Oslo, 30 November 2014 - Interoil recorded an EBITDAx (EBITDA adjusted for exploration expenses) of USD 6,8 million in Q3 2014 on operating revenues of USD 13,3 million. EBIT came in at USD 4,7 million while net income from continuing operations amounted to USD 3,5 million. Net loss from discontinued operations (Peru) amounted to USD 2,7 million, giving a comprehensive net income of USD 0,9 million.
Sale of Peruvian business
In November 2014 Interoil transferred ownership of its Peruvian operations in a transaction with United Oilfield Colombia Inc. The transaction allowed Interoil to discontinue its business in Peru in an orderly fashion without any material impact on its liquidity or financial position. As previously communicated, Interoil would not be qualified to continue as an operator in Peru or be able to repatriate any additional proceeds from Peru, and the business therefore did not represent any value for the company. In this financial report, the Peruvian business is reported as discontinued business (see note 4).
Following the sale in Peru, all Interoil's exploration and production assets are now in Colombia. Key assets include the Puli-C and Altair producing fields and the LLA-47 license, all in prolific onshore hydrocarbon provinces in the country. The Puli-C field produces around 1,600 barrels of oil equivalents per day net to Interoil, but requires new investments to maintain output at current level due to its complex nature. The LLA-47 license is expected to hold well above 30 million barrels in recoverable reserves and represents a significant value driver for the company. An 8-well exploration program is planned and drilling will commence as soon as possible.
Increasing financial difficulties
As a consequence of negative developments in Peru and Colombia, together with its high leverage, Interoil is experiencing increasing difficulties in obtaining necessary funding and financial guarantees to support operations, and the board of directors decided to accelerate preparations for the planned refinancing of the company, as communicated 27. October 2014. Arctic Securities AS has been mandated to provide support in this process as well as to explore other strategic options.
As previously communicated, the National Agency of Hydrocarbons (ANH) has threatened to terminate the Cor-6 and LLA-47 licenses and impose penalties, unless Interoil provides the required bank guarantees under these license contracts, by the end of the year. Interoil accepts that the bank guarantees for LLA-47 need to be presented and is working on achieving this. On Cor-6, Interoil believes it will be impossible to conduct E&P activities and consequently, the company should not be required to post the USD 16 million in bank guarantees. Interoil will continue to work closely with ANH in order to find a solution that is acceptable to both parties.
The above significantly impacts Interoil's ability to continue its business. The company has already decided to postpone new investments at the Puli-C field and the drilling of the first well on LLA-47, which was originally planned to commence in December 2014.
Towards a solution
The uncertainty that has been introduced by the recent feedback from ANH on top of a challenging financial situation in general, further complicates the work to refinance and build a sustainable financial foundation for Interoil. While the company had hoped to be able to present a solution in November, this has now been delayed to December. The company continues to work closely with bondholders and other creditors to review all available alternatives to create or preserve values for all stakeholders as a going concern.
For further information, please see the attached Q3 report. Please direct any further questions firstname.lastname@example.org.
Interoil Exploration and Production ASA is a Norwegian based exploration and production company - listed on the Oslo Stock Exchange - with focus on Latin-America. The Company is operator of several production and exploration assets in Colombia. Interoil currently employs approximately 95 people and is headquartered in Oslo.
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.