InterOil in sound financial position to effect project

INTEROIL executives say the company is in a sound financial position as it moves forward towards development of the Elk-Antelope LNG project.

Chief financial officer, Donald Spector said the company is rationalising its business to minimise overheads.

Mr Spector said one of the measures that had been undertaken in 2014 was to reduce the number of offices from four down to two during the last 12 months. He said these outcomes had all contributed to its business being run in the most cost-efficient manner possible.

Speaking during a recent investor call conference, Mr Spector said InterOil had started its 2014 fourth quarter with the capacity of $754 million (K2081m), consisting of $454 million (K1268m) of cash and receivables and the Credit Suisse-led facility of $300 million (K838m), which was fully undrawn.

The company’s expense in the quarter consist of $79 million (K221m) drilling costs on the Raptor, Bobcat, Antelope-4 and Antelope-5 wells; and a further $28 million (K78m) for the costs associated with its seismic, inventory and other corporate costs.

The CFO said these costs had been partially offset by the change in working capital for the quarter, which has resulted in a net cash outlay of only $39 million (K109m).

"This change in our working capital will obviously unwind during 2015 but it has left us in a very healthy position - $715 million (K1997m) of available liquidity at the end of 2014," said Mr Spector.

Meanwhile, Mr Spector said InterOil forecasts expenditure for this year to be in the range of $250 to $290 million (K698m to K810m) and the convertible notes in November.

Furthermore, he said the increase of activity in 2015 with the work program containing up to seven wells and additional seismic work being undertaken during the year, the company has seen substantial decreases in unit cost per each activity.
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