InterOil Corporation
TSX : IOL
AMEX : IOC

InterOil Corporation

March 05, 2007 09:07 ET

InterOil Announces Turnaround in Profitability at Its Refinery in Papua New Guinea

ORLANDO, FLORIDA--(CCNMatthews - March 5, 2007) - InterOil Corporation (TSX:IOL) (AMEX:IOC) (POMSoX:IOC) At the Raymond James 28th Annual Institutional Investor Conference, Mr. Phil Mulacek, Chairman and CEO of InterOil, today announced that refining operations at the company's refinery in Papua New Guinea expects to generate a profit in the fourth quarter of 2006.

For the fourth quarter of 2006, the refinery is expected to report net income of approximately $3.8 million, an increase of $8.1 million over the third quarter 2006 loss of $4.3 million. Earnings before interest, taxes, depreciation and amortization ("EBITDA") is also expected to improve to around $9.1 million for the fourth quarter which is a significant turnaround from the $1.7 million reported in the third quarter of 2006. This represents the second consecutive quarter that the refinery has generated positive EBITDA. (See notes on Non-GAAP measures below).

"Drivers for the financial improvement include: the operational impact of the optimization efforts and our ongoing crude selection, which has enhanced the product slate, improved reliability and reduced fuel costs," Mr. Mulacek added.

Middle distillates, the refinery's highest value products, yield increased through the year and in the fourth quarter, accounted for sixty-three percent of the refinery's total throughput. Diesel yield had the biggest gain, increasing about seven percent from the third quarter, while fuel losses were reduced to less than three percent.

In conclusion Mr. Mulacek said, "We expect to see continued improvement at the refinery over the next 12 to 18 months." A link to the live web cast of this presentation will be available at www.interoil.com

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, retail and commercial distribution assets and targeting expansion into Liquefied Natural Gas (LNG). 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 is widely recognized as being the largest value added processing facility in PNG.

InterOil's common shares trade on the Toronto Stock Exchange under the symbol IOL in Canadian dollar and on the American Stock Exchange under the symbol IOC in US dollars.

InterOil currently has no reserves as defined in Canadian National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Any information contained herein regarding resources are references to undiscovered resources under NI 51-101, whether stated or not.

Cautionary Statements

This press release may include "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 Company expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by the Company based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. 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.

NON-GAAP MEASURES

Earnings before interest, taxes, depreciation and amortization, commonly referred to as 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 InterOil to analyze operating performance. EBITDA does not have a standardized meaning prescribed by Canadian generally accepted accounting principles 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 Canadian generally accepted accounting principles. Further, EBITDA is not a measure of cash flow under Canadian generally accepted accounting principles and should not be considered as such. For reconciliation of EBITDA to the net income (loss) under GAAP, refer to our third quarter 2006 MD&A.

Contact Information