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The following excerpt is from the company's SEC filing.

This MD&A (as defined herein) should be read in conjunction with our Condensed Consolidated Interim Financial Statements (as defined herein) and accompanying notes, the Consolidated Financial Statements (as defined herein) and 2014 AIF (as defined herein). This MD&A was prepared by management and provides a review of our performance for the quarter and nine months ended September 30, 2015, and of our financial condition and future prospects.

Our financial statements and the financial information contained in this MD&A have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board applicable to the preparation of financial statements and are presented in United States dollars (“USD” or “$”) unless otherwise specified.

In this MD&A, references to “we,” “us,” “our,” “the Company,” and “InterOil” refer to InterOil Corporation or InterOil Corporation and its subsidiaries as the context requires. Information is presented in this MD&A as at September 30, 2015 and for the quarter and nine months ended September 30, 2015 unless otherwise specified. A listing of specific defined terms can be found in the “Glossary of Terms” section of this MD&A.

Management Discussion and Analysis INTEROIL CORPORATION


This MD&A contains “forward-looking statements” as defined in U.S. federal and Canadian securities laws. Such statements are generally identifiable by the terminology used such as “may,” “plans,” “believes,” “expects,” “anticipates,” “intends,” “estimates,” “forecasts,” “budgets,” “targets” or other similar wording suggesting future outcomes or statements regarding an outlook. We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of historical fact, included in or incorporated by reference in this MD&A are forward-looking statements.

Forward-looking statements include, without limitation, statements regarding our business strategies and plans; plans for and anticipated timing of our exploration and appraisal (including drilling plans) and other business activities and results therefrom; anticipated timing of certain well testing and resource certifications under the Total SSA (as defined herein); characteristics of our properties; construction and development of a proposed liquefaction plant and central processing facility in Papua New Guinea; the timing and cost of such construction and development; commercialization and monetization of any resources; whether sufficient resources will be established; the likelihood of successful exploration for gas and gas condensate or other hydrocarbons; cash flows from operations; sources of capital and its sufficiency; operating costs; contingent liabilities; environmental matters; and plans and objectives for future operations; and timing, maturity and amount of future capital and other expenditures.

Many risks and uncertainties may affect matters addressed in these forward-looking statements, including but not limited to:

the uncertainty associated with the availability, terms and deployment of capital;

our ability to obtain and maintain necessary permits, concessions, licenses and approvals from relevant State (as defined herein) authorities to develop our gas and condensate resources within reasonable periods and on reasonable terms or at all;

inherent uncertainty of oil and gas exploration;

the difficulties with recruitment and retention of qualified personnel;

the political, legal and economic risks in Papua New Guinea;

landowner claims and disruption;

compliance with and changes in Papua New Guinean laws and regulations, including environmental laws;

the exploration and production businesses are competitive;

the inherent limitations in all control systems, and misstatements due to errors that may occur and not be detected;

exposure to certain uninsured risks stemming from our operations;

contractual defaults;

weather conditions and unforeseen operating hazards;

compliance with environmental and other government regulations could be costly and could negatively impact our business;

general economic conditions, including further economic downturn, availability of credit and the decline in commodity prices;

risk of legal action against us; and

law enforcement difficulties.

Forward-looking statements and information are based on our current beliefs as well as assumptions made by, and information currently available to us concerning anticipated financial conditions and performance, business prospects, strategies, regulatory developments, the ability to attract joint venture partners, future hydrocarbon commodity prices, the ability to secure adequate capital funding, the ability to obtain equipment and qualified personnel in a timely manner to develop resources, the ability to obtain financing on acceptable terms, and the ability to develop reserves and production through development and exploration activities.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate, and, therefore, we cannot assure you that the forward-looking statements will eventuate.

In light of the significant uncertainties inherent in our forward-looking statements, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved.

Some of these assumptions and other risks and uncertainties that could cause actual results to differ materially from such forward-looking statements are more fully described under the heading “Risk Factors” in our 2014 AIF.

Further, forward-looking statements contained in this MD&A are made as of the date hereof and, except as required by applicable law, we will not update publicly or revise any of these forward-looking statements. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement.



Crude Oil and Natural Gas Liquids

one barrel equalling 34.972 Imperial gallons or 42 U.S. gallons

British Thermal Units


barrels per day

thousand standard cubic feet

barrels of oil equivalent

thousand standard cubic feet per day

barrels of oil equivalent per day

million British Thermal Units

barrels per stream day


million British Thermal Units per day

thousand barrels of oil equivalent

million standard cubic feet


million standard cubic feet per day


million barrels

million tonnes per annum

million barrels of oil equivalent

West Texas Intermediate crude oil delivered at Cushing, Oklahoma

trillion standard cubic feet equivalent

billion standard cubic feet

pounds per square inch

All calculations converting natural gas to crude oil equivalent have been made using a ratio of six mcf of natural gas to one barrel of crude equivalent. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of six mcf of natural gas to one barrel of crude oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Tcfes may be misleading, particularly if used in isolation. A tcfe conversion ratio of one barrel of oil to six thousand cubic feet of gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.


This table outlines certain standard conversions between Standard Imperial Units and the International System of Units (metric units).

To Convert From

Multiply By

cubic meters


cubic meters





We are required to comply with the Canadian Securities Administrators’ NI 51-101, which prescribes disclosure of oil and gas reserves and resources. GLJ Petroleum Consultants Ltd., an independent qualified reserve evaluator based in Calgary, Canada, has evaluated our resources data as at December 31, 2014 in accordance with NI 51-101. This evaluation is summarized in our 2014 AIF available at

. We do not have any production or reserves, including proved reserves, as defined under NI 51-101 or as per the guidelines set by the SEC, as at September 30, 2015.

Well flow test results are not necessarily indicative of long-term performance or of ultimate recovery.

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, possible and probable reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We include in this MD&A information that the SEC’s guidelines generally prohibit U.S registrants from including in filings with the SEC.


“2014 AIF”

means InterOil’s Annual Information Form for the year ended December 31, 2014.

“2014 MD&A”

means Management’s Discussion and Analysis for the year ended December 31, 2014.


means Australia and New Zealand Banking Group (PNG) Limited.

“BNP Paribas”

means BNP Paribas Capital (Singapore) Limited.

means Bank of South Pacific Limited.


means Commonwealth Bank of Australia.


means a component of natural gas which is a liquid at surface conditions.

“Condensed Consolidated Interim Financial Statements”

means the unaudited condensed consolidated interim financial statements for the quarter and nine months ended September 30, 2015.

“Consolidated Financial Statements”

means the audited consolidated financial statements for the years ended December 31, 2014, 2013 and 2012.

“Convertible Notes”

means the 2.75% convertible senior notes of InterOil due November 15, 2015.

“Credit Suisse”

means Credit Suisse A.G.

"crude oil"

means a mixture consisting mainly of pentanes and heavier hydrocarbons

that exists in the liquid phase in reservoirs and remains liquid at atmospheric pressure and temperature. Crude oil may contain small amounts of sulfur and other non-hydrocarbons but does not include liquids obtained from the processing of


means the Department of Petroleum and Energy, a PNG government department responsible for regulating oil and gas activities in PNG.


represents net income/(loss) plus total interest expense (excluding amortization of debt issuance costs), income tax expense, depreciation and amortization expense. EBITDA is a non-GAAP measure used to analyze operating performance. See

“Non-GAAP Measures and Reconciliation”


means Canadian generally accepted accounting principles.

means a mixture of lighter hydrocarbons that exist either in the gaseous phase or in solution in crude oil in reservoirs but are gaseous at atmospheric conditions. Gas may contain sulfur or other non-hydrocarbon compounds.

“IPI holders”

means investors holding indirect participating working interests in certain exploration wells required to be drilled pursuant to the indirect participating interest agreement between us and certain investors dated February 25, 2005, as amended.


means daily reference rate based on the interest rates at which banks borrow unsecured funds from banks in the London, United Kingdom, wholesale money market.


means liquefied natural gas. Natural gas may be converted to a liquid state by pressure and severe cooling for transportation purposes, and then returned to a gaseous state to be used as fuel. LNG, which is predominantly artificially liquefied methane, is not to be confused with NGLs, natural gas liquids, which are heavier fractions that occur naturally as liquids.


means Macquarie Group Limited.


means this Management’s Discussion and Analysis for the quarter and nine months ended September 30, 2015.


means Bank of Tokyo-Mitsubishi UFJ, Ltd.

“natural gas”

means a naturally occurring mixture of hydrocarbon and non-hydrocarbon gases found in porous geological formations beneath the earth's surface, often in association with petroleum. The principal constituent is methane.

“NI 51-101”

means National Instrument 51-101 -

Standards of Disclosure for Oil and Gas Activities

adopted by the Canadian Securities Administrators.

“Oil Search”

means Oil Search Limited, a company incorporated in PNG, and its subsidiaries.

“Papua LNG Project”

means the Elk-Antelope liquefied natural gas joint venture project operated by Total on behalf of the PRL 15 joint venture, which includes Total, Oil Search and us.

means the kina, currency of PNG.


PNG Drilling Ventures Limited,

an entity with which we entered into an amended and restated indirect participation agreement on May 1, 2006.

means the Petroleum Prospecting License, an exploration tenement granted under the Oil & Gas Act 1997 (PNG).

means Pacific Exploration and Production Corporation (formerly Pacific Rubiales Energy Corporation), a company incorporated under the laws of British Columbia, Canada.


means the Petroleum Retention License, the tenement granted under the Oil & Gas Act 1997 (PNG) to allow the license holder to evaluate the commercial and technical options for the potential development of an oil and/or gas discovery.

” means Puma Energy Pacific Holdings Pte Ltd.

“Puma Transaction”

means the transaction by which Puma acquired all of the shares of certain of our subsidiaries that held our refinery and petroleum products distribution businesses for approximately $524.6 million. The transaction was completed on June 30, 2014.

means the United States Securities and Exchange Commission.


means Société Generale Hong Kong branch.



means the independent State of Papua New Guinea.


means Total S.A., a French multinational integrated oil and gas company and its subsidiaries.

“Total SSA

” means the share purchase agreement under which Total acquired, through the purchase of all of the shares of SPI (200) Limited, a wholly owned subsidiary, a gross 40.1275% interest in PRL 15.

means UBS A.G.


means Westpac Bank PNG Limited.


We are an independent upstream oil and gas business with a sole focus on PNG. Our assets include licenses covering the Elk, Antelope and Triceratops fields and Raptor and Bobcat discoveries in the Gulf Province of PNG and exploration licenses covering about 16,000 square kilometers (about 4 million acres) in PNG. We have our main offices in Singapore and Port Moresby. We are listed on the New York Stock Exchange and the Port Moresby Stock Exchange. At September 30, 2015, we had 345 full-time employees.


Our strategy is to unlock significant value to shareholders by finding oil and gas safely and competitively; enable its development through the right partnerships, funding and project development capability; and to repeat this process. Running an effective and efficient business is the core component of this strategy. This business model is founded on exploration and drilling discipline and success, strong commercial and project development acumen and being a “partner of choice”. The focus areas for our strategy are to:

Continue to develop as a prudent and responsible business operator;

Enable our discovered resources with strategic joint venture partners;

Maximize the value of our exploration assets; and

Position for long-term success.

Further details of our business strategy can be found under the heading “

Business Strategy

” in our 2014 AIF available at


Summary of operational highlights

A summary of the key operational matters and events for the quarter is as follows:

Airborne Field Survey

On January 17, 2015, we began the acquisition of high resolution airborne gravity gradiometry over all of our PPLs and PRLs. As at September 30, 2015, we had completed 80% of the planned survey.


A seismic survey over Triceratops in PRL 39 began in April 2015 and was completed in July 2015.

The Murua Phase 2 seismic program in PPL 476 began in June 2015 and was completed in September 2015.

PPL 474 – Wahoo

On June 10, 2015, we resumed drilling at Wahoo with the Wahoo-1 side-track exploration well to follow-up Wahoo-1, which was suspended in July 2014 due to higher-than-expected pressures.

On August 12, 2015, we advised the market that the Wahoo-1 sidetrack operations had not intersected a carbonate reservoir and the well was plugged and abandoned. As a result, we expensed $78.2 million of costs relating to the Wahoo exploration program.

PPL 475 – Raptor

The Raptor-1 exploration well is about 12 kilometers west of the Elk and Antelope gas fields. On November 14, 2014, we notified the DPE of a discovery at Raptor-1. On October 19, 2015, we announced that our appraisal drilling of the Raptor discovery will be deferred, until the Elk-Antelope appraisal program is complete.

In August 2015, we received notification from PRE of their intention to withdraw from further participating in PPL 475. In accordance with the Farm-In Agreement dated July 27, 2012 between us and PRE, we are required to refund to PRE $3.0 million in monthly installments commencing in the month subsequent to our receipt of any net cash proceeds from commercial sale of product from PRL 15, although the $3.0 million must be repaid in full within 6 years of receiving the notification. Subsequent to PRE’s withdrawal, our interest in the Raptor discovery is 79.1114%, and in PPL 475 (excluding the Raptor discovery) is 100% (94.25% assuming PNGDV will elect to exercise their option to participate at their 5.75% interest election).

PRL 15 – Antelope-4, Antelope-4 Side Track and Antelope-6

The Antelope-4 appraisal well was spudded on September 16, 2014. On April 27, 2015, the well was suspended because of drilling difficulties and the WDL rig was replaced by Rig 103.

Antelope-4 well operations resumed on August 13, 2015. On August 27, 2015, PRL 15 joint venture started drilling a side-track well at the Antelope-4 site. The side-track was initiated at a measured depth of...