EXHIBIT 9
[KPMG LOGO]
INDEPENDENT REVIEW REPORT TO THE MEMBERS OF INTEROIL CORPORATION
SCOPE
We have reviewed the financial report of InterOil Corporation for the half-year
ended 30 June 2004, denominated in US dollars, consisting of the statement of
operations, balance sheet, statement of cash flows, statement of shareholders'
equity accompanying notes and the directors' declaration.
The financial report includes the consolidated financial statements of the
consolidated entity, comprising the Company and the entities it controlled at
the end of the half-year or from time to time during the half-year. The
Company's directors are responsible for the financial report.
We have performed the independent review of the financial report in order to
state whether, on the basis of procedures described, anything has come to our
attention that would indicate that the financial report is not presented fairly
in accordance with generally accepted accounting standards in Canada so as to
present a view which is consistent with our understanding of the consolidated
entity's financial position, and in order for the Company to lodge the financial
report with the Australian Stock Exchange.
Our review has been conducted in accordance with Australian Auditing Standards
applicable to review engagements. The review is limited primarily to inquiries
of company personnel and analytical procedures applied to the financial data.
Our review has not involved a study and evaluation of internal accounting
controls, tests of accounting records or tests of responses to inquiries by
obtaining corroborative evidence from inspection, observation or confirmation.
The procedures do not provide all the evidence that would be required in an
audit, thus the level of assurance is less than given in an audit. We have not
performed an audit and, accordingly, we do not express an audit opinion.
STATEMENT
Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the half-year financial report of InterOil
Corporation does not present fairly the financial position of the consolidated
entity as at 30 June 2004 and its performance for the half-year at that date in
accordance with general accepted accounting principles in Canada.
/s/ KPMG
- -------------------
KPMG
/s/Trent van Veen
- -----------------
Trent van Veen
Partner
Signed at Sydney this the 13th day of August 2004
[LOGO]
INTEROIL CORPORATION [INTEROIL LOGO]
ARBN: 094 136 884
Consolidated Financial Statements
(Unaudited, Expressed in United States dollars)
Six months ended June 30, 2004 and 2003
INTEROIL CORPORATION
APPENDIX 4D
HALF YEAR REPORT [INTEROIL LOGO]
PERIOD ENDING JUNE 30, 2004
RESULTS FOR ANNOUNCEMENT TO THE MARKET
ARBN: 094 136 884
RESULTS
%Up/ JUNE 2004 JUNE 2003
(DOWN) $US'000 $US'000
Revenues from ordinary activities >1000% 12,846 42
(Loss) from ordinary activities after tax attributable to members 704% (4,167) (518)
Net (loss) for the period attributable to members 704% (4,167) (518)
Earnings per common share (0.17) (0.02)
Earnings per CDI (0.02) (0.00)
DIVIDENDS
The company does not propose to pay dividends in the current period.
There were no dividends paid in the previous corresponding period.
NET TANGIBLE ASSETS PER SECURITY
$US $US
Net tangible asset backing per common share 6.17 4.87
Net tangible asset backing over CDI* 0.62 0.49
*10 Chess Depository Instruments (CDIs) represent one common share.
CONTROL OVER ENTITIES
On March 1, 2004, InterOil Corporation, 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"). 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 that control of the acquired entity's
shares was transferred to InterOil Corporation. 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.
This information is provided according to ASX Listing Rule 4.3A.
The Appendix 4D and Financial Report for the half year ended June 30, 2004
should be read in conjunction with the Company's 2003 annual report.
The Financial Statements have been prepared using Canadian Generally Accepted
Accounting Principles (GAAP).
The Financial Statements for the half year ended June 30, 2004 have been
reviewed.
INTEROIL CORPORATION
CONSOLIDATED BALANCE SHEETS [INTEROIL LOGO]
(Expressed United States dollars)
REVIEWED AUDITED REVIEWED
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 labilities
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 - -
Accumulated deficit (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
CONSOLIDATED STATEMENTS OF EARNINGS [INTEROIL LOGO]
(Expressed in United States dollars)
UNAUDITED REVIEWED
QUARTER ENDED SIX MONTHS ENDED
------------------------- ------------------------
JUNE 30 JUNE 30 JUNE 30 JUNE 30
2004 2003 2004 2003
$ $ $ $
---------- -------- ---------- ---------
REVENUES
Sales and operating revenues 12,586,137 - 12,586,137 -
interest 123,956 19,861 175,254 34,110
Other (19,560) 7,856 84,738 7,856
---------- -------- ---------- ---------
12,690,533 27,717 12,846,129 41,966
---------- -------- ---------- ---------
EXPENSES
Cost of sales and operating expenses 10,468,871 - 10,468,871 -
Administrative and general expenses 2,399,751 315,045 3,620,684 1,376,333
Management fees for prior periods waived
- - - (840,000)
Exploration costs 1,485,828 - 1,491,623 -
Legal and professional fees 236,927 133,362 829,054 302,356
Foreign exchange 114,678 252,937 96,713 (301,358)
---------- -------- ---------- ---------
14,706,055 701,344 16,506,945 537,330
---------- -------- ---------- ---------
(Loss) before income taxes and non-controlling interest (2,015,523) (673,627) (3,660,816) (495,364)
income tax (expense) (508,821) (15,997) (508,821) (23,701)
---------- -------- ---------- ---------
(Loss) before non-controlling interest (2,524,344) (689,624) (4,169,637) (519,065)
Non-controlling interest 2,065 534 2,432 1,046
---------- -------- ---------- ---------
NET (LOSS) (2,522,279) (689,090) (4,167,205) (518,019)
---------- -------- ---------- ---------
BASIC (LOSS) PER SHARE (0.10) (0.03) (0.17) (0.02)
DILUTED (LOSS) PER SHARE (0.10) (0.03) (0.17) (0.02)
See accompanying notes to the consolidated financial statements
INTEROIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS [INTEROIL LOGO]
(Expressed in United States dollars)
UNAUDITED REVIEWED
QUARTER ENDED SIX MONTHS ENDED
------------------------- --------------------------
JUNE 30 JUNE 30 JUNE 30 JUNE 30
2004 2003 2004 2003
$ $ $ $
---------- ----------- ----------- -----------
Cash flows provided by (used in)
OPERATING ACTIVITIES
Net (loss) (2,522,278) (689,090) (4,167,205) (518,019)
Non-controlling interest (2,065) (534) (2,432) (1,046)
Adjustments for non-cash transactions 2,107,456 252,937 2,199,651 -
Change in non-cash operating working capital 1,454,524 (106,143) 1,200,013 (1,280,373)
---------- ----------- ---------- -----------
1,037,637 (542,830) (769,973) (1,799,438)
---------- ----------- ---------- -----------
INVESTING ACTIVITIES
Expenditure on oil and gas properties (8,134,953) (2,705,138) (16,912,183) (4,177,782)
Expenditure on Capital assets (5,701,042) (27,399,860) (8,688,000) (46,189,979)
Funds received on sale of assets - - 405,353 -
Redemption of cash on short-term investments 13,950,068 1,069,800 24,554,925 3,964,701
Acquisition of InterOil Products Limited net of cash received 4,757,276 - 4,757,276 -
---------- ----------- ---------- -----------
4,871,349 (29,035,198) 4,117,371 (46,403,060)
---------- ----------- ---------- -----------
FINANCING ACTIVITIES
Proceeds from borrowings 5,600,000 16,500,000 6,600,000 29,000,000
Proceeds from indirect participation interest - 7,150,000 3,235,000 7,150,000
Other net advances (to) related party (note 3) (211,250) (200,209) (422,500) (565,861)
Proceeds from issue of common shares 30,000 6,879,131 90,125 16,197,513
---------- ----------- ---------- -----------
5,418,750 30,328,922 8,502,625 51,781,652
---------- ----------- ---------- -----------
Increase in cash and cash equivalents 11,327,736 750,894 11,850,023 3,579,154
Cash and cash equivalents, beginning of period 9,835,969 6,116,799 9,313,682 3,288,539
---------- ----------- ---------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD 21,163,705 6,867,693 21,163,705 6,867,693
========= =========== ========== ===========
See accompanying notes to the consolidated financial statements.
INTEROIL CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY [INTEROIL LOGO]
(Expressed in United States dollars)
REVIEWED AUDITED REVIEWED
----------- ----------- -----------
JUNE 30 DECEMBER 31 JUNE 30
2004 2003 2003
$ $ $
----------- ----------- -----------
SHARE CAPITAL
At beginning of year as previously reported 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 7,523,525 63,328,591 16,243,307
----------- ----------- -----------
At end of period 165,065,159 157,449,200 110,363,916
----------- ----------- -----------
ADDITIONAL PAID IN CAPITAL
At beginning of year as previously reported 540,222 769,964 769,964
Adjustment to reflect change in accounting for
employee stock options (note 1) 645,216 - -
Stock compensation 561,795 (229,742) (150,434)
----------- ----------- -----------
At end of period 1,747,233 540,222 619,530
----------- ----------- -----------
DEFERRED FOREIGN EXCHANGE
At beginning of year - - -
Movement for period (note 1) 49,715 - -
----------- ----------- -----------
At end of period 49,715
----------- ----------- -----------
ACCUMULATED DEFICIT
At beginning of year (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 (4,167,205) (3,517,569) (518,019)
----------- ----------- -----------
At end of period (15,936,257) (11,031,402) (8,031,852)
----------- ----------- -----------
SHAREHOLDERS' EQUITY AT END OF PERIOD 150,925,850 146,958,020 102,951,594
=========== =========== ===========
See accompanying notes to the consolidated financial statements
INTEROIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited Expressed in United States dollars) [INTEROIL LOGO]
InterOil Corporation (the "Company" or InterOil) primary business
interests and 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 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 separate
component of shareholder's 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
JUN-30 JUN-30
2004 2003
$ $
--------- ---------
Cash paid during the Period for:
Interest - 1,656,451
Income taxes 17,177 13,462
Interest received during the period for
non-cash investing and financing activities: 275,263 3,881
Write off Oil and Gas exploration retention
licences 1,488,127
Conversion of indirect participation into
share capital 7,725,500
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 period, $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
=========== =========== ===========
[INTEROIL CORPORATION LOGO]
INTEROIL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited, Expressed in United States dollars)
6. OIL 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 no immediate development plans for these licences.
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
========== ========== =========
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). The total number of shares issued in the
period to June 30, 2004 is 703,640 (June 30, 2003 - 1,902,740). The
weighted average number of shares used in the earnings per share
calculation is 24,938,621 (2003 - 22,488,683) 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"). 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 data 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.
$
-----------
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
-----------
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 or credit outstanding for
$25,960,000. Cash totalling $11,536,332 was being maintained as a security
margin for the facility.
INTEROIL CORPORATION [INTEROIL LOGO]
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited Expressed in United States dollars)
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 Clanon Finanz AG.
16. SEGMENT REPORTING
Management has determinated that the Company operates in three
key segments. Upstream exploration and production,
Midstream-refinery operations. Down stream refined product.
The following tables present the company results by segment
Quarter ended June 30, 2004 (unaudited)
UPSTREAM MIDSTREAM DOWNSTREAM OTHER TOTAL
$ $ $ $ $
--------- --------- ---------- ----------- -----------
External revenues - 12,586,137 - 12,586,137
----------
Segment contributions (1,878,780) (219,983) 1,223,029 (1,244,185) (2,119,919)
----------
Reconciliation to net earning (loss)
Segment contributions (2,119,919)
Investment income 123,956
Other (19,560)
Non controlling interest 2,065
Income tax expense (508,821)
----------
Net earnings (loss) (2,522,279)
==========
Quarter ended June 30, 2003 (unaudited)
UPSTREAM MIDSTREAM DOWNSTREAM OTHER TOTAL
$ $ $ $ $
--------- --------- ---------- --------- --------
External revenues - - - - -
--------
Segment contributions (311,917) (269,761) (224) (119,442) (701,344)
--------
Reconciliation to net earning (loss)
Segment contributions (701,344)
Investment income 19,861
Other 7,856
Non controlling interest 534
Income tax expense (15,997)
--------
Net earnings (loss) (689,090)
========
Six months ended June 30, 2004 (unaudited)
UPSTREAM MIDSTREAM DOWNSTREAM OTHER TOTAL
$ $ $ $ $
----------- --------- ---------- ----------- -----------
External revenues - - 12,586,137 - 12,586,137
----------
Segment contributions (2,370,537) (310,606) 1,190,675 (2,430,341) (3,920,809)
----------
Reconciliation to net earning (loss)
Segment contributions (3,920,809)
Investment income 175,254
Other 84,738
Non controlling interest 2,432
Income tax expense (508,821)
----------
Net earnings (loss) (4,167,206)
==========
Six months ended June 30, 2003 (unaudited)
UPSTREAM MIDSTREAM DOWNSTREAM OTHER TOTAL
$ $ $ $ $
--------- ----------- ---------- ----------- ---------
External revenues - - - - -
--------
Segment contributions (472,482) (1,005,555) (1,298) (1,069,105) (537,330)
--------
Reconciliation to net earning (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)
========
INTEROIL CORPORATION
DIRECTORS' CERTIFICATE
[INTEROIL LOGO]
The directors of the Company have made reasonable enquiries to ensure that
there is no material statement in this document that is misleading and to
ensure that there is no material omission from this document. The Board
reports, as at 13 August 2004, after due inquiry by them, that they have
not become aware of any circumstances that in their opinion materially
affect or will materially affect the assets and liabilities, financial
position, profits and losses or prospects of the Company
/s/ Phil E Mulacek
-------------------------------------
Phil E Mulacek
Chairman, on behalf of the Board
of Directors
InterOil Corporation
26025 1-45 North, Suite 420
PO Box 8727 The Woodlands, TX 77387-8727,
USA Telephone 281 292 1800 Facsimile: 281 292 0888 Web: www.interoil.com