admin's picture

PNG’S INTEROIL POSTS $29 MILLION ANNUAL LOSS Audit questions viability of Canada-based oil company

PORT MORESBY, Papua New Guinea (PNG Post-Courier, April 2, 2008) - Papua New Guinea’s sole refiner of petroleum products, InterOil Corporation, faces serious question marks from auditors over its ability to keep going.

Company auditors Pricewaterhouse Coopers said in their report to shareholders that InterOil had suffered recurring losses and cash outputs from operations and had a working deficiency of US$49.9 million [PGK139 million] due to the classification of the secured bridging facility of US$130 million [PGK362 million] due for repayment on May 3 as a current liability.

"This raises substantial doubt about the company’s ability to continue as a going concern," Pricewaterhouse Coopers (PWC) said in their report.

[PIR editor’s note: InterOil is a Canada-based company which built Papua New Guinea’s only oil refinery in 2004. BP Singapore is the exclusive agent for all of the crude oil supplied to the refinery. Previously, all the crude obtained from InterOil's fields was exported to Australia or Singapore for refining, with the refined products being imported back to PNG to supply the domestic market..]

InterOil this week announced a net loss of US$28.9 million [PGK80 million] for the year ended December 31, 2007.

In the 12 months to December, InterOil reported record sales and operating revenues of US$626.5 million [PGK1.7 billion], a US$114.4 million [PGK319 million] increase (+22.4 percent) compared to the corresponding period of 2006. InterOil president Bill Jasper said InterOil was currently negotiating with major international finance houses, among them the Merrill Lynch and Clarion Finanz organizations, to meet the company’s short and mid-term, operational cash requirements.

"The fact is that we are a relatively young company and continuously need new capital to establish ourselves in the market," Mr. Jasper said.

"The international financial community understands this and that is why we have continued to receive strong support from bankers like Merrill Lynch and Clarion Finanz. If there was any doubt about our potential or the future of our endeavors we would not have been the beneficiaries of such support." Jasper predicted a strong and vibrant future for the Port Moresby-based refiner despite it posting a deficit for the 2007 calendar year. "On so many levels we’re continuing to go from strength to strength," he said. "In financial terms we recorded a US$28.9 million loss, [PGK80 million] but much of that money was spent on exploration, seismic appraisal drilling and the LNG project. And that is an investment in the future. It should also be remembered that for 11 months of that year we were constrained by a pricing formula that did not reflect the realities of the international crude oil market."

Jasper said the latest figures showed the company was performing strongly in many key areas.

"Although we’re not yet in the black, we are laying the foundation for a positive future," he said.

Rate this article: 
Average: 3.1 (24 votes)

Add new comment