.
.
.
EXHIBIT 7
INTEROIL CORPORATION (INTEROIL CORPORATION LOGO)
CONSOLIDATED BALANCE SHEETS
(Expressed in United States dollars)
UNAUDITED AUDITED UNAUDITED
JUNE 30 DECEMBER 31 JUNE 30
2004 2003 2003
$ $ $
----------- ----------- -----------
ASSETS
Current assets:
Cash and cash equivalents 21,163,705 9,313,682 6,867,693
Temporary investments 168,647 24,723,572 3,452,093
Trade receivables 7,127,714 -- --
Other receivables -- 175,491 591,468
Other assets 129,064 311,093 --
Inventories (note 4) 29,303,284 -- --
Prepaid expenses 548,284 488,532 392,563
----------- ----------- -----------
58,440,698 35,012,370 11,303,817
Plant and equipment (note 5) 219,712,847 202,309,465 170,663,045
Oil and gas properties (note 6) 38,690,805 23,018,015 9,489,641
Future income tax benefit 642,353 -- --
----------- ----------- -----------
317,486,703 260,339,850 191,456,503
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities
Crude feedstock 23,476,702 -- --
Other 22,164,787 5,835,583 12,675,556
Deferred acquisition cost (note 13) 11,854,110 -- --
Due to related parties (note 3) 1,056,251 1,478,751 1,690,001
Unsecured loans (note 8) 3,600,000 -- --
Current portion of secured loan (note 7) 4,500,000 9,000,000 4,500,000
----------- ----------- -----------
66,651,850 16,314,334 18,865,557
Deferred financing costs 834,439 -- --
Secured loan (note 7) 80,500,000 74,000,000 55,500,000
Indirect participation interest (note 9) 12,109,500 16,600,000 7,650,000
----------- ----------- -----------
160,095,789 106,914,334 82,015,557
----------- ----------- -----------
Non-controlling interest (note 10) 6,465,064 6,467,496 6,489,352
----------- ----------- -----------
Shareholders' equity:
Share capital (note 11) 165,065,159 157,449,200 110,363,916
Additional paid in capital 1,747,233 540,222 619,530
Deferred foreign exchange 49,715 -- --
Deficit accumulated during the development stage (15,936,257) (11,031,402) (8,031,852)
----------- ----------- -----------
150,925,850 146,958,020 102,951,594
----------- ----------- -----------
317,486,703 260,339,850 191,456,503
=========== =========== ===========
See accompanying notes to the consolidated financial statements
INTEROIL CORPORATION (INTEROIL CORPORATION LOGO)
CONSOLIDATED STATEMENTS OF EARNINGS
(Expressed in United States dollars)
UNAUDITED
CUMULATIVE
AMOUNTS FROM
INCEPTION OF
UNAUDITED UNAUDITED DEVELOPMENT
QUARTER ENDED SIX MONTHS ENDED STAGES TO
---------------------------- ---------------------------- ------------
JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30
2004 2003 2004 2003 2004
$ $ $ $ $
----------- ----------- ----------- ------------ -----------
REVENUE
Sales and operating revenues 12,586,137 -- 12,586,137 -- 12,586,137
Interest 123,956 19,861 175,254 34,110 7,142,027
Other (19,560) 7,856 84,738 7,856 118,887
Equity earnings of SP InterOil, LDC -- -- -- -- (281,128)
----------- ----------- ----------- ------------ -----------
12,690,533 27,717 12,846,129 41,966 19,565,923
----------- ----------- ----------- ------------ -----------
EXPENSES
Cost of sales and operating expenses 10,468,871 -- 10,468,871 -- 10,468,871
Administrative and general expenses 2,399,751 830,633 3,620,684 1,376,333 14,369,261
Management fees -- -- -- -- 1,365,000
Management fees for prior periods waived -- -- -- (840,000) (840,000)
Exploration costs 1,485,828 -- 1,491,623 -- 2,452,209
Legal and professional fees 236,927 133,362 829,054 302,355 4,489,281
Foreign exchange 114,678 252,937 96,713 (301,358) 2,260,383
----------- ----------- ----------- ------------ -----------
14,706,055 1,216,932 16,506,945 537,330 34,565,005
----------- ----------- ----------- ------------ -----------
(Loss) before income taxes
and non-controlling interest (2,015,522) (1,189,215) (3,660,816) (495,364) (14,999,082)
Income tax (expense) (508,821) (15,997) (508,821) (23,701) (658,247)
----------- ----------- ----------- ------------ -----------
(Loss) before non-controlling interest (2,524,343) (1,205,212) (4,169,637) (519,065) (15,657,329)
Non-controlling interest 2,065 534 2,432 1,046 458,722
----------- ----------- ----------- ------------ -----------
NET (LOSS) (2,522,278) (1,204,678) (4,167,205) (518,019) (15,198,607)
=========== =========== =========== ============ ===========
Basic (loss) per share (0.10) (0.05) (0.17) (0.02)
Diluted (loss) per share (0.10) (0.05) (0.17) (0.02)
Weighted avg number of common shares
outstanding - Basic and diluted 25,056,672 22,238,463 24,938,621 21,645,981
See accompanying notes to the consolidated financial statements
INTEROIL CORPORATION (INTEROIL CORPORATION LOGO)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States dollars)
UNAUDITED
CUMULATIVE
AMOUNTS FROM
INCEPTION OF
UNAUDITED UNAUDITED DEVELOPMENT
QUARTER ENDED SIX MONTHS ENDED STAGES TO
---------------------------- --------------------------- ------------
JUNE 30 JUNE 30 JUNE 30 JUNE 30 JUNE 30
2004 2003 2004 2003 2004
$ $ $ $ $
------------ ------------ ----------- ------------ ------------
Cash flows provided by (used in):
OPERATING ACTIVITIES
Net (loss) (2,522,278) (1,204,678) (4,167,205) (518,019) (15,198,607)
Net distributions from SP InterOil LDC -- -- -- -- 781,187
Non-controlling interest (2,065) (534) (2,432) (1,046) (458,722)
Adjustments for non-cash transactions 2,107,456 -- 2,199,651 -- 4,363,321
Change in non-cash operating working capital 1,454,524 146,794 1,200,013 (1,280,373) (115,569)
------------ ------------ ------------ ------------ ------------
1,037,637 (1,058,418) (769,973) (1,799,438) (10,628,390)
------------ ------------ ------------ ------------ ------------
INVESTING ACTIVITIES
Cash acquired on consolidation of SPI InterOil LDC -- -- -- -- (14,858,947)
Expenditure on oil and gas properties (8,134,953) (2,705,138) (16,912,183) (4,177,782) (35,613,281)
Expenditure on capital assets (5,701,042) (27,399,860) (8,688,000) (46,189,979) (155,722,912)
Funds received on sale of assets -- -- 405,353 -- 405,353
Redemption/(purchase) of cash
on short-term investments 13,950,068 1,069,800 24,554,925 3,964,701 (168,647)
Acquisition of InterOil Products Limited
net of cash received 4,757,276 -- 4,757,276 -- 4,757,276
------------ ------------ ------------ ------------ ------------
4,871,349 (29,035,198) 4,117,371 (46,403,060) (201,201,158)
------------ ------------ ------------ ------------ ------------
FINANCING ACTIVITIES
Proceeds from borrowings 5,600,000 16,500,000 5,600,000 29,000,000 87,840,000
Proceeds from indirect participation interest -- 7,150,000 3,235,000 7,150,000 19,535,000
Other net advances (to) related party (note 3) (211,250) (200,209) (422,500) (565,861) 900,598
Proceeds from issue of common shares 30,000 7,394,719 90,125 16,197,513 124,717,655
------------ ------------ ------------ ------------ ------------
5,418,750 30,844,510 8,502,625 51,781,652 232,993,253
------------ ------------ ------------ ------------ ------------
Increase in cash and cash equivalents 11,327,736 750,894 11,850,023 3,579,154 21,163,705
</Table>
INTEROIL CORPORATION (INTEROIL CORPORATION LOGO)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Expressed in United States dollars)
UNAUDITED UNAUDITED AUDITED
QUARTER ENDED SIX MONTHS ENDED YEAR ENDED
---------------------------- ---------------------------- -----------
JUNE 30 JUNE 30 JUNE 30 JUNE 30 DECEMBER 31
2004 2003 2004 2003 2003
$ $ $ $ $
----------- ----------- ----------- ----------- -----------
SHARE CAPITAL
At beginning of period 157,677,259 103,017,992 157,449,200 94,120,609 94,120,609
Adjustment to reflect change in accounting for
employee stock options (note 1) -- -- 92,434 -- --
Issue of capital stock 7,387,900 7,345,924 7,523,525 16,243,307 63,328,591
----------- ----------- ----------- ----------- -----------
At end of period 165,065,159 110,363,916 165,065,159 110,363,916 157,449,200
----------- ----------- ----------- ----------- -----------
ADDITIONAL PAID IN CAPITAL
At beginning of period 1,267,870 769,964 540,222 769,964 769,964
Adjustment to reflect change in accounting for
employee stock options (note 1) -- -- 645,216 -- --
Stock compensation 479,363 (150,434) 561,795 (150,434) (229,742)
----------- ----------- ----------- ----------- -----------
At end of period 1,747,233 619,530 1,747,233 619,530 540,222
----------- ----------- ----------- ----------- -----------
DEFERRED FOREIGN EXCHANGE
At beginning of period -- -- -- -- --
Movement for period (note 1) 49,715 -- 49,715 -- --
----------- ----------- ----------- ----------- -----------
At end of period 49,715 -- 49,715 -- --
----------- ----------- ----------- ----------- -----------
DEFICIT ACCUMULATED DURING THE DEVELOPMENT
STAGE
At beginning of period (13,413,978) (6,827,174) (11,031,402) (7,513,833) (7,513,833)
Adjustment to reflect change in accounting for
employee stock options (note 1) -- -- (737,650) -- --
Net (loss) for period (2,522,278) (1,204,678) (4,167,205) (518,019) (3,517,569)
----------- ----------- ----------- ----------- -----------
At end of period (15,936,256) (8,031,852) (15,936,257) (8,031,852) (11,031,402)
----------- ----------- ----------- ----------- -----------
SHAREHOLDERS' EQUITY AT END OF PERIOD 150,925,851 102,951,594 150,925,850 102,951,594 146,958,020
=========== =========== =========== =========== ===========
</Table>
INTEROIL CORPORATION (INTEROIL CORPORATION LOGO)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, Expressed in United States dollars)
InterOil Corporation's (the "Company" or "InterOil") primary business interests
are the development of an oil refinery (the "Project"), Oil and Gas Exploration
in Papua New Guinea ("PNG") and distribution of refined petroleum products in
PNG.
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The unaudited consolidated financial statements for the quarter ended June 30,
2004 and the six months ended June 30, 2004 have been prepared in accordance
with Canadian generally accepted accounting principles. The preparation of the
financial data is based on accounting policies and practices consistent with
those used in the preparation of the audited annual consolidated financial
statements for the year ended December 31, 2003. These unaudited consolidated
financial statements should be read together with the audited annual
consolidated financial statements and the accompanying notes included in the
Company's 2003 Annual Report except for the following;
Stock-based compensation - Prior to January 1, 2004, the Company applied the
fair value based method of accounting prescribed by CICA Handbook Section 3870,
Stock-based Compensation and Other Stock-based Payments, only to employee stock
appreciation rights, and applied the settlement method of accounting to employee
stock options. Under the settlement method, any consideration paid by employees
on the exercise of stock options or purchase of stock is credited to share
capital and no compensation expense was recognised.
The CICA Accounting Standards Board has amended CICA Handbook Section 3870,
Stock-based Compensation and Other Stock-based Payments, to require entities to
account for employee stock options using the fair value based method, beginning
January 1, 2004. Under the fair value based method, compensation expense is
measured at fair value at the date of grant and is expensed over the award's
vesting period. In accordance with one of the transitional options permitted
under amended Section 3870, the Company has retroactively applied the fair value
based method to all employee stock options granted on or after January 1, 2002,
without restatement to prior periods. The effect of retroactively adopting the
fair value based method, without restatement, is to increase the opening
accumulated deficit by $737,650, increase additional paid up capital by $645,216
and increase share capital by $92,434.
Inventory valuation - Crude oil and refined petroleum products are valued at the
lower of cost, on a first-in, first-out basis, or net realisable value. Cost
consists of raw material, labour, direct overheads and transportation.
Foreign currency - For subsidiaries considered to be self-sustaining foreign
operations, all assets and liabilities denominated in foreign currency are
translated to United States dollars at exchange rates in effect at the balance
date and all revenue and expense items are translated at the rates of exchange
in effect at the time of the transactions. Foreign exchange gains or losses are
reported as a seperate component of shareholders' equity.
For subsidiaries considered to be an integrated foreign operation, monetary
items denominated in foreign currency are translated to United States dollars at
exchange rates in effect at balance date and non-monetary items are translated
at rates of exchange in effect when the assets were acquired or obligations
incurred. Revenue and expense items are translated at the rates of exchange in
effect at the time of the transactions. Foreign exchange gains or losses are
included in income.
Deferred financing costs - Deferred financing costs represent the unamortised
cost of fees incurred to secure long-term borrowings. Amortisation is provided
on a straight-line basis, over the term of the related debt and is included in
administrative and general expenses for the period.
Receivables - The collectability of debts is assessed at reporting date and
specific provision is made for any doubtful accounts.
2. SUPPLEMENTAL CASH FLOW INFORMATION
<Table>
<Caption>
QUARTER ENDED SIX MONTHS ENDED
----------------------- -----------------------
JUN-30 JUN-30 JUN-30 JUN-30
2004 2003 2004 2003
$ $ $ $
--------- --------- --------- ---------
Cash paid during the period for:
Interest -- 1,656,451 -- 1,656,451
Income taxes 8,588 6,731 17,177 13,462
Interest received during the
period for non-cash investing
and financing activities: 123,083 -- 275,263 3,881
Write off of Oil and Gas
exploration retention licences 1,488,127 -- 1,488,127 --
Conversion of indirect
participation into share
capital 7,725,500 -- 7,725,500 --
</Table>
3. RELATED PARTIES
Amounts due to related parties of $1,056,251 (December 31, 2003 - $1,478,751)
represents monies owed to Petroleum Independent and Exploration Corporation
(PIE) which acts as a sponsor of the Company's oil refinery project. PIE
advanced a loan of $2,900,000 to the InterOil Group in the quarter ended March
31, 2002 and the Company has repaid $1,843,750 of this loan as at June 30, 2004.
This loan has interest charged at a rate of 5.75% per annum.
During the six months ended 30 June 2004, $75,000 was accrued for the sponsor's
(PIE) legal, accounting and reporting costs.
4. INVENTORIES
JUN-30 DEC-31 JUN-30
2004 2003 2003
$ $ $
---------- ---------- ----------
Midstream (crude oil feedstock) 23,476,702 -- --
Downstream (refined petroleum product) 5,826,582 -- --
---------- ---------- ----------
29,303,284 -- --
========== ========== ==========
5. PLANT AND EQUIPMENT
The Company is considered to be in the construction and pre-operating stage of
development of an oil refinery in Papua New Guinea. Project costs, net of any
recoveries, incurred during this pre-operating stage are being capitalised as
part of plant and equipment (refinery assets). Administrative and general costs
are expensed as incurred. Plant and equipment are recorded at cost. Development
costs and the costs of acquiring or constructing support facilities and
equipment are capitalised. Interest costs relating to the construction and
pre-operating stage of the development project prior to commencement of
commercial operations are capitalised as part of the cost of such plant and
equipment (refinery assets). Plant and equipment is depreciated over their
useful lives. Depreciation of refinery assets will commence on the date of
achieving commercial operations.
Plant and equipment by business stream:
JUN-30 DEC-31 JUN-30
2004 2003 2003
$ $ $
----------- ----------- -----------
Upstream assets 5,644,660 5,650,817 5,656,827
Refinery assets 210,336,101 196,244,045 164,624,057
Downstream assets 3,629,235 321,817 287,151
Corporate assets 102,851 92,786 95,010
----------- ----------- -----------
219,712,847 202,309,465 170,663,045
=========== =========== ===========
6. OIL AND GAS PROPERTIES
The Company follows the successful efforts method of accounting for oil and gas
exploration and development activities. Direct acquisition costs of development
properties as well as geological and geophysical costs associated with these
properties are capitalised. Costs of development and exploratory wells that
result in additions to proven reserves are also capitalised. Costs associated
with Retention Licences PRL 4 and PRL 5 have been written off in the current
quarter. This was due to the non-existence of gas contracts and immediate
development plans for these licences.
<Table>
<Caption>
JUN-30 DEC-31 JUN-30
2004 2003 2003
$ $ $
---------- ---------- ----------
PPL 238, at cost 37,778,860 21,192,055 6,491,989
Other exploration properties at cost 911,945 1,825,960 2,997,652
---------- ---------- ----------
38,690,805 23,018,015 9,489,641
========== ========== ==========
</Table>
7. SECURED LOAN
On June 12, 2001, the Company entered into a loan agreement with the Overseas
Private Investment Corporation (OPIC), an agency of the US Government, to secure
a project financing facility of $85,000,000. The facility is fully drawn down at
June 30, 2004. The loan is secured over the assets of the refinery project.
The loan expires June 30, 2014 and half yearly repayments of $4,500,000 were to
commence on June 30, 2004. The loan agreement has been amended such that
repayments will now commence on June 30, 2005.
8. UNSECURED LOAN
On June 24, 2004, the Company entered into a loan agreement with Clarion Finanz
AG for $3,000,000. Interest is calculated at 12% per annum calculated daily. The
loan expires on June 24, 2005 and repayments are due to commence in July 2004.
On June 29, 2004 the Company entered into an agreement with Global Asset
Management LLC. A promissory note for $600,000 has been issued and is due to be
repaid on or before August 31, 2004.
9. INDIRECT PARTICIPATION INTEREST
In March 2004, the Company received an additional $3,235,000 from PNG Drilling
Ventures Limited ("PNGDV") relating to PNGDV's indirect interest in the
Company's phase 1 exploration program. In January 2004, $75,500 of the PNGDV
indirect participation interest was converted to 5,000 common shares of InterOil
Corporation in accordance with the indirect participation interest agreement.
The balance of the indirect participation interest at June 30, 2004 is
$12,109,500.
On May 17, 2004 PNG Energy Investors converted their $7,350,000 indirect
participation interest to 683,140 common shares of InterOil Corporation.
10. NON-CONTROLLING INTEREST
At June 30, 2004, a subsidiary, S .P. InterOil LDC, holds 98.69% (December 31,
2003 - 98.66%) of the non-voting participating shares issued from E. P. InterOil
Limited.
11. SHARE CAPITAL
InterOil Corporation has issued shares as at June 30, 2004 of 25,519,601
(December 31, 2003 - 24,815,961, June 30, 2003 - 22,488,683). The total number
of shares issued in the period to June 30, 2004 is 703,640 (June 30, 2003 -
1,902,740, year ended December 31, 2003 - 4,230,018). InterOil Corporation
securities trade on the Australian Stock Exchange as Chess Depository Interests
(CDIs) on the basis of 10 CDIs to one common share. They also trade on the Port
Moresby Stock Exchange and the Toronto Stock Exchange in Canada as common
shares.
12. STOCK OPTIONS
As at June 30, 2004, InterOil Corporation has 1,482,985 (December 31, 2003 -
1,363,265) stock options outstanding. During the six months to June 30, 2004, a
total of 174,260 options were issued.
13. ACQUISITION OF SUBSIDIARY
On March 1, 2004, InterOil, through its wholly owned subsidiary, S.P.I.
Distribution Limited acquired 100% of the outstanding common shares of BP Papua
New Guinea Limited which was subsequently renamed InterOil Products Limited
("IPL"). InterOil purchased IPL in order to enhance its downstream position in
Papua New Guinea as IPL is a distributor of refined petroleum products in Papua
New Guinea.
The results of IPL's operations have been included in the consolidated financial
statements since April 28, 2004, the date control of IPL's shares was
transferred to InterOil. Under the agreement, InterOil Corporation was entitled
to the profit of IPL from March 1, 2004. The profit earned after tax between
March 1, 2004 and April 28, 2004 of $1,243,746 was recognised as a reduction in
the acquisition cost.
The aggregate purchase price is $13,226,854, including a service agreement for
$1,000,000 related to the purchase. A deposit of $1,000,000 of the purchase
price has been paid. The remaining $12,226,854 (discounted amount $11,854,110)
is payable on March 1, 2005 and is included in current liabilities in the
financial statements.
The following table summarises the estimated fair value of the assets acquired
and liabilities assumed at the date of acquisition.
<Table>
<Caption>
$
-----------
Current assets 22,474,255
Future income tax benefit 640,284
Property, plant and equipment 3,007,312
-----------
Total assets acquired 26,121,851
Current liabilities (12,894,997)
-----------
Net assets acquired 13,226,854
===========
</Table>
14. WORKING CAPITAL FACILITY
The Company has secured a $60,000,000 working capital facility to finance the
ongoing purchase of crude oil for the refinery. Under the facility the Company
has access to documentary letters of credit, stand by letters of credit, short
term advances and advances on merchandise. The interest rate applicable to any
advance under the short term loans is 2.5% per annum above LIBOR. The facility
is available for twelve months to June 2005.
The facility is secured by sales contracts, purchase contracts, certain cash
accounts associated with the refinery, all crude and refined products of the
refinery.
At June 30, 2004, the Company had letters of credit outstanding for $25,960,000.
Cash totalling $11,536,332 was being maintained as a security margin for the
facility.
15. SUBSEQUENT EVENTS
In July 2004, $1,359,200 was received by the Company from a director for the
exercise of stock options.
In July 2004, an additional amount of $1,500,000 was drawn down on the unsecured
loan with Clarion Finanz AG.
16. SEGMENT REPORTING
Management has determined that the Company operates in three key segments;
Upstream - exploration and production, Midstream - refinery operations,
Downstream - refined product distribution, in Papua New Guinea. The remaining
amounts related to Corporate offices.
The following tables present the Company's results by segment.
Quarter ended June 30, 2004 (unaudited)
<Table>
<Caption>
UPSTREAM MIDSTREAM DOWNSTREAM OTHER TOTAL
$ $ $ $ $
----------- ----------- ----------- ----------- -----------
External revenues -- -- 12,586,137 -- 12,586,137
-----------
Segment contributions (1,878,780) (219,983) 1,223,029 (1,244,184) (2,119,918)
-----------
Reconciliation to net earnings (loss):
Segment contributions (2,119,918)
Investment income 123,956
Other (19,560)
Non controlling interest 2,065
Income tax expense (508,821)
-----------
Net earnings (loss) (2,522,278)
===========
</Table>
Quarter ended June 30, 2003 (unaudited)
<Table>
<Caption>
UPSTREAM MIDSTREAM DOWNSTREAM OTHER TOTAL
$ $ $ $ $
----------- ----------- ----------- ----------- -----------
External revenues -- -- -- -- --
-----------
Segment contributions (311,917) (269,761) (224) (635,030) (1,216,932)
-----------
Reconciliation to net earnings (loss):
Segment contributions (1,216,932)
Investment income 19,861
Other 7,856
Non controlling interest 534
Income tax expense (15,997)
-----------
Net earnings (loss) (1,204,678)
===========
</Table>
Six months ended June 30, 2004 (unaudited)
<Table>
<Caption>
UPSTREAM MIDSTREAM DOWNSTREAM OTHER TOTAL
$ $ $ $ $
----------- ----------- ----------- ----------- -----------
External revenues -- -- 12,586,137 -- 12,586,137
-----------
Segment contributions (2,370,537) (310,606) 1,190,675 (2,430,340) (3,920,808)
-----------
Reconciliation to net earnings (loss):
Segment contributions (3,920,808)
Investment income 175,254
Other 84,738
Non controlling interest 2,432
Income tax expense (508,821)
-----------
Net earnings (loss) (4,167,205)
===========
</Table>
Six months ended June 30, 2003 (unaudited)
<Table>
<Caption>
UPSTREAM MIDSTREAM DOWNSTREAM OTHER TOTAL
$ $ $ $ $
----------- ----------- ----------- ----------- -----------
External revenues -- -- -- -- --
-----------
Segment contributions (472,482) 1,005,555 (1,298) (1,069,105) (537,330)
-----------
Reconciliation to net earnings (loss):
Segment contributions (537,330)
Investment income 34,110
Other 7,856
Non controlling interest 1,046
Income tax expense (23,701)
-----------
Net earnings (loss) (518,019)
===========
</Table>
The following tables present the Company's assets by segment.
June 30, 2004 (unaudited)
<Table>
<Caption>
UPSTREAM MIDSTREAM DOWNSTREAM OTHER TOTAL
$ $ $ $ $
----------- ----------- ----------- ----------- -----------
Total assets 45,884,246 234,396,546 25,441,417 11,764,494 317,486,703
=========== =========== =========== =========== ===========
June 30, 2003 (unaudited)
<Table>
<Caption>
UPSTREAM MIDSTREAM DOWNSTREAM OTHER TOTAL
$ $ $ $ $
----------- ----------- ----------- ----------- -----------
Total assets 17,534,025 169,857,543 287,151 3,777,784 191,456,503
=========== =========== =========== =========== ===========