UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, DC 20549







Form 40-F


(Check One)




 ̈      Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934


or


x      Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934




For the fiscal year ended December 31, 2010





Commission File Number: 001-32179







InterOil Corporation


(Exact name of registrant as specified in its charter)




Yukon Territory, Canada


(Province or other jurisdiction of incorporation or organization)




1311
Not Applicable(Primary Standard Industrial Classification Code Number)
(I.R.S. Employer Identification Number)


Level 1


60-92 Cook Street


Cairns, QLD 4870, Australia


Telephone Number:  +61 (7) 4046-4600


(Address and telephone number of registrant’s principal executive offices)




CT Corporation Systems


111 Eighth Avenue


New York, New York 10011


Telephone Number:  (212) 894-8940


(Name, address (including zip code) and telephone number


(including area code) of agent for service in the United States)




Copy to:




Mark Laurie

InterOil Corporation

Level 1

60-92 Cook Street

Cairns, QLD 4870, Australia

Telephone Number:  +61 (7) 4046-4600


Securities registered or to be registered pursuant to Section 12(b) of the Act:




Title of each class

Name of each exchange on which registeredCommon Shares

New York Stock Exchange





Securities registered or to be registered pursuant to Section 12(g) of the Act:  None




Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:  None




For annual reports, indicate by check mark the information filed with this form:




x Annual Information Form
x Audited Annual Financial Statements




As of December 31, 2010, 47,800,552 of the issuer’s common shares were outstanding.




Indicate by check mark whether the registrant by filing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”).  If “Yes” is marked, indicate the filing number assigned to the registrant in connection with such rule.   ̈ Yes  82-______    x No




Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.  x Yes     ̈ No




Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  ̈ Yes    x No












PRINCIPAL DOCUMENTS




The following documents have been filed as part of this Annual Report on Form 40-F (“Report”) for InterOil Corporation (the “Company”):




A.           Annual Information Form





The 2010 Annual Information Form for the Company is incorporated herein by reference.




B.           Audited Annual Financial Statements





The audited consolidated financial statements of the Company for the years ended December 31, 2010, 2009 and 2008, including the report of PricewaterhouseCoopers (the Company’s independent auditors) with respect thereto, are incorporated herein by reference.  For a reconciliation of important differences between Canadian and United States generally accepted accounting principles, see Note 31 of the Notes to the audited consolidated financial statements incorporated herein by reference.




C.           Management’s Discussion and Analysis





The Management Discussion and Analysis for the Company for the year ended December 31, 2010 (“MD&A”) is incorporated herein by reference.




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EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES




The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This term refers to the controls and procedures of an issuer that are designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (the “Commission”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.




Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, the Company evaluated the effectiveness of the Company’s disclosure controls and procedures. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2010.




MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROLS OVER FINANCIAL REPORTING




Responsibility




The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Generally Accepted Accounting Principles (GAAP).




Inherent Limitations




Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Additionally, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of a change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.




Assessment




Management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010, using the criteria set forth in the framework established by the Committee of Sponsoring Organizations of the Treadway Commission entitled Internal Controls — Integrated Framework. Based on this assessment, the Company’s management determined that the Company’s internal control over financial reporting was effective as of December 31, 2010.




The effectiveness of the Company's internal control over financial reporting as of December 31, 2010 has been audited by PricewaterhouseCoopers, an independent registered public accounting firm, as stated in their report included on page 2of the consolidated financial statements in this Annual Report on Form 40-F.




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CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING




Effective June 1, 2010 the Company migrated to a new Enterprise Resource Planning (“ERP”) System for companies in the Corporate, Midstream and Upstream segments, with a plan to migrate the operating company of our Downstream segment during the first half of 2011.  The ERP System implementation required installation of new hardware and software into our Information Technology environment and the way we record, process and report financial transactions.  In particular, implementation of the new ERP system resulted in significant changes to many of the Company’s internal controls over financial reporting.  Such changes include the modification of design and documentation of our key internal control processes and procedures affected by the new ERP
system.  Following the implementation, these new controls were evaluated and tested as part of the Company’s evaluation of the effectiveness of internal control over financial reporting. As of December 31, 2010 the company has determined that these revised controls were designed and operating effectively to ensure that the financial statements were materially accurate.





Other than implementing the new ERP system, there have been no changes in internal control over financial reporting during fiscal year 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting




AUDIT COMMITTEE




The Audit Committee of the Company’s Board of Directors is comprised of Mr. Roger Lewis, Dr. Gaylen Byker and Mr. Ford Nicholson. The Board of Directors has affirmatively determined that each member of the Audit Committee is financially literate and is an independent director for purposes of the New York Stock Exchange rules applicable to members of the audit committee.  Additionally, the Board of Directors has determined that Mr. Lewis has the accounting or financial management expertise to be considered a “financial expert” as defined by the final rules approved by the Commission implementing the requirements set forth in Section 407 of the Sarbanes-Oxley Act of 2002.




CODE OF ETHICS AND BUSINESS CONDUCT




The Company’s Board of Directors has adopted a Code of Ethics and Business Conduct which applies to all directors, officers and employees of the Company.  The Board has not granted any waivers to the Code of Ethics and Business Conduct.  The Code of Ethics and Business Conduct is accessible on the Company’s website http://www.interoil.com.  Any amendment to or waiver of the Code of Ethics and Business Conduct that applies to the Company’s Chief Executive Officer, Chief Financial Officer, principal accounting officer or controller will also be posted on the Company’s website.




PRINCIPAL ACCOUNTANT FEES AND SERVICES




Audit Fees.  Fees billed for professional services rendered related to the audit of the Company’s annual consolidated financial statements for the fiscal years ended December 31, 2010 and December 31, 2009 by PricewaterhouseCoopers for services that are normally provided by such accountant in connection with statutory or regulatory filings or engagements for such fiscal years were $1,709,000 and $1,557,328, respectively, including out-of-pocket expenses.




Audit-Related Fees.  Fees billed for professional services rendered related to audit-related services for the Company for the fiscal years ended December 31, 2010 and December 31, 2009 by PricewaterhouseCoopers not otherwise reported above were $322,788 and $35,144, respectively.  The audit-related services provided by PricewaterhouseCoopers during 2010 and 2009 consisted of procedures performed with respect to the registration statements and work on the shelf prospectus prepared for equity and debt offerings during those years.




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Tax Fees.  Fees billed for professional services rendered related to tax compliance, tax advice, and tax planning services for the Company for the fiscal years ended December 31, 2010 and December 31, 2009 by PricewaterhouseCoopers were $355,221 and $557,693, respectively.




All Other Fees.  Fees billed for professional services rendered related to all other services for the Company for the fiscal years ended December 31, 2010 and December 31, 2009 by PricewaterhouseCoopers were $67,611 and $47,718, respectively.  The fees related to procedures performed in connection with the quarterly financial reporting of the Company’s subsidiaries.




Pre-Approval.  The Audit Committee of the Company’s Board of Directors has adopted a policy that requires pre-approvals of all auditing services, including the compensation and terms of the audit engagement, and all other non-audit services to be performed by the Company’s independent auditors, subject to certain de-minimus exceptions.  Non-audit services subject to the de-minimus exceptions described in Section 10A(i)(1)(B) of the Exchange Act may be approved by the Audit Committee prior to the completion of the audit.  All of the services provided by the Company’s independent auditors during 2009 and 2010 were pre-approved by the audit committee.




OFF BALANCE SHEET ARRANGEMENTS




Please see the section titled “Liquidity and Capital Resources—Off Balance Sheet Arrangements” in the Company’s MD&A, which is incorporated herein by reference.




CONTRACTUAL OBLIGATIONS




Please see the section titled “Liquidity and Capital Resources—Contractual Obligations and Commitments” in the Company’s MD&A, which is incorporated herein by reference.




UNDERTAKINGS




The Company undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to:  the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.




CONSENT TO SERVICE PROCESS




The Company has previously filed a Form F-X in connection with the class of securities in relation to which the obligation to file this Report arises.




DISCLOSURE REQUIRED BY NEW YORK STOCK EXCHANGE




The Company is classified as a “foreign private issuer” in connection with its listing on the New York Stock Exchange (“NYSE”).  As a result, many of the governance rules of the NYSE that apply to U.S. domestic companies do not apply to the Company. However, as a Canadian public company, the Company has in place a system of corporate governance practices that meets Canadian requirements.




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Additionally, the NYSE listing standards require foreign private issuers to make certain corporate governance disclosures, including disclosure of any significant differences between its governance practices and the NYSE governance rules.  The following is the NYSE required disclosure:




Presiding Director at Meetings of Non-Management Directors.Section 303A.03 of the NYSE Listed Company Manual requires “non-management directors” to schedule regular executive sessions with members of management present.  “Non-management directors” are defined in Section 303A.03 as all directors who are not executive officers.  The Company schedules executive sessions on a regular basis in which the Company's non-management directors meet without management participation. Dr. Gaylen Byker serves as the presiding director (the “Presiding Director”) at such sessions. The Board of Directors is responsible for determining whether or not each director is independent. The Board of Directors has
adopted the director independence standards contained in Section 303A.02 of the NYSE’s Listed Company Manual for the purposes of satisfying the NYSE’s applicable governance requirements.




Communication with Non-Management Directors.Shareholders may send communications to the Company's non-management directors by writing to the Presiding Director, c/o Mark Laurie, Corporate Secretary, at Level 1, 60-92 Cook Street, Cairns, Queensland 4870 Australia, Telephone: +61 7 4046 4600.  Communications will be referred to the Presiding Director for appropriate action.  The status of all outstanding concerns addressed to the Presiding Director will be reported to the Board of Directors as appropriate.




Audit Committee.  Section 303A.06 of the NYSE Listed Company Manual requires listed companies to have an audit committee composed entirely of independent directors.  The Company has established an Audit Committee composed entirely of independent directors who qualify as independent under the requirements of Rule 10A-3 of the Exchange Act, and Section 303A.07 of the NYSE Listed Company Manual. The Company also complies with Canadian Multilateral Instrument 52-110-Audit Committees, which sets out detailed requirements regarding the composition of the Audit Committee and its responsibilities.




Corporate Governance Guidelines.  According to Section 303A.09 of the NYSE Listed Company Manual, a listed company must adopt and disclose a set of corporate governance guidelines with respect to specified topics. Such guidelines are required to be posted on the listed company’s website. The Company operates under corporate governance principles that are consistent with the requirements of Section 303A.09 of the NYSE Listed Company Manual, many of which are described under the heading “Statement of Corporate Governance Practice” in the Company’s Annual Information Circular.   However, the Company has not codified its corporate governance principles into formal guidelines.




Shareholder Meeting Quorum Requirement.  The NYSE governance rules do not contain a minimum quorum requirement for a shareholder meeting, but gives careful consideration to provisions in a listed company’s by-laws that fixes a quorum for a shareholders’ meeting at less than a majority of the outstanding shares.  The Company’s quorum requirement is set forth in its By-Laws.  A quorum for a meeting of shareholders is present, irrespective of the number of persons actually present at the meeting, if the holder or holders of five percent (5%) of the shares entitled to vote at the meeting are present in person or represented by proxy.




Proxy Delivery Requirement.  The NYSE requires the solicitation of proxies and delivery of proxy statements for all shareholder meetings, and requires that these proxies shall be solicited pursuant to a proxy statement that conforms to the Commission’s proxy rules.  The Company is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act, and the equity securities of the Company are accordingly exempt from the proxy rules set forth in Sections 14(a), 14(b), 14(c) and 14(f) of the Exchange Act.  The Company solicits proxies in accordance with applicable rules and regulations in Canada.




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Board Committee Mandates.  The mandates of the Company’s Audit Committee, Compensation Committee, Reserves Committee and Nominating and Corporate Governance Committee are each available for viewing on the Company’s website at www.interoil.com/governance.asp, and are available in print to any shareholder who requests them. Requests for copies of these documents should be made by contacting Mark Laurie, Corporate Secretary, at Level 1, 60-92 Cook Street, Cairns, Queensland 4870 Australia, Telephone: +61 7 4046 4600.




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SIGNATURES





Pursuant to the requirements of the Exchange Act, the Company certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.




INTEROIL CORPORATION/s/ Phil E. MulacekPhil E. MulacekChairman of the Board, Chief Executive Officer

and President





Date:  March 22, 2011











EXHIBIT INDEX





The following exhibits have been filed as part of the Annual Report:





EXHIBIT

NUMBER

DESCRIPTION1.

Annual Information Form for the year ended December 31, 2010.2.

Audited annual consolidated financial statements for the year ended December 31, 2010, including a reconciliation to United States generally accepted accounting principles.3.

Management’s Discussion and Analysis for the year ended December 31, 2010.4.

Consent of PricewaterhouseCoopers dated March 22, 2011.5.

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.6.

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.7.

Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.8.

Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.