849    8,445    6,270    7,616    (473)    11,275  3,463

Consolidation 384      (1,988)  2,205    (2,136)  252      (190)    3,657   (1,596)
Entries

Net profit/
(loss) per    18,545   5,336    (31,713) 9,436    13,197   (19,778) 23,540  699
segment

InterOil Corporation

Consolidated Income Statements

(Expressed in United States dollars)
                          Year ended
                          December 31,    December 31,    December 31,
                          2012            2011            2010
                          $               $               $



Revenue

Sales and operating       1,308,051,816   1,106,533,853   802,374,399
revenues

Interest                  248,261         1,356,124       150,816

Other                     12,257,833      11,058,090      4,470,048
                          1,320,557,910   1,118,948,067   806,995,263



Changes in inventories of
finished goods and work   23,799,540      43,934,439      57,010,311
in progress

Raw materials and         (1,242,987,054) (1,064,866,361) (758,566,961)
consumables used

Administrative and        (40,825,612)    (41,160,824)    (41,047,949)
general expenses

Derivative (losses)/gains (4,229,190)     2,006,321       (1,065,188)
(note 9)

Legal and professional    (5,418,210)     (6,801,334)     (6,902,241)
fees

Exploration costs,
excluding exploration     (13,901,558)    (18,435,150)    (16,981,929)
impairment (note 14)

Finance costs             (28,614,981)    (18,163,769)    (12,064,982)

Depreciation and          (21,863,367)    (20,136,649)    (14,274,922)
amortization

Gain on conveyance of oil
and gas properties (note  4,418,170       -               2,140,783
14)

Loss on extinguishment of -               -               (30,568,710)
liability

Litigation settlement     -               -               (12,000,000)
expense

Loss on
available-for-sale        -               (3,420,406)     -
investment

Foreign exchange          (43,148)        25,018,661      (10,776,823)
(losses)/gains
                          (1,329,665,410) (1,102,025,072) (845,098,611)

(Loss)/profit before      (9,107,500)     16,922,995      (38,103,348)
income taxes



Income taxes

Current tax expense (note (15,883,469)    (5,512,842)     (3,898,067)
16)

Deferred tax benefit/     26,594,678      6,248,509       (2,511,656)
(expense) (note 16)
                          10,711,209      735,667         (6,409,723)



Profit/(loss) for the     1,603,709       17,658,662      (44,513,071)
period



Profit/(loss) is
attributable to:

Owners of InterOil        1,603,709       17,652,461      (44,519,573)
Corporation

Non-controlling interest  -               6,201           6,502
                          1,603,709       17,658,662      (44,513,071)



Basic profit/(loss) per   0.03            0.37            (1.00)
share

Diluted profit/(loss) per 0.03            0.36            (1.00)
share

Weighted average number
of common shares
outstanding

Basic (Expressed in       48,352,822      47,977,478      44,329,670
number of common shares)

Diluted (Expressed in     49,357,256      49,214,190      44,329,670
number of common shares)



See accompanying notes to the consolidated financial statements

InterOil Corporation

Consolidated Balance Sheets

(Expressed in United States dollars)
                                            As at
                              December 31,  December 31,  December 31,
                              2012          2011          2010
                              $             $             $
    Assets

 Current assets:

 Cash and cash equivalents    49,860,044    68,846,441    233,576,821
 (note 6)

 Cash restricted (note 9)     37,340,631    32,982,001    40,664,995

 Short term treasury bills -  -             11,832,110    -
 held-to-maturity (note 8)

 Trade and other receivables  146,948,227   135,273,600   48,047,496
 (note 10)

 Derivative financial         233,922       595,440       -
 instruments (note 9)

 Other current assets         832,936       867,967       505,059

 Inventories (note 11)        194,871,339   171,071,799   127,137,360

 Prepaid expenses             8,517,340     5,477,596     3,593,574

 Total current assets         438,604,439   426,946,954   453,525,305

 Non-current assets:

 Cash restricted (note 9)     11,670,463    6,268,762     6,613,074

 Goodwill (note 12)           6,626,317     6,626,317     6,626,317

 Plant and equipment (note    255,031,703   246,043,948   225,205,427
 13)

 Oil and gas properties (note 515,055,288   362,852,766   255,294,738
 14)

 Deferred tax assets (note    63,526,458    35,965,273    28,477,690
 16)

 Other non-current            5,000,000     -             -
 receivables (note 22)

 Available-for-sale           4,304,176     3,650,786     -
 investments (note 15)

 Total non-current assets     861,214,405   661,407,852   522,217,246

 Total assets                 1,299,818,844 1,088,354,806 975,742,551

 Liabilities and
 shareholders' equity

 Current liabilities:

 Trade and other payables     180,026,381   159,882,177   75,132,880
 (note 17)

 Income tax payable           11,977,681    4,085,137     955,074

 Derivative financial         -             11,457        178,578
 instruments (note 9)

 Working capital facilities   94,290,479    16,480,503    51,254,326
 (note 18)

 Unsecured loan and current
 portion of secured loans     31,383,115    19,393,023    14,456,757
 (note 19)

 Current portion of Indirect
 participation interest (note 15,246,397    540,002       540,002
 20)

 Total current liabilities    332,924,053   200,392,299   142,517,617

 Non-current liabilities:

 Secured loans (note 19)      89,446,137    26,037,166    34,813,222

 2.75% convertible notes      59,046,581    55,637,630    52,425,489
 liability (note 26)

 Deferred gain on
 contributions to LNG project -             5,810,775     8,949,857
 (note 21)

 Indirect participation       16,405,393    34,134,840    34,134,387
 interest (note 20)

 Other non-current            20,961,380    -             -
 liabilities (note 22)

 Asset retirement obligations 4,978,334     4,562,269     -
 (note 23)

 Deferred tax liabilities     -             1,889,391     -
 (note 16)

 Total non-current            190,837,825   128,072,071   130,322,955
 liabilities

 Total liabilities            523,761,878   328,464,370   272,840,572

 Equity:

 Equity attributable to
 owners of InterOil
 Corporation:

 Share capital (note 25)      928,659,756   905,981,614   895,651,052

 Authorized - unlimited

 Issued and outstanding -
 48,607,398

 (Dec 31, 2011 - 48,121,071)

 (Dec 31, 2010 - 47,800,552)

 2.75% convertible notes      14,298,036    14,298,036    14,298,036
 (note 26)

 Contributed surplus (note    21,876,853    25,644,245    16,738,417
 27)

 Accumulated Other            25,032,953    29,380,882    9,261,177
 Comprehensive Income

 Conversion options (note 20) 12,150,880    12,150,880    12,150,880

 Accumulated deficit          (225,961,512) (227,565,221) (245,217,682)

 Total equity attributable to
 owners of InterOil           776,056,966   759,890,436   702,881,880
 Corporation

 Non-controlling interest     -             -             20,099
 (note 24)

 Total equity                 776,056,966   759,890,436   702,901,979

 Total liabilities and equity 1,299,818,844 1,088,354,806 975,742,551

See accompanying notes to the consolidated financial statements

InterOil Corporation

Consolidated Statements of Cash Flows

(Expressed in United States dollars)
                               Year ended
                               December 31,  December 31,  December 31,
                               2012          2011          2010
                               $             $ (revised)   $ (revised)



Cash flows generated from
(used in):



Operating activities

Net profit/(loss) for the      1,603,709     17,658,662    (44,513,071)
period

Adjustments for non-cash and
non-operating transactions

Depreciation and amortization  21,863,367    20,136,649    14,274,922

Deferred tax                   (29,450,576)  (5,598,192)   1,841,473

Gain on conveyance of          (4,418,170)   -             (2,140,783)
exploration assets

Accretion of convertible notes 3,408,951     3,212,141     432,632
liability

Amortization of deferred       598,698       223,944       1,223,944
financing costs

Timing difference between
derivatives recognized

and settled                    350,061       (762,561)     178,578

Stock compensation expense,    7,882,067     14,721,387    11,804,000
including restricted stock

Inventory write down           322,535       259,406       -

Accretion of asset retirement  331,096       159,356       -
obligation liability

Loss on extinguishment of IPI  -             -             30,568,710
Liability

Non-cash litigation settlement -             -             12,000,000
expense

Loss on Flex LNG investment    -             3,420,406     -

Gain on proportionate          -             (555,030)     -
consolidation of LNG project

Unrealized foreign exchange    (1,070,269)   (2,618,814)   (72,456)
gain

Change in operating working
capital

Increase in trade and other    (31,472,316)  (53,064,305)  (9,224,005)
receivables

(Increase)/decrease in other
current assets and prepaid     (3,004,713)   (2,246,930)   3,505,963
expenses

Increase in inventories        (28,886,641)  (28,003,484)  (56,115,637)

Increase in trade and other    25,912,734    77,291,915    5,692,543
payables

Net cash (used in)/generated   (36,029,467)  44,234,550    (30,543,187)
from operating activities



Investing activities

Expenditure on oil and gas     (184,165,722) (116,492,551) (96,146,987)
properties

Proceeds from IPI cash calls   3,497,542     749,794       23,723,752

Expenditure on plant and       (36,661,897)  (42,050,435)  (22,560,055)
equipment

Proceeds received on sale of   -             -             15,544,465
exploration assets

Proceeds from Pacific Rubiales
Energy (conveyance accounted   20,000,000    -             -
portion)

Maturity of/(investment in)    11,832,110    (11,832,110)  -
short term treasury bills

Acquisition of Flex LNG Ltd
shares, including transaction  -             (7,478,756)   -
costs

(Increase)/decrease in
restricted cash held as        (9,760,331)   8,027,306     (17,969,494)
security on borrowings

Change in non-operating
working capital

Decrease/(increase) in trade   5,000,000     (10,000,000)  -
and other receivables

Increase/(decrease) in trade   20,545,509    (6,727,960)   3,232,029
and other payables

Net cash used in investing     (169,712,789) (185,804,712) (94,176,290)
activities



Financing activities

Repayments of OPIC secured     (35,500,000)  (9,000,000)   (9,000,000)
loan

Proceeds from Mitsui for       3,578,489     9,872,532     11,913,514
Condensate Stripping Plant

Proceeds from/(repayments of)
Clarion Finanz secured loan,   -             -             (1,000,000)
net of transaction costs

Proceeds from Westpac secured  15,000,000    -             -
loan

Repayments of Westpac secured  (2,143,000)   -             -
loan

Proceeds from PNG LNG cash     -             2,247,533     866,600
call

Proceeds from Pacific Rubiales 20,000,000    -             -
Energy for interest in PPL237

Proceeds from Petromin for Elk -             -             5,000,000
and Antelope field development

Proceeds from/(repayments of)  77,809,976    (34,773,823)  26,627,907
working capital facility

Proceeds from ANZ, BSP & BNP
syndicated loan (net of        95,924,091    -             -
transaction costs)

Proceeds from issue of common
shares, net of transaction     11,028,683    4,488,703     211,147,565
costs

Proceeds from issue of
convertible notes, net of      -             -             66,290,893
transaction costs

Net cash generated from/(used  185,698,239   (27,165,055)  311,846,479
in) financing activities



(Decrease)/increase in cash    (20,044,017)  (168,735,217) 187,127,002
and cash equivalents

Cash and cash equivalents,     68,846,441    233,576,821   46,449,819
beginning of period

Exchange gains on cash and     1,057,620     4,004,837     -
cash equivalents

Cash and cash equivalents, end 49,860,044    68,846,441    233,576,821
of period

Comprising of:

Cash on Deposit                49,225,717    18,758,288    233,576,821

Term Deposits                  634,327       50,088,153    -

Total cash and cash            49,860,044    68,846,441    233,576,821
equivalents, end of period



See accompanying notes to the consolidated financial statements

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 c overing 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.

 
________________________________________________________________________________________________________________________
___________________________________________________________________________________________
|Investor Contacts for InterOil:                                                                                        


                                                                                        |
|_______________________________________________________________________________________________________________________
____________________________________________________________________________________________|
|Wayne Andrews                                                                                              |Meg 
LaSalle                                                                                            |
|___________________________________________________________________________________________________________|___________
____________________________________________________________________________________________|
|V. P. 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                                                                                  |
|___________________________________________________________________________________________________________|___________
____________________________________________________________________________________________| 
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 further seismic-related exploration activities, 
development activities, the ability to attract a strategic LNG partner and 
complete the LNG partnering process and the timing of such process, the 
construction and development of the proposed LNG project, the characteristics 
of our properties, the ability to commercially develop our resources, 
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. Statements relating to 'resources' are forward looking, as they 
involve the applied assessment, based on certain estimates and assumptions, 
that the resources described exist in the quantities estimated. These 
statements are based on certain assumptions made by the Company based on its 
experience and perception of current conditions, expected future developments, 
the terms of agreements with its joint venture partners 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, 2012 on Form 40-F and its Annual 
Information Form for the year ended December 31, 2012. 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 and Antelope 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. 
Oil and Gas and Resource Information 
InterOil currently has no production or reserves as defined in Canadian NI 
51-101 or under the definitions established by the United States Securities 
and Exchange Commission. 
The resources information set forth in this press release is based on the 2012 
GLJ Report, which was prepared in accordance with NI 51-101 and is included in 
InterOil's annual information form for the year ended December 31, 2012, a 
copy of which has been filed on SEDAR (www.SEDAR.com) and on InterOil's 
website (www.interoil.com). 
Contingent resources are those quantities of natural gas and condensate 
estimated, as of a given date, to be potentially recoverable from known 
accumulations using established technology or technology under development, 
but which are not currently considered to be commercially recoverable due to 
one or more contingencies. The economic status of the resources is 
undetermined and there is no certainty that it will be commercially viable to 
produce any portion of the resources. The following contingencies must be met 
before the resources can be classified as reserves: (i) sanctioning of the 
facilities required to process and transport marketable natural gas to market, 
(ii) confirmation of a market for the marketable natural gas and condensate 
and (iii) determination of economic viability. Although a final project has 
not yet been sanctioned, pre-FEED studies are ongoing for the LNG Project and 
FEED studies conducted for the Condensate Stripping Project as options for 
potential monetization of the gas and condensate. 
The "low" estimate is considered to be a conservative estimate of the quantity 
that will actually be recovered. It is likely that the actual remaining 
quantities recovered will exceed the low estimate. With the probabilistic 
methods used, there should be at least a 90 percent probability (P90) that the 
quantities actually recovered will equal or exceed the low estimate. The 
"best" estimate is considered to be the best estimate of the quantity that 
will actually be recovered. It is equally likely that the actual remaining 
quantities recovered will be greater or less than the best estimate. With the 
probabilistic methods used, there should be at least a 50 percent probability 
(P50) that the quantities actually recovered will equal or exceed the best 
estimate. The "high" estimate is considered to be an optimistic estimate of 
the quantity that will actually be recovered. It is unlikely that the actual 
remaining quantities recovered will exceed the high estimate. With the 
probabilistic methods used, there should be at least a 10 percent probability 
(P10) that the quantities actually recovered will equal or exceed the high 
estimate. 
The accuracy of resource estimates is in part a function of the quality and 
quantity of the available data and of engineering and geological 
interpretation and judgment. Other factors in the classification as a resource 
include a requirement for more delineation wells, detailed design estimates 
and near term development plans. The size of the resource estimate could be 
positively impacted, potentially in a material amount, if additional 
delineation wells determined that the aerial extent, reservoir quality and/or 
the thickness of the reservoir is larger than what is currently estimated 
based on the interpretation of the seismic and well data. The size of the 
resource estimate could be negatively impacted, potentially in a material 
amount, if additional delineation wells determined that the aerial extent, 
reservoir quality and/or the thickness of the reservoir are less than what is 
currently estimated based on the interpretation of the seismic and well data. 
All calculations converting natural gas to crude oil equivalent have been made 
using a ratio of six mcf of natural gas to one barrel of crude equivalent. 
Boe's may be misleading, particularly if used in isolation. A boe conversion 
ratio of six mcf of natural gas to one barrel of crude oil equivalent is based 
on an energy equivalency conversion method primarily applicable at the burner 
tip and does not represent a value equivalency at the wellhead. 
http://www.interoil.com 
SOURCE: InterOil Corporation 
To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/February2013/27/c9056.html 
CO: InterOil Corporation
ST: Texas
NI: UTI OIL ERN EST ERN  
-0- Feb/27/2013 22:26 GMT
 
 
Press spacebar to pause and continue. Press esc to stop.