Broader loss for InterOil

INTEROIL has posted a net loss of $US19.78 million ($A19.42 million) for the September quarter, a 37% bigger loss than experienced in this period for 2010 and a vast change from the $23.54 million net profit in the June quarter.
Broader loss for InterOil Broader loss for InterOil Broader loss for InterOil Broader loss for InterOil Broader loss for InterOil

Papua New Guinea's sole oil refiner attributed the loss to several factors, including lower gross margins of $13.4 million year-on-year due to lower crack spreads on its export products.

The result was also impacted by inventory write-downs as crude and petroleum product prices fell towards the end of the quarter and a $6 million loss from the Flex LNG shares it owns.

Interoil also increased its spending on seismic by $5.5 million year-on-year as it prepares for future drilling in the Gulf province.

The Triceratops-2 well in the Bwata field is on track for spudding by year-end.

Interoil chief executive officer Phil Mulacek said the recent phase three seismic program had improved the structural model of this prospect and increased the optimism it would be successfully confirmed with the drill bit.

Seismic in this quarter will cover 50 kilometres to further scope out the various leads in its Gulf tenements PPLs236 and 238.

There is a lot of interest in how Interoil's underway search for a suitable LNG operator of its Gulf LNG project will play out.

PNG's Department of Petroleum and Energy clearly wants oil major Shell to operate the project but Interoil will select its own strategic partner.

"While we look forward to a prompt conclusion to this process and to our discussions with the PNG Government concerning the Gulf LNG Project, we continue to pre-invest in our Gulf LNG Project and the civil works and the front-end engineering and design," Mulacek said.

Civil works for the road between the Purari river wharf of the project and the Antelope-2 well were completed in the recent quarter. Interoil said the next focus is grading and surfacing the road along with strengthening bridges.

The Interoil-led Gulf LNG project is based on an onshore modular LNG plant in Gulf province along with an offshore floating LNG facility, for a total of 5 million tonnes per annum in 2014. There is also an option to ramp up to 8MMtpa through 2015 and 2016.

The final investment decision for the joint venture project is due by the end of 2011.

Interoil had a cash position of $144.4 million at the end of September.

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