##### 



InterOil Corporation 
Consolidated Balance Sheets
(Unaudited, Expressed in United States dollars)
    
    (INTEROIL LOGO)
 As atJune 30,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2006$
    
    $
    
    $AssetsCurrent assets:Cash and cash equivalents (note 5)
    
    
    22,406,039
    
    
    
    31,681,435
    
    
    
    61,036,551Cash restricted (note 7)
    
    
    20,055,745
    
    
    
    29,301,940
    
    
    
    24,424,625Trade receivables (note 8)
    
    
    57,535,357
    
    
    
    67,542,902
    
    
    
    33,034,214Commodity derivative contracts (note 7)
    
    
    
    
    
    
    1,759,575
    
    
    
    Other assets
    
    
    373,110
    
    
    
    2,954,946
    
    
    
    788,204Inventories (note 9)
    
    
    116,046,492
    
    
    
    67,593,558
    
    
    
    101,460,081Prepaid expenses
    
    
    521,773
    
    
    
    880,640
    
    
    
    1,525,056Total current assets
    
    
    216,938,516
    
    
    
    201,714,996
    
    
    
    222,288,218Deposit on business acquisition
    
    
    
    
    
    
    
    
    
    
    4,500,000Cash restricted (note 7)
    
    
    1,215,798
    
    
    
    3,217,284
    
    
    
    2,084,542Deferred financing costs (note 15)
    
    
    
    
    
    
    1,716,757
    
    
    
    1,258,475Plant and equipment (note 10)
    
    
    238,661,407
    
    
    
    242,642,077
    
    
    
    237,169,715Oil and gas properties (note 11)
    
    
    44,774,326
    
    
    
    37,449,734
    
    
    
    18,874,550Future income tax benefit
    
    
    1,583,767
    
    
    
    1,424,014
    
    
    
    962,476Total assets
    
    
    503,173,814
    
    
    
    488,164,862
    
    
    
    487,137,976Liabilities and shareholders equityCurrent liabilities:Accounts payable and accrued liabilities
    
    
    106,679,039
    
    
    
    73,310,793
    
    
    
    67,211,633Income tax payable
    
    
    2,323,733
    
    
    
    2,784,576
    
    
    
    3,429,304Commodity derivative contracts (note 7)
    
    
    46,800
    
    
    
    
    
    
    
    15,919Working capital facility  crude feedstock (note 12)
    
    
    29,522,326
    
    
    
    36,873,508
    
    
    
    78,623,126Deferred hedge gain (note 7)
    
    
    
    
    
    
    1,385
    
    
    
    Deferred liquefaction project liability (note 15)
    
    
    
    
    
    
    6,553,080
    
    
    
    3,574,565Current portion of secured loan (note 15)
    
    
    142,616,909
    
    
    
    13,500,000
    
    
    
    9,000,000Current portion of indirect participation interest  PNGDV (note 16)
    
    
    1,518,229
    
    
    
    730,534
    
    
    
    1,761,120Current portion of indirect participation interest (note 16)
    
    
    23,293,968
    
    
    
    12,460,725
    
    
    
    28,882,252Total current liabilities
    
    
    306,001,004
    
    
    
    146,214,601
    
    
    
    192,497,919Accrued financing costs (note 15)
    
    
    362,500
    
    
    
    1,087,500
    
    
    
    950,000Secured loan (note 15)
    
    
    56,529,417
    
    
    
    184,166,433
    
    
    
    143,273,802Indirect participation interest (note 16)
    
    
    26,260,353
    
    
    
    36,827,877
    
    
    
    23,277,986Indirect participation interest  PNGDV (note 16)
    
    
    298,198
    
    
    
    1,012,999
    
    
    
    Total liabilities
    
    
    389,451,472
    
    
    
    369,309,410
    
    
    
    359,999,707Non-controlling interest (note 17)
    
    
    5,764,521
    
    
    
    5,759,206
    
    
    
    5,763,235Shareholders equity:Share capital (note 18)
    
    
    234,990,864
    
    
    
    233,889,366
    
    
    
    232,519,987Authorised  unlimited
Issued and outstanding - 29,922,842
(Dec 31, 2006 - 29,871,180)
(Jun 30, 2006 - 29,799,513)Contributed surplus
    
    
    7,159,462
    
    
    
    4,377,426
    
    
    
    3,595,996Warrants (note 20)
    
    
    2,119,034
    
    
    
    2,137,852
    
    
    
    2,137,852Accumulated Other Comprehensive Income
    
    
    1,731,116
    
    
    
    1,492,869
    
    
    
    660,360Conversion options (note 16)
    
    
    25,271,563
    
    
    
    25,475,368
    
    
    
    25,475,368Accumulated deficit
    
    
    (163,314,218
    )
    
    
    (154,276,635
    )
    
    
    (143,014,529
    )Total shareholders equity
    
    
    107,957,821
    
    
    
    113,096,246
    
    
    
    121,375,034Total liabilities and shareholders equity
    
    
    503,173,814
    
    
    
    488,164,862
    
    
    
    487,137,976
 See accompanying notes to the consolidated financial statements. Commitments and contingencies (note 22)
On behalf of the Board  Phil Mulacek, Director Christian Vinson, Director




---



##### 



InterOil Corporation Consolidated Statement of Operations 
(Unaudited, Expressed in United States dollars)
    
    (INTEROIL LOGO)
 Quarter ended
    
    Six months endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006$
    
    $
    
    $
    
    $RevenueSales and operating revenues
    
    
    139,320,670
    
    
    
    122,777,853
    
    
    
    265,238,868
    
    
    
    231,406,635Interest
    
    
    544,919
    
    
    
    720,845
    
    
    
    1,233,327
    
    
    
    1,327,925Other
    
    
    673,401
    
    
    
    910,756
    
    
    
    963,574
    
    
    
    1,566,743140,538,990
    
    
    
    124,409,454
    
    
    
    267,435,769
    
    
    
    234,301,303ExpensesCost of sales and operating expenses
    
    
    127,276,947
    
    
    
    123,676,020
    
    
    
    239,505,779
    
    
    
    233,871,341Administrative and general expenses
    
    
    8,628,915
    
    
    
    6,031,046
    
    
    
    15,109,885
    
    
    
    10,136,314Depreciation and amortization
    
    
    3,619,128
    
    
    
    2,862,128
    
    
    
    7,078,887
    
    
    
    5,699,312Exploration costs, excluding exploration impairment (note 11)
    
    
    4,517,605
    
    
    
    1,660,177
    
    
    
    7,885,508
    
    
    
    1,663,370Exploration impairment (note 11)
    
    
    5,968
    
    
    
    23,265
    
    
    
    20,251
    
    
    
    264,818Legal and professional fees
    
    
    1,268,989
    
    
    
    867,748
    
    
    
    2,014,451
    
    
    
    1,917,259Short term borrowing costs
    
    
    3,037,161
    
    
    
    2,535,095
    
    
    
    4,227,074
    
    
    
    4,181,272Long term borrowing costs
    
    
    2,348,530
    
    
    
    2,291,838
    
    
    
    6,180,195
    
    
    
    3,768,860Accretion expense (note 16)
    
    
    343,295
    
    
    
    893,116
    
    
    
    683,642
    
    
    
    2,781,307Loss on amendment of indirect participation interest  PNGDV (note 16)
    
    
    
    
    
    
    1,446,901
    
    
    
    
    
    
    
    1,446,901Gain on LNG shareholder agreement
    
    
    (6,553,080
    )
    
    
    
    
    
    
    (6,553,080
    )
    
    
    Foreign exchange gain
    
    
    (692,178
    )
    
    
    (1,148,607
    )
    
    
    (228,428
    )
    
    
    (91,542
    )143,801,280
    
    
    
    141,138,727
    
    
    
    275,924,164
    
    
    
    265,639,212Loss before income taxes and non-controlling interest
    
    
    (3,262,290
    )
    
    
    (16,729,273
    )
    
    
    (8,488,395
    )
    
    
    (31,337,909
    )Income taxesCurrent
    
    
    339,272
    
    
    
    (1,119,198
    )
    
    
    (158,093
    )
    
    
    (943,115
    )Future
    
    
    (385,764
    )
    
    
    (51,326
    )
    
    
    (385,764
    )
    
    
    (102,652
    )(46,492
    )
    
    
    (1,170,524
    )
    
    
    (543,857
    )
    
    
    (1,045,767
    )Loss before non-controlling interest
    
    
    (3,308,782
    )
    
    
    (17,899,797
    )
    
    
    (9,032,252
    )
    
    
    (32,383,676
    )Non-controlling interest (note 17)
    
    
    11,925
    
    
    
    139,214
    
    
    
    (5,331
    )
    
    
    259,702Net loss
    
    
    (3,296,857
    )
    
    
    (17,760,583
    )
    
    
    (9,037,583
    )
    
    
    (32,123,974
    )Basic loss per share(note 21)
    
    
    (0.11
    )
    
    
    (0.60
    )
    
    
    (0.30
    )
    
    
    (1.09
    )Diluted loss per share(note 21)
    
    
    (0.11
    )
    
    
    (0.60
    )
    
    
    (0.30
    )
    
    
    (1.09
    )Weighted average number of common shares outstandingBasic and diluted
    
    
    29,907,260
    
    
    
    29,596,287
    
    
    
    29,901,733
    
    
    
    29,380,999
 See accompanying notes to the consolidated financial statements




---



##### 



InterOil Corporation Consolidated Statement of Cash Flows 
(Unaudited, Expressed in United States dollars)
    
    (INTEROIL LOGO)
 Quarter ended
    
    

Six
months endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006$
    
    $
    
    $
    
    $Cash flows provided by (used in):Operating activitiesNet loss
    
    
    (3,296,857
    )
    
    
    (17,760,583
    )
    
    
    (9,037,583
    )
    
    
    (32,123,974
    )Adjustments for non-cash transactionsNon-controlling interest
    
    
    (11,925
    )
    
    
    (139,204
    )
    
    
    5,331
    
    
    
    (259,702
    )Depreciation and amortization
    
    
    3,619,128
    
    
    
    2,862,128
    
    
    
    7,078,887
    
    
    
    5,699,312Future income tax asset
    
    
    (139,904
    )
    
    
    35,637
    
    
    
    (317,440
    )
    
    
    96,422Fair value adjustment on IPL PNG Ltd. acquisition
    
    
    (367,935
    )
    
    
    
    
    
    
    (367,935
    )
    
    
    Loss on sale of plant and equipment
    
    
    
    
    
    
    154,657
    
    
    
    
    
    
    
    256,393Impairment of plant and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    755,857Amortization of discount on debt
    
    
    
    
    
    
    14,446
    
    
    
    
    
    
    
    28,891Amortization of deferred financing costs
    
    
    104,655
    
    
    
    57,377
    
    
    
    210,549
    
    
    
    98,341Accretion of discount on indirect participation interest
    
    
    343,295
    
    
    
    893,116
    
    
    
    683,642
    
    
    
    2,781,307Gain/(loss) on unsettled hedge contracts
    
    
    6,318
    
    
    
    532,757
    
    
    
    (47,314
    )
    
    
    590,720Gain/(loss) on derivative contracts
    
    
    1,604,720
    
    
    
    (393,800
    )
    
    
    1,852,300
    
    
    
    (128,700
    )Stock compensation expense
    
    
    1,995,539
    
    
    
    542,348
    
    
    
    2,884,876
    
    
    
    802,871Inventory revaluation
    
    
    1,411,022
    
    
    
    3,127,541
    
    
    
    1,411,022
    
    
    
    7,072,360Oil and gas properties expensed
    
    
    4,523,573
    
    
    
    1,683,442
    
    
    
    7,905,759
    
    
    
    1,928,188Loss on amendment of indirect participation interest  PNGDV
    
    
    
    
    
    
    1,446,901
    
    
    
    
    
    
    
    1,446,901Gain on LNG shareholder agreement
    
    
    (6,553,080
    )
    
    
    
    
    
    
    (6,553,080
    )
    
    
    Unrealized foreign exchange gain
    
    
    (692,178
    )
    
    
    (1,148,607
    )
    
    
    (228,428
    )
    
    
    (91,542
    )Non-cash interest on secured loan facility
    
    
    1,526,291
    
    
    
    392,378
    
    
    
    3,033,808
    
    
    
    392,378Change in non-cash operating working capital(Increase)/decrease in trade receivables
    
    
    (30,333,892
    )
    
    
    2,363,294
    
    
    
    7,388,984
    
    
    
    17,066,757Decrease/(increase) in other assets and prepaid expenses
    
    
    1,021,926
    
    
    
    (992,879
    )
    
    
    2,940,703
    
    
    
    (663,849
    )(Increase)/decrease in inventories
    
    
    (6,596,736
    )
    
    
    (52,880,748
    )
    
    
    (48,763,575
    )
    
    
    (64,178,823
    )Increase in accounts payable, accrued liabilities
and income tax payable
    
    
    39,647,712
    
    
    
    33,978,531
    
    
    
    32,751,725
    
    
    
    41,365,8237,811,672
    
    
    
    (25,231,268
    )
    
    
    2,832,231
    
    
    
    (17,064,069
    )Investing activitiesExpenditure on oil and gas properties
    
    
    (19,694,291
    )
    
    
    (3,968,985
    )
    
    
    (31,393,017
    )
    
    
    (4,441,120
    )Proceeds from IPI cash calls
    
    
    
    
    
    
    
    
    
    
    9,865,856
    
    
    
    Expenditure on plant and equipment
    
    
    (1,059,957
    )
    
    
    (5,428,801
    )
    
    
    (1,664,160
    )
    
    
    (10,229,093
    )Expenditure on oil and gas properties applied against
indirect participation interest (note 16)
    
    
    
    
    
    
    (6,148,801
    )
    
    
    49,285
    
    
    
    (17,302,858
    )Proceeds from PNG LNG cash call
    
    
    2,076,596
    
    
    
    
    
    
    
    4,076,596
    
    
    
    Proceeds received on sale of assets
    
    
    
    
    
    
    3,734,822
    
    
    
    
    
    
    
    3,746,964Acquisition of subsidiary (note 13)
    
    
    (863,775
    )
    
    
    
    
    
    
    (2,679,435
    )
    
    
    Deposit on business acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,500,000
    )Decrease/(increase) in restricted cash held as security on
borrowings
    
    
    16,882,928
    
    
    
    (12,331,326
    )
    
    
    11,247,681
    
    
    
    (9,846,898
    )Change in non-cash working capital
(Decrease)/increase in accounts payable and accrued liabilities
    
    
    (467,072
    )
    
    
    2,200,008
    
    
    
    459,028
    
    
    
    (726,178
    )(3,125,571
    )
    
    
    (21,943,083
    )
    
    
    (10,038,166
    )
    
    
    (43,299,183
    )Financing activitiesRepayments of unsecured loan
    
    
    
    
    
    
    (22,856,684
    )
    
    
    
    
    
    
    (21,453,132
    )Repayments of secured loan
    
    
    
    
    
    
    (4,500,000
    )
    
    
    
    
    
    
    (4,500,000
    )Proceeds from bridging facility, net of transaction costs
    
    
    
    
    
    
    79,455,989
    
    
    
    
    
    
    
    79,455,989Financing fees related to bridging facility
    
    
    (100,000
    )
    
    
    (100,000
    )
    
    
    (100,000
    )
    
    
    (100,000
    )Proceeds from Clarion Finanz for Elk option agreement
    
    
    5,000,000
    
    
    
    
    
    
    
    5,000,000
    
    
    
    (Repayments of)/proceeds from working capital facility
    
    
    (11,598,285
    )
    
    
    17,280,657
    
    
    
    (7,351,182
    )
    
    
    7,898,804Proceeds from issue of common shares
    
    
    316,100
    
    
    
    496,335
    
    
    
    316,100
    
    
    
    496,335Proceeds from conversion of warrants
    
    
    
    
    
    
    
    
    
    
    65,621
    
    
    
    (6,382,185
    )
    
    
    69,776,297
    
    
    
    (2,069,461
    )
    
    
    61,797,996(Decrease)/increase in cash and cash equivalents
    
    
    (1,696,084
    )
    
    
    22,601,946
    
    
    
    (9,275,396
    )
    
    
    1,434,744Cash and cash equivalents, beginning of period
    
    
    24,102,123
    
    
    
    38,434,605
    
    
    
    31,681,435
    
    
    
    59,601,807Cash and cash equivalents, end of period (note 5)
    
    
    22,406,039
    
    
    
    61,036,551
    
    
    
    22,406,039
    
    
    
    61,036,551
 See accompanying notes to the consolidated financial statements
See note 6 for non cash financing and investing activities




---



##### 



InterOil Corporation Consolidated Statements of Shareholders Equity
(Unaudited, Expressed in United States dollars)
    
    
    
    (INTEROIL LOGO)
 Six months ended
    
    Year ended
    
    Six months endedJune 30,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2006$
    
    $
    
    $Share capitalAt beginning of period
    
    
    233,889,366
    
    
    
    223,934,500
    
    
    
    223,934,500Issue of capital stock (note 18)
    
    
    1,101,498
    
    
    
    9,954,866
    
    
    
    8,585,487At end of period
    
    
    234,990,864
    
    
    
    233,889,366
    
    
    
    232,519,987Contributed surplusAt beginning of period
    
    
    4,377,426
    
    
    
    2,933,586
    
    
    
    2,933,586Stock compensation (note 19)
    
    
    2,782,036
    
    
    
    1,443,840
    
    
    
    662,410At end of period
    
    
    7,159,462
    
    
    
    4,377,426
    
    
    
    3,595,996WarrantsAt beginning of period
    
    
    2,137,852
    
    
    
    2,137,852
    
    
    
    2,137,852Movement for period (note 20)
    
    
    (18,818
    )
    
    
    
    
    
    
    At end of period
    
    
    2,119,034
    
    
    
    2,137,852
    
    
    
    2,137,852Accumulated Other Comprehensive IncomeAt beginning of period
    
    
    1,492,869
    
    
    
    477,443
    
    
    
    477,443Deferred hedge gain recognised on transition
    
    
    1,385
    
    
    
    
    
    
    
    Deferred hedge (loss)/gain movement for period, net of tax
    
    
    (1,385
    )
    
    
    
    
    
    
    Foreign curreny translation adjustment movement for period, net of tax
    
    
    238,247
    
    
    
    1,015,426
    
    
    
    182,917At end of period
    
    
    1,731,116
    
    
    
    1,492,869
    
    
    
    660,360Conversion optionsAt beginning of period
    
    
    25,475,368
    
    
    
    25,475,368
    
    
    
    25,475,368Movement for period (note 16)
    
    
    (203,805
    )
    
    
    
    
    
    
    At end of period
    
    
    25,271,563
    
    
    
    25,475,368
    
    
    
    25,475,368Accumulated deficitAt beginning of period
    
    
    (154,276,635
    )
    
    
    (110,890,555
    )
    
    
    (110,890,555
    )Net loss for period
    
    
    (9,037,583
    )
    
    
    (43,386,080
    )
    
    
    (32,123,974
    )At end of period
    
    
    (163,314,218
    )
    
    
    (154,276,635
    )
    
    
    (143,014,529
    )Shareholders equity at end of period
    
    
    107,957,821
    
    
    
    113,096,246
    
    
    
    121,375,034
 See accompanying notes to the consolidated financial statements




---



##### 



InterOil Corporation Statements of Comprehensive Income 
(Unaudited, Expressed in United States dollars)
    
    (INTEROIL LOGO)
 Quarter ended
    
    Six months endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006$
    
    $
    
    $
    
    $Net loss
    
    
    (3,296,857
    )
    
    
    (17,760,583
    )
    
    
    (9,037,583
    )
    
    
    (32,123,974
    )Other comprehensive income, net of tax
    
    
    2,011,102
    
    
    
    444,903
    
    
    
    238,247
    
    
    
    182,917Comprehensive loss
    
    
    (1,285,755
    )
    
    
    (17,315,680
    )
    
    
    (8,799,336
    )
    
    
    (31,941,057
    )
 See accompanying notes to the consolidated financial statements




---



##### 



June 30,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2006$
    
    $
    
    $Cash on deposit
    
    
    22,406,039
    
    
    
    31,681,435
    
    
    
    61,036,551Bank term deposits- Papua New Guinea kina deposits
    
    
    
    
    
    
    
    
    
    
    - Australian dollar deposits
    
    
    
    
    
    
    
    
    
    
    22,406,039
    
    
    
    31,681,435
    
    
    
    61,036,551
 June 30,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2006$
    
    $
    
    $Midstream  refining and marketing (crude oil feedstock)
    
    
    22,609,840
    
    
    
    12,795,356
    
    
    
    38,135,041Midstream  refining and marketing (refined petroleum product)
    
    
    54,922,877
    
    
    
    22,329,270
    
    
    
    45,916,767Midstream  refining and marketing (parts inventory)
    
    
    202,780
    
    
    
    46,636
    
    
    
    Downstream (refined petroleum product)
    
    
    38,310,995
    
    
    
    32,422,296
    
    
    
    17,408,273116,046,492
    
    
    
    67,593,558
    
    
    
    101,460,081
 June 30,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2006$
    
    $
    
    $Drilling equipment
    
    
    21,497,122
    
    
    
    18,242,972
    
    
    
    15,311,318Petroleum Prospecting License drilling programs at cost
    
    
    23,277,204
    
    
    
    19,206,762
    
    
    
    3,563,23244,774,326
    
    
    
    37,449,734
    
    
    
    18,874,550
 Six months ended
    
    Year ended
    
    Six months endedJune 30,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2006$
    
    $
    
    $Exploration costs, excluding exploration impairment
    
    
    7,885,508
    
    
    
    1,657,671
    
    
    
    1,663,370Exploration impairmentCosts incurred in prior years
    
    
    
    
    
    
    
    
    
    
    Costs incurred in current year
    
    
    20,251
    
    
    
    416,923
    
    
    
    264,818Total exploration impairment
    
    
    20,251
    
    
    
    416,923
    
    
    
    264,8187,905,759
    
    
    
    2,074,594
    
    
    
    1,928,188
 June 30,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2006$
    
    $
    
    $Cash deposit on working capital facility (4.7%)
    
    
    17,635,745
    
    
    
    29,301,940
    
    
    
    24,424,625Debt reserve for secured loan
    
    
    2,420,000
    
    
    
    
    
    
    
    Cash restricted  Current
    
    
    20,055,745
    
    
    
    29,301,940
    
    
    
    24,424,625Cash deposit on secured loan (3.5%)
    
    
    1,061,502
    
    
    
    647,502
    
    
    
    636,923Debt reserve for secured loan
    
    
    
    
    
    
    2,420,000
    
    
    
    1,300,000Bank term deposits on Petroleum Prospecting Licenses (0.7%)
    
    
    109,319
    
    
    
    107,997
    
    
    
    104,849Cash deposit on office premises (6.2%)
    
    
    44,977
    
    
    
    41,785
    
    
    
    42,770Cash restricted  Non-current
    
    
    1,215,798
    
    
    
    3,217,284
    
    
    
    2,084,54221,271,543
    
    
    
    32,519,224
    
    
    
    26,509,167




---



##### 



June 30,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2006$
    
    $
    
    $Current portion
    
    
    23,293,968
    
    
    
    12,460,725
    
    
    
    28,882,252Non current portion
    
    
    26,260,353
    
    
    
    36,827,877
    
    
    
    23,277,986Total indirect participation interest
    
    
    49,554,321
    
    
    
    49,288,602
    
    
    
    52,160,238
 June 30,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2006$
    
    $
    
    $Working capital credit facility
    
    
    170,000,000
    
    
    
    170,000,000
    
    
    
    150,000,000Less amounts included in the working capital facility liability:Short term advances
    
    
    (29,522,326
    )
    
    
    (13,201,940
    )
    
    
    (73,978,979
    )Discounted receivables (note 8)
    
    
    
    
    
    
    (23,671,568
    )
    
    
    (4,644,147
    )(29,522,326
    )
    
    
    (36,873,508
    )
    
    
    (78,623,126
    )Less: other amounts outstanding under the facility:Letters of credit outstanding
    
    
    (55,156,400
    )
    
    
    (79,000,000
    )
    
    
    (42,000,000
    )Bank guarantees on hedging facility
    
    
    (3,500,000
    )
    
    
    (1,500,000
    )
    
    
    (1,500,000
    )Working capital credit facility available for use
    
    
    81,821,274
    
    
    
    52,626,492
    
    
    
    27,876,874
 June 30,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2006$
    
    $
    
    $Secured loan (OPIC)   current portion
    
    
    18,000,000
    
    
    
    13,500,000
    
    
    
    9,000,000Secured loan (bridging facility)  current portion
    
    
    124,700,242
    
    
    
    
    
    
    
    Secured loan (bridging facility)  deferred financing costs
    
    
    (83,333
    )
    
    
    
    
    
    
    Total current secured loan
    
    
    142,616,909
    
    
    
    13,500,000
    
    
    
    9,000,000Secured loan (OPIC)   non current portion
    
    
    58,000,000
    
    
    
    62,500,000
    
    
    
    67,000,000Secured loan (OPIC)   deferred financing costs
    
    
    (1,470,583
    )
    
    
    
    
    
    
    Secured loan (bridging facility)  non current portion
    
    
    
    
    
    
    121,666,433
    
    
    
    76,273,802Total non current secured loan
    
    
    56,529,417
    
    
    
    184,166,433
    
    
    
    143,273,802Total secured loan
    
    
    199,146,325
    
    
    
    197,666,433
    
    
    
    152,273,802
 June 30,
    
    December 31,
    
    June 30,2007
    
    2006
    
    2006$
    
    $
    
    $Current portion
    
    
    1,518,229
    
    
    
    730,534
    
    
    
    1,761,120Non current portion
    
    
    298,198
    
    
    
    1,012,999
    
    
    
    Total indirect participation interest  PNGDV
    
    
    1,816,427
    
    
    
    1,743,533
    
    
    
    1,761,120




---



##### 



Income taxes
 December 31,
    
    December 31,
    
    December 31,
    
    December 31,2006
    
    2005
    
    2004
    
    2003$
    
    $
    
    $
    
    $(Loss) before income taxes and non controlling interest
    
    
    (41,307,166
    )
    
    
    (36,818,729
    )
    
    
    (51,134,909
    )
    
    
    (3,503,131
    )Statutory income tax rate
    
    
    35.10
    %
    
    
    35.10
    %
    
    
    35.12
    %
    
    
    35.12
    %Computed tax (benefit)
    
    
    (14,498,815
    )
    
    
    (12,923,374
    )
    
    
    (17,958,580
    )
    
    
    (1,230,300
    )Effect on income tax of:Losses in foreign jurisdictions not deductible
    
    
    251,639
    
    
    
    2,834,689
    
    
    
    2,273,530
    
    
    
    (56,527
    )Non-deductible stock compensation expense
    
    
    693,601
    
    
    
    585,783
    
    
    
    424,924
    
    
    
    (13,926
    )Gains and losses on foreign exchange
    
    
    (1,358,526
    )
    
    
    268,843
    
    
    
    58,659
    
    
    
    302,499Tax rate differential in foreign jurisditions
    
    
    1,103,122
    
    
    
    1,224,361
    
    
    
    (341,613
    )
    
    
    143,502Over provision for tax in prior years
    
    
    (51,632
    )
    
    
    (113,950
    )
    
    
    (42,874
    )
    
    
    Tax losses for which no future tax benefit has been brought to account
    
    
    12,166,624
    
    
    
    9,845,189
    
    
    
    2,696,330
    
    
    
    836,142Temporary differences for which no future tax benefit has been brought to account
    
    
    778,301
    
    
    
    1,123,458
    
    
    
    14,552,726
    
    
    
    Temporary differences brought to account on acquisition of subsidiary
    
    
    1,135,181
    
    
    
    (34,902
    )
    
    
    (488,027
    )
    
    
    Other  net
    
    
    2,123,377
    
    
    
    21,897
    
    
    
    699,988
    
    
    
    55,9492,342,872
    
    
    
    2,831,994
    
    
    
    1,875,063
    
    
    
    37,339
 December 31,
    
    December 31,
    
    December 31,
    
    December 31,2006
    
    2005
    
    2004
    
    2003$
    
    $
    
    $
    
    $Future tax assetsTemporary differencesPlant and equipment
    
    
    3,030,479
    
    
    
    2,665,173
    
    
    
    2,263,654
    
    
    
    Exploration expenditure
    
    
    24,828,156
    
    
    
    12,184,351
    
    
    
    11,541,022
    
    
    
    Other  net
    
    
    122,713
    
    
    
    99,834
    
    
    
    127,240
    
    
    
    (1,194,314
    )27,981,348
    
    
    
    14,949,358
    
    
    
    13,931,916
    
    
    
    (1,194,314
    )Losses carried forward
    
    
    27,060,498
    
    
    
    17,373,507
    
    
    
    4,850,380
    
    
    
    2,558,40655,041,846
    
    
    
    32,322,865
    
    
    
    18,782,296
    
    
    
    1,364,092Less valuation allowance
    
    
    (53,617,833
    )
    
    
    (31,263,967
    )
    
    
    (17,478,665
    )
    
    
    (1,364,092
    )1,424,013
    
    
    
    1,058,898
    
    
    
    1,303,631
    
    
    
    




---



##### 



Cash Flow Note:
 Quarter ended
    
    Six months endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2007
    
    2006
    
    2007
    
    2006$
    
    $
    
    $
    
    $Cash paid during the yearInterest
    
    
    2,115,418
    
    
    
    5,596,652
    
    
    
    4,159,438
    
    
    
    6,550,377Income taxes
    
    
    45
    
    
    
    681,059
    
    
    
    91
    
    
    
    1,313,439Interest received
    
    
    543,771
    
    
    
    678,562
    
    
    
    1,231,557
    
    
    
    1,200,622Non-cash investing and financing activities:Fair value adjustment on IPL PNG Ltd. acquisition
    
    
    (367,935
    )
    
    
    
    
    
    
    (367,935
    )
    
    
    Decrease in plant and equipment as a result of impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    755,857Transfer to plant and equipment to assets held or sale
    
    
    
    
    
    
    (3,368,750
    )
    
    
    
    
    
    
    (Decrease)/increase in deferred liquefaction project liability
    
    
    (6,553,080
    )
    
    
    3,574,565
    
    
    
    (6,553,080
    )
    
    
    3,574,565Increase in share capital from:the exercise of share options
    
    
    102,840
    
    
    
    140,461
    
    
    
    102,840
    
    
    
    140,461the exercise of warrants
    
    
    
    
    
    
    
    
    
    
    18,818
    
    
    
    conversion of indirect participation interest into share capital
    
    
    
    
    
    
    7,948,691
    
    
    
    598,119
    
    
    
    7,948,691




---



##### 



Less than 1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    year
    
    1-2 years
    
    2-3 years
    
    3-4 years
    
    4-5 years
    
    5 years000
    
    000
    
    000
    
    000
    
    000
    
    000
    
    000Secured loan obligations
    
    
    200,700
    
    
    
    142,700
    
    
    
    9,000
    
    
    
    9,000
    
    
    
    9,000
    
    
    
    9,000
    
    
    
    22,000Accrued financing costs
    
    
    1,450
    
    
    
    1,088
    
    
    
    363
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Indirect participation interest  PNGDV (note 16)
    
    
    1,816
    
    
    
    1,518
    
    
    
    298
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Indirect participation interest (note 16)
    
    
    49,554
    
    
    
    23,294
    
    
    
    21,353
    
    
    
    4,908
    
    
    
    
    
    
    
    
    
    
    
    Petroleum prospecting and retention licenses (a)
    
    
    4,184
    
    
    
    824
    
    
    
    3,360
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    257,705
    
    
    
    169,424
    
    
    
    34,374
    
    
    
    13,908
    
    
    
    9,000
    
    
    
    9,000
    
    
    
    22,000




---



##### 



$Cash
    
    
    4,989,895Trade receivables
    
    
    6,288,834Inventory
    
    
    20,429,728Other assets
    
    
    2,190,226Future income tax benefit
    
    
    1,698,224Property, plant and equipment
    
    
    9,713,556Total assets acquired
    
    
    45,310,463Accounts payable and accrued liabilities
    
    
    (11,815,188
    )Net assets acquired
    
    
    33,495,275




---



##### 



Corporate &June 30, 2007
    
    Upstream
    
    Midstream
    
    Downstream
    
    Consolidated
    
    TotalsPlant and equipment
    
    
    1,247,201
    
    
    
    249,816,698
    
    
    
    40,988,037
    
    
    
    219,152
    
    
    
    292,271,088Deferred project costs and work in progress
    
    
    
    
    
    
    770,853
    
    
    
    1,609,617
    
    
    
    
    
    
    
    2,380,470Consolidation entries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,925,673
    )
    
    
    (2,925,673
    )Accumulated depreciation and amortisation
    
    
    (194,360
    )
    
    
    (27,227,158
    )
    
    
    (25,591,507
    )
    
    
    (51,453
    )
    
    
    (53,064,478
    )Net book value
    
    
    1,052,841
    
    
    
    223,360,393
    
    
    
    17,006,147
    
    
    
    (2,757,974
    )
    
    
    238,661,407Capital expenditure for six months ended Jun 2007
    
    
    
    
    
    
    137,872
    
    
    
    2,843,329
    
    
    
    72,355
    
    
    
    3,053,556
 Corporate &December 31, 2006
    
    Upstream
    
    Midstream
    
    Downstream
    
    Consolidated
    
    TotalsPlant and equipment
    
    
    1,247,201
    
    
    
    249,741,042
    
    
    
    37,697,458
    
    
    
    146,797
    
    
    
    288,832,498Deferred project costs and work in progress
    
    
    
    
    
    
    723,566
    
    
    
    715,653
    
    
    
    
    
    
    
    1,439,219Consolidation entries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,990,688
    )
    
    
    (2,990,688
    )Accumulated depreciation and amortisation
    
    
    (153,455
    )
    
    
    (21,760,341
    )
    
    
    (22,697,003
    )
    
    
    (28,153
    )
    
    
    (44,638,952
    )Net book value
    
    
    1,093,746
    
    
    
    228,704,267
    
    
    
    15,716,108
    
    
    
    (2,872,044
    )
    
    
    242,642,077Capital expenditure for year ended Dec 2006
    
    
    
    
    
    
    11,948,960
    
    
    
    10,543,842
    
    
    
    156,817
    
    
    
    22,649,619
 Corporate &June 30, 2006
    
    Upstream
    
    Midstream
    
    Downstream
    
    Consolidated
    
    TotalsPlant and equipment
    
    
    1,247,201
    
    
    
    239,151,458
    
    
    
    12,658,445
    
    
    
    77,495
    
    
    
    253,134,599Deferred project costs and work in progress
    
    
    
    
    
    
    9,268,229
    
    
    
    1,669,915
    
    
    
    
    
    
    
    10,938,144Consolidation entries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,055,703
    )
    
    
    (3,055,703
    )Accumulated depreciation and amortisation
    
    
    (118,851
    )
    
    
    (16,343,299
    )
    
    
    (7,375,792
    )
    
    
    (9,383
    )
    
    
    (23,847,325
    )Net book value
    
    
    1,128,350
    
    
    
    232,076,388
    
    
    
    6,952,568
    
    
    
    (2,987,591
    )
    
    
    237,169,715Capital expenditure for six months ended Jun 2006
    
    
    
    
    
    
    8,552,690
    
    
    
    992,480
    
    
    
    87,514
    
    
    
    9,632,684




---



##### 



Midstream -Refining and
    
    Midstream -
    
    
    
    
    
    
    
    
    
    ConsolidationSix months ended June 30, 2007
    
    Upstream
    
    Marketing
    
    Liquefaction
    
    Downstream
    
    Corporate
    
    adjustments
    
    TotalRevenues from external customers
    
    
    
    
    
    
    94,751,227
    
    
    
    
    
    
    
    170,487,641
    
    
    
    
    
    
    
    
    
    
    
    265,238,868Intersegment revenues
    
    
    
    
    
    
    122,864,076
    
    
    
    
    
    
    
    46,711
    
    
    
    4,023,848
    
    
    
    (126,934,635
    )
    
    
    Interest revenue
    
    
    289,383
    
    
    
    24,283
    
    
    
    5,433
    
    
    
    2,898
    
    
    
    990,725
    
    
    
    (79,395
    )
    
    
    1,233,327Other revenue
    
    
    502,430
    
    
    
    
    
    
    
    
    
    
    
    461,144
    
    
    
    
    
    
    
    
    
    
    
    963,574Total segment revenue
    
    
    791,813
    
    
    
    217,639,586
    
    
    
    5,433
    
    
    
    170,998,394
    
    
    
    5,014,573
    
    
    
    (127,014,030
    )
    
    
    267,435,769Cost of sales and operating expenses
    
    
    
    
    
    
    204,915,297
    
    
    
    
    
    
    
    158,716,859
    
    
    
    
    
    
    
    (124,126,376
    )
    
    
    239,505,780Office and admin and other expenses
    
    
    1,783,554
    
    
    
    3,533,661
    
    
    
    773,139
    
    
    
    6,522,016
    
    
    
    9,603,980
    
    
    
    (4,023,855
    )
    
    
    18,192,495Foreign exchange loss/(gain)
    
    
    649,869
    
    
    
    (920,566
    )
    
    
    (1,307
    )
    
    
    (28,142
    )
    
    
    71,718
    
    
    
    
    
    
    
    (228,428
    )Gain on LNG shareholder agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,553,080
    )
    
    
    
    
    
    
    (6,553,080
    )Exploration costs, excluding exploration impairment
    
    
    7,885,508
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,885,508Exploration impairment
    
    
    20,251
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,251Depreciation and amortisation
    
    
    647,711
    
    
    
    5,465,272
    
    
    
    
    
    
    
    1,007,619
    
    
    
    23,300
    
    
    
    (65,015
    )
    
    
    7,078,887Accretion expense
    
    
    683,642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    683,642Interest expense
    
    
    
    
    
    
    4,246,472
    
    
    
    
    
    
    
    (27,257
    )
    
    
    5,199,288
    
    
    
    (79,394
    )
    
    
    9,339,109Total segment expenses
    
    
    11,670,535
    
    
    
    217,240,136
    
    
    
    771,832
    
    
    
    166,191,095
    
    
    
    8,345,206
    
    
    
    (128,294,640
    )
    
    
    275,924,164(Loss)/income before income taxes and
non-controlling interest
    
    
    (10,878,722
    )
    
    
    399,450
    
    
    
    (766,399
    )
    
    
    4,807,299
    
    
    
    (3,330,633
    )
    
    
    1,280,610
    
    
    
    (8,488,395
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (514,642
    )
    
    
    (29,215
    )
    
    
    
    
    
    
    (543,857
    )Non controlling interest
    
    
    
    
    
    
    (5,252
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79
    )
    
    
    (5,331
    )Total net income/(loss)
    
    
    (10,878,722
    )
    
    
    394,198
    
    
    
    (766,399
    )
    
    
    4,292,657
    
    
    
    (3,359,848
    )
    
    
    1,280,531
    
    
    
    (9,037,583
    )Total assets
    
    
    66,569,705
    
    
    
    337,711,235
    
    
    
    1,630,009
    
    
    
    119,030,587
    
    
    
    392,819,044
    
    
    
    (414,586,766
    )
    
    
    503,173,814
 Midstream -Refining and
    
    Midstream -
    
    
    
    
    
    
    
    
    
    ConsolidationQuarter ended June 30, 2007
    
    Upstream
    
    Marketing
    
    Liquefaction
    
    Downstream
    
    Corporate
    
    adjustments
    
    TotalRevenues from external customers
    
    
    
    
    
    
    46,538,477
    
    
    
    
    
    
    
    92,782,193
    
    
    
    
    
    
    
    
    
    
    
    139,320,670Intersegment revenues
    
    
    
    
    
    
    68,030,987
    
    
    
    
    
    
    
    27,035
    
    
    
    2,090,555
    
    
    
    (70,148,577
    )
    
    
    Interest revenue
    
    
    100,824
    
    
    
    14,798
    
    
    
    5,433
    
    
    
    (13
    )
    
    
    464,213
    
    
    
    (40,337
    )
    
    
    544,918Other revenue
    
    
    296,482
    
    
    
    
    
    
    
    
    
    
    
    376,919
    
    
    
    
    
    
    
    
    
    
    
    673,401Total segment revenue
    
    
    397,306
    
    
    
    114,584,262
    
    
    
    5,433
    
    
    
    93,186,134
    
    
    
    2,554,768
    
    
    
    (70,188,914
    )
    
    
    140,538,989Cost of sales and operating expenses
    
    
    
    
    
    
    110,073,604
    
    
    
    
    
    
    
    87,109,311
    
    
    
    
    
    
    
    (69,905,967
    )
    
    
    127,276,948Office and admin and other expenses
    
    
    968,827
    
    
    
    1,762,573
    
    
    
    450,499
    
    
    
    3,478,324
    
    
    
    5,856,731
    
    
    
    (2,090,562
    )
    
    
    10,426,392Foreign exchange loss/(gain)
    
    
    397,176
    
    
    
    (1,028,015
    )
    
    
    (849
    )
    
    
    (160,700
    )
    
    
    100,210
    
    
    
    
    
    
    
    (692,178
    )Gain on LNG shareholder agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,553,080
    )
    
    
    
    
    
    
    (6,553,080
    )Exploration costs, excluding exploration impairment
    
    
    4,517,605
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,517,605Exploration impairment
    
    
    5,968
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,968Depreciation and amortisation
    
    
    338,835
    
    
    
    2,748,598
    
    
    
    
    
    
    
    551,985
    
    
    
    12,217
    
    
    
    (32,507
    )
    
    
    3,619,128Accretion expense
    
    
    343,295
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    343,295Interest expense
    
    
    
    
    
    
    2,155,827
    
    
    
    
    
    
    
    (66,776
    )
    
    
    2,808,484
    
    
    
    (40,334
    )
    
    
    4,857,201Total segment expenses
    
    
    6,571,706
    
    
    
    115,712,587
    
    
    
    449,650
    
    
    
    90,912,144
    
    
    
    2,224,562
    
    
    
    (72,069,370
    )
    
    
    143,801,279(Loss)/income before income taxes and
non-controlling interest
    
    
    (6,174,400
    )
    
    
    (1,128,325
    )
    
    
    (444,217
    )
    
    
    2,273,990
    
    
    
    330,206
    
    
    
    1,880,456
    
    
    
    (3,262,290
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,543
    )
    
    
    (14,949
    )
    
    
    
    
    
    
    (46,492
    )Non controlling interest
    
    
    
    
    
    
    11,702
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    223
    
    
    
    11,925Total net income/(loss)
    
    
    (6,174,400
    )
    
    
    (1,116,623
    )
    
    
    (444,217
    )
    
    
    2,242,447
    
    
    
    315,257
    
    
    
    1,880,679
    
    
    
    (3,296,857
    )




---



##### 



Midstream Refining and
    
    Midstream 
    
    
    
    
    
    
    
    
    
    ConsolidationSix months ended June 30, 2006
    
    Upstream
    
    Marketing
    
    Liquefaction
    
    Downstream
    
    Corporate
    
    adjustments
    
    TotalRevenues from external customers
    
    
    
    
    
    
    165,676,474
    
    
    
    
    
    
    
    65,730,161
    
    
    
    
    
    
    
    
    
    
    
    231,406,635Intersegment revenues
    
    
    
    
    
    
    44,025,098
    
    
    
    
    
    
    
    8,914
    
    
    
    3,993,539
    
    
    
    (48,027,551
    )
    
    
    Interest revenue
    
    
    2,104,177
    
    
    
    228,677
    
    
    
    
    
    
    
    63,780
    
    
    
    478,769
    
    
    
    (1,547,479
    )
    
    
    1,327,925Other revenue
    
    
    1,539,600
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,143
    
    
    
    
    
    
    
    1,566,743Total segment revenue
    
    
    3,643,777
    
    
    
    209,930,249
    
    
    
    
    
    
    
    65,802,855
    
    
    
    4,499,451
    
    
    
    (49,575,030
    )
    
    
    234,301,303Cost of sales and operating expenses
    
    
    
    
    
    
    217,657,954
    
    
    
    
    
    
    
    60,247,397
    
    
    
    
    
    
    
    (44,034,010
    )
    
    
    233,871,341Office and admin and other expenses
    
    
    3,461,049
    
    
    
    5,797,938
    
    
    
    
    
    
    
    2,329,241
    
    
    
    7,604,153
    
    
    
    (4,018,403
    )
    
    
    15,173,978Foreign exchange (gain)/loss
    
    
    (37,874
    )
    
    
    (107,639
    )
    
    
    
    
    
    
    (6,829
    )
    
    
    60,799
    
    
    
    
    
    
    
    (91,543
    )Exploration costs, excluding exploration impairment
    
    
    1,663,370
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,663,370Exploration impairment
    
    
    264,818
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    264,818Depreciation and amortisation
    
    
    370,895
    
    
    
    5,223,582
    
    
    
    
    
    
    
    151,374
    
    
    
    18,476
    
    
    
    (65,015
    )
    
    
    5,699,312Accretion expense
    
    
    2,781,307
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,781,307Interest expense
    
    
    2,670
    
    
    
    5,073,266
    
    
    
    
    
    
    
    77,420
    
    
    
    2,670,753
    
    
    
    (1,547,480
    )
    
    
    6,276,629(Loss)/income before income taxes and
non-controlling interest
    
    
    (4,862,458
    )
    
    
    (23,714,852
    )
    
    
    
    
    
    
    3,004,252
    
    
    
    (5,854,729
    )
    
    
    89,878
    
    
    
    (31,337,909
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (860,849
    )
    
    
    (184,918
    )
    
    
    
    
    
    
    (1,045,767
    )Non controlling interest
    
    
    
    
    
    
    255,010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,692
    
    
    
    259,702Total net income/(loss)
    
    
    (4,862,458
    )
    
    
    (23,459,842
    )
    
    
    
    
    
    
    2,143,403
    
    
    
    (6,039,647
    )
    
    
    94,570
    
    
    
    (32,123,974
    )Total assets
    
    
    84,441,920
    
    
    
    353,047,953
    
    
    
    
    
    
    
    55,416,926
    
    
    
    354,534,056
    
    
    
    (360,302,879
    )
    
    
    487,137,976
 Midstream -Refining and
    
    Midstream -
    
    
    
    
    
    
    
    
    
    ConsolidationQuarter ended June 30, 2006
    
    Upstream
    
    Marketing
    
    Liquefaction
    
    Downstream
    
    Corporate
    
    adjustments
    
    TotalRevenues from external customers
    
    
    
    
    
    
    84,823,185
    
    
    
    
    
    
    
    37,954,668
    
    
    
    
    
    
    
    
    
    
    
    122,777,853Intersegment revenues
    
    
    
    
    
    
    21,869,755
    
    
    
    
    
    
    
    8,442
    
    
    
    2,275,827
    
    
    
    (24,154,024
    )
    
    
    Interest revenue
    
    
    1,750,404
    
    
    
    132,247
    
    
    
    
    
    
    
    32,045
    
    
    
    285,191
    
    
    
    (1,479,042
    )
    
    
    720,845Other revenue
    
    
    934,056
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (23,300
    )
    
    
    
    
    
    
    910,756Total segment revenue
    
    
    2,684,460
    
    
    
    106,825,187
    
    
    
    
    
    
    
    37,995,155
    
    
    
    2,537,719
    
    
    
    (25,633,066
    )
    
    
    124,409,453Cost of sales and operating expenses
    
    
    
    
    
    
    112,107,517
    
    
    
    
    
    
    
    33,446,699
    
    
    
    
    
    
    
    (21,878,196
    )
    
    
    123,676,020Office and admin and other expenses
    
    
    2,490,896
    
    
    
    3,977,241
    
    
    
    
    
    
    
    1,005,941
    
    
    
    4,417,073
    
    
    
    (2,328,006
    )
    
    
    9,563,145Foreign exchange (gain)/loss
    
    
    (120,916
    )
    
    
    (1,071,122
    )
    
    
    
    
    
    
    (16,453
    )
    
    
    59,883
    
    
    
    
    
    
    
    (1,148,608
    )Exploration costs, excluding exploration impairment
    
    
    1,660,177
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,660,177Exploration impairment
    
    
    23,265
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,265Depreciation and amortisation
    
    
    173,087
    
    
    
    2,625,582
    
    
    
    
    
    
    
    89,467
    
    
    
    6,500
    
    
    
    (32,508
    )
    
    
    2,862,128Accretion expense
    
    
    893,116
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    893,116Interest expense
    
    
    1,345
    
    
    
    2,730,913
    
    
    
    
    
    
    
    39,001
    
    
    
    2,317,258
    
    
    
    (1,479,043
    )
    
    
    3,609,474(Loss)/income before income taxes and
non-controlling interest
    
    
    (2,436,510
    )
    
    
    (13,544,944
    )
    
    
    
    
    
    
    3,430,500
    
    
    
    (4,262,995
    )
    
    
    84,687
    
    
    
    (16,729,263
    )Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,004,697
    )
    
    
    (165,827
    )
    
    
    
    
    
    
    (1,170,524
    )Non controlling interest
    
    
    
    
    
    
    136,522
    
    
    
    
    
    
    
    
    
    
    
    (2,010
    )
    
    
    4,692
    
    
    
    139,204Total net income/(loss)
    
    
    (2,436,510
    )
    
    
    (13,408,422
    )
    
    
    
    
    
    
    2,425,803
    
    
    
    (4,430,832
    )
    
    
    89,379
    
    
    
    (17,760,583
    )




---



##### 



InterOil Corporation  Movements in share capital  June 30, 2007
 Number of shares
    
    $January 1, 2005
    
    
    28,310,884
    
    
    
    216,813,654Shares issued for debt
    
    
    52,000
    
    
    
    923,000Shares issued on exercise of warrants
    
    
    19,168
    
    
    
    540,346Shares issued on exercise of options
    
    
    781,268
    
    
    
    5,657,500December 31, 2005
    
    
    29,163,320
    
    
    
    223,934,500Shares issued on exercise of options
    
    
    132,285
    
    
    
    2,006,176Shares issued on conversion of indirect participation interest
    
    
    575,575
    
    
    
    7,948,691December 31, 2006
    
    
    29,871,180
    
    
    
    233,889,367Shares issued on exercise of options
    
    
    22,000
    
    
    
    418,940Shares issued on conversion of indirect participation interest
    
    
    26,667
    
    
    
    598,118Shares issued on conversion of warrants
    
    
    2,995
    
    
    
    84,439June 30, 2007
    
    
    29,922,842
    
    
    
    234,990,864




---



##### 



InterOil Corporation  Stock options outstanding note disclosure  June 30, 2007
 Quarter ended June 30,
    
    Six months ended June 30,2007
    
    2006
    
    2007
    
    2006Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    average
    
    
    
    
    
    average
    
    
    
    
    
    averageNumber of
    
    exercise price
    
    Number of
    
    exercise price
    
    Number of
    
    exercise price
    
    Number of
    
    exercise priceStock options outstanding
    
    options
    
    $
    
    options
    
    $
    
    options
    
    $
    
    options
    
    $Outstanding at beginning of
period
    
    
    1,021,000
    
    
    
    20.66
    
    
    
    722,800
    
    
    
    22.28
    
    
    
    1,013,500
    
    
    
    20.59
    
    
    
    746,800
    
    
    
    22.23Granted
    
    
    314,750
    
    
    
    34.74
    
    
    
    247,500
    
    
    
    13.89
    
    
    
    329,750
    
    
    
    34.32
    
    
    
    282,500
    
    
    
    14.01Exercised
    
    
    (22,000
    )
    
    
    (14.37
    )
    
    
    (60,618
    )
    
    
    (8.19
    )
    
    
    (22,000
    )
    
    
    (14.37
    )
    
    
    (60,618
    )
    
    
    (8.19
    )Forfeited
    
    
    
    
    
    
    
    
    
    
    (82
    )
    
    
    (10.25
    )
    
    
    (5,000
    )
    
    
    (18.78
    )
    
    
    (228,500
    )
    
    
    (15.69
    )Expired
    
    
    
    
    
    
    
    
    
    
    (21,000
    )
    
    
    (22.19
    )
    
    
    (2,500
    )
    
    
    (27.00
    )
    
    
    (29,082
    )
    
    
    (12.00
    )Outstanding at end of period
    
    
    1,313,750
    
    
    
    24.14
    
    
    
    888,600
    
    
    
    20.90
    
    
    
    1,313,750
    
    
    
    24.14
    
    
    
    943,100
    
    
    
    20.95




---



##### 



InterOil Corporation  Stock options outstanding note disclosure  June 30, 2007
 Options issued and outstanding
    
    
    
    
    
    Options exercisableRange of exercise
    
    
    
    
    
    Weighted average
    
    Weighted average
    
    
    
    
    
    Weighted averageprices $
    
    Number of options
    
    exercise price $
    
    remaining term (years)
    
    Number of options
    
    exercise price $12.01 to 24.00
    
    
    697,000
    
    
    
    17.96
    
    
    
    3.17
    
    
    
    150,000
    
    
    
    18.8424.01 to 31.00
    
    
    482,750
    
    
    
    28.06
    
    
    
    2.86
    
    
    
    90,000
    
    
    
    29.5731.01 to 41.00
    
    
    44,000
    
    
    
    39.88
    
    
    
    0.64
    
    
    
    
    
    
    
    41.01 to 51.00
    
    
    90,000
    
    
    
    43.22
    
    
    
    1.43
    
    
    
    90,000
    
    
    
    43.221,313,750
    
    
    
    24.14
    
    
    
    2.69
    
    
    
    330,000
    
    
    
    28.41
 Weighted averageRisk free interest rate
    
    
    
    
    
    expected life forYear
    
    Period
    
    (%)
    
    Dividend yield
    
    Volatility (%)
    
    options2007
    
    January 1 to June 30
    
    5
    
    
    
    63
    
    
    5.02006
    
    October 1 to December 31
    
    4.6
    
    
    
    65
    
    
    5.02006
    
    July 1 to September 30
    
    5.1
    
    
    
    68
    
    
    4.22006
    
    January 1 to June 30
    
    4.4
    
    
    
    60
    
    
    4.82005
    
    July 1 to December 31
    
    2.5
    
    
    
    55
    
    
    3.62005
    
    January 1 to June 30
    
    2.5
    
    
    
    45
    
    
    3.2