InterOil (NYSE:IOC) today announced the recovery of oil

InterOil (NYSE: IOC) Updates Antelope-1 Side Track Testing

May 28, 2009 -- InterOil Corporation (NYSE:IOC - News) (POMSoX: IOC) today announced the recovery of oil from testing below the 7 inch liner in the second side track of the Antelope-1 well. Drill Stem Test (DST) #12, performed over an interval from 7,700 feet (2,347 meters) to 7,881 feet (2,402 meters) in the second side track, recovered gas, condensate and oil over the 180 foot (55 meter) open hole section. Subsequently, DST #13 was performed over an interval from 7,792 feet (2,375 meters) to 7,881 feet (2,402 meters) to isolate the oil zone from the gas bearing zone included in DST #12. DST #13, completed on May 28th, recovered oil and very little gas from this 89 foot (27 meter) interval. The oil measured 35 degree API gravity in the field. Detailed analysis of the oil samples and downhole pressures are underway.

DST #13 is the third test in the Antelope 1 well from which oil has been recovered. The forward plan is to drill an additional 148 feet (45 meters) then perform another DST with a view to evaluating the extent of the oil column height. Additional zones of interest may also warrant further drilling and testing contingent on the results derived from the next DST. The Company is in the early stages of evaluation and has not yet been able to determine any reasonable approximation of oil volumes, and in particular whether oil volumes would be sufficient to be commercially exploitable.

The Company is continuing to test the lower sections of the Antelope reservoir to further its understanding of the nature and volume of both condensate and oil in the reservoir and complete the original objective of testing for higher condensate-to-gas ratios and to determine the existence of an oil leg at the base of the gas column.

COMPANY DESCRIPTION
InterOil Corporation is developing a vertically integrated energy business whose primary focus is Papua New Guinea and the surrounding region. InterOil's assets consist of petroleum licenses covering about 4.6 million acres, an oil refinery, and retail and commercial distribution facilities, all located in Papua New Guinea. In addition, InterOil is a shareholder in a joint venture established to construct an LNG plant on a site adjacent to InterOil's refinery in Port Moresby, Papua New Guinea.

InterOil's common shares trade on the NYSE in US dollars.

For more information or for questions please call 1-800-404-8982 or go to www.undiscoveredequities.com

1515 S Federal Highway, Ste 207
Boca Raton, FL 33432
1-800-404-8982

BULLETIN>>

Breakout! Manas Petroleum
Share Price Shatters Pre-crash Resistance

Technical take: A picture is worth a thousand words and this one is bullish.

A picture or stock chart is worth a thousand words and the Manas Petroleum (MNAP: $0.56) chart looks to be shouting loud and clear that some very bullish events are in the works. After breaking through its downtrend last February I have been chronicling each and every bullish development. I warned readers that powerful long term technical buy signals had been triggered in stochastics, on balance volume, relative strength and moving average during the past month. The latest break out is through what I think is a very significant $0.50 resistance level (see chart). Critically this breakout has been confirmed by RSI, OBV and Stochastics. According to the chart below the next resistance level is not until almost 50% higher or $0.75. I think I have to give Edwards & McGee the Authors of the 1940s classic Technical Analysis of Stock Trends credit for the observation that for a break out to be really bullish it should be on rising volume. Over many years of observation this has proved to be true. Manas latest move started a few days ago on only 46,000 shares, the next day it traded twice that amount as its share price rose and its volume kept building: rising to 382,000 shares yesterday, and then, as it broke through what was a major resistance level today it traded more than 700,000 shares. To repeat: I think Manas shares are in a classic technical bull market- the major kind I have witnessed and profited from and in my early years, read about in Edwards & McGee.

Possible drivers of this bull move: With Manas there is more than one.

As Santos embarks on drilling what could be some very significant discoveries at its Central Asian joint venture with MNAP, Manas says its focus has been to find partners for its Albania light oil play; specifically some very high quality drill ready exploration prospects, some which were originally developed by Shell and Occidental Petroleum. The chart is confirming what the company has been saying, it is out of the woods financially, drilling of some great light oil prospects and it is in advanced stages of negotiating the farm out of its (what I consider fantastic) Albanian light oil play. To put "fantastic" in perspective the last exploration play I put in the same league was InterOil’s Papua New Guinea play and they just drilled the largest producing gas well in the history of the oil industry.

To watch for: Farm out or drilling in Central Asia

Currently I think all eyes are on the Occidental’s Spiragu light oil discovery in Albania which Manas now has possession of. I think the question is more likely not “if” but “when” will they farm out the appraisal drilling of the OXY/Spiragu discovery. I have to emphasize I don’t know what is moving Manas Petroleum’s shares - whether it is drilling in Kyrgyz Republic or the “possible” approach of a deal on Albania. I think the bottom line at this juncture is that its shares still appear very undervalued even after the recent gains.

I think it’s important to keep in mind that at a $2 per barrel estimated cost of production, and with resources that now exceed, according to independent studies (Shell/Gustavson), more than 3 billion barrels, MNAP must be on every oil major’s radar screen. Because the Spiragu is around 15 miles east of Europe’s largest onshore oil field (1 billion barrels) this subsequent discovery in the neighborhood, in hind sight, appears a given. The real question as to size will be answered by the appraisal drilling of the Spiragu and the drilling of newly discovered prospects nearby. My guess is Manas will seek a smaller operator or independent they can easily deal with rather than risk partnering with an 800 pound gorilla like Shell or ExxonMobil. Time will tell. One thing is apparent, according to its share price action Manas looks like it’s about to have a great year.

For questions and additional information, please call me toll-free at 1-800-404-8982, or visit our website at www.undiscoveredequities.com.

Very Sincerely,

Kevin McKnight
1-800-404-8982
Undiscovered Equities, Inc.
1515 S Federal Hwy, Ste 207
Boca Raton, FL 33432
www.undiscoveredequities.com

disclaimer

Manas Petroleum: NEW PARTNER, MONEY IN THE BANK, DRILLING IMMINENT

NEW PARTNER, MONEY IN THE BANK, DRILLING IMMINENT
*******On April 9, 2009, a term sheet with a partner regarding the farm-out in Albania has been signed. The parties agreed to keep the economic conditions confidential.

*******On April 3, 2009, we successfully negotiated new work programs for our exploration blocks A, B and D, E in Albania with the Albanian authorities (AKBN), which allows us to reduce the bank guarantee, held as restricted cash on our accounts on behalf of exploration work in Albania, by $2,541,800 at our own disposal without any restrictions or limitations to these funds after the release, which took place by April 23, 2009 following completion of the procedural formalities. In addition, the Company finalized negotiation for an additional loan of $1,300,000, which will be secured by the remaining escrow funds in Mongolia

*******On January 22, 2009, the restricted cash in Mongolia was reduced from $4,000,000 to $2,000,000 in agreement with the Mongolian authorities. The Group immediately paid its bank loan of $1,220,000 and accumulated interest of $34,248. As a result, the Group was able to free up cash in the amount of $745,752 net of all costs and charges at the Group’s own disposal (no restriction or limitation of these funds after release).

Call us at 1-800-404-8982 or visit www.undiscoveredequities.com

Giant oil play emerging in Europe

1515 S Federal Highway, Ste 207
Boca Raton, FL 33432
1-800-404-8982
http://www.undiscoveredequities.com/
Is one of the world's largest oil plays sitting right in the heart of Europe?
Thanks to a light oil discovery only a few miles east of Europe's largest onshore oil field this is looking increasingly possible.
Please call me at 1-800-404-8982 to hear about this amazing story....

Dear fellow investors and friends,
It was a brutal 2008 and just about everything that could go wrong did. I think its fairly evident that the stock market has put in a bottom – not all that surprising considering that analytical greats (and the same people that actually made money during the collapse) such as Stephen Leuthold whose Grizzly Short Fund made 74 percent last year, are now predicting a major up move for US equities. In fact Mr. Leuthold warned earlier this month that those that did not buy would “regret it”. I think as the chart shows small caps have been among the strongest in recovering a very good sign for the future.

InterOil shows what can happen
Based on the premise that the tide is at last moving with us I think its time to survey the wreckage in our small cap arena and pick out the survivors that are still capable of executing business plans in a way that give them serious upside. We stayed with InterOil (IOC $36.00) throughout the market collapse and have been amply rewarded. We remain bullish on this story as new highs look imminent. Record gas flows at InterOil’s Papua New Guinea discovery and the recovery of 44º gravity oil from a subsequent side track well (and more recently talk of a major Chinese funding package) has sent its shares back to where they were prior to the market collapse – a 300% gain in only three months! Now that InterOil’s shares have rocketed back to last year’s highs, the natural question is: which junior explorer is likely to be next?

InterOil rocketed from $10 to $36 as it drilled one of the largest gas wells in history! Call me at 1-800-404-8982 to find out about this astounding discovery and why I think Manas Petroleum (MNAP.OB) could be next.

One company that looks set to rise, Phoenix-like out of the ashes of the market cataclysm is another of my favorites. Check out their latest news release which I’ve included and I expect you will at least begin to understand why. But here’s some background first.

Great story but…
Manas Petroleum Corp. (OTC:MNAP) was a $5 stock in 2007. That was when financing exploration companies was relatively easy and having a BIG story almost assured institutional investor support. Manas didn’t have just one big story it had FOUR and then later FIVE big stories - all company builders on their own. Imagine that. Independent engineering studies estimated these projects’ P50 potential totaled more than a recoverable 4 billion boe. One project covered as much land as Switzerland and another was so big the president of the country (Chile) saw fit to come down for the license signing ceremony. Clearly Manas had (and still has) big, serious, hall of fame projects. But its timing was terrible…

Then along came subprime, liar loans, credit default swaps, and the collapse of some of the world’s most trusted financial institutions. The subsequent stock market implosion compared to 1929. Risk capital disappeared and, like all other oil exploration companies’ shares, Manas Petroleum’s share price was crushed.

Big projects looked like they could become big liabilities…
Worse yet because Manas had not yet financed all of these projects, not only had speculative interest evaporated, but its big stories looked to have become BIG LIABILITIES. A lot of investors rightly worried that the cash needs of these giant projects could bankrupt the company or, nearly as bad, an equity financing if even possible would be extremely dilutive – in other words: result in the issuance of many millions of additional shares.

Farm-outs reduce risk and set course for higher stock price…
The risk of dilution or worse now looks remote, principally because the company has dramatically reduced its overhead and has farmed out or is in the process of farming out every project except Mongolia which currently has enough funding in place for the next 2 years. Also there is little pressure on Manas regarding its largest project (Albania) as they have been granted the option of suspending exploration for 12 months and in the meantime have fulfilled their phase 1 obligations so that they really have until mid 2010 before they have to resume work. I doubt Manas will need to exercise the suspension option as I think its fair to bet that a farm out will occur long before it would be necessary, but more on that later.

Oil major puts up precious dollars to continue Manas farmout no 1.
Clearly we should pay attention to a very bullish event that I think was overlooked by most investors a few months ago. That was when, right in the midst of the darkest days of the stock market and oil price collapse, Santos announced that it would be proceeding to Phase II of its JV with Manas in the Kyrgyz republic.

“In an environment where it seems that just about every other oil project has been cancelled, Santos, a sophisticated oil major, has decided to continue its joint venture with Manas - thus committing to spending more than $50 million.” That tells me what I think should also become apparent to most readers: Manas Petroleum must have one heck of a project there. Those following it closely will know that Santos has an option to expand the program onto Manas Tajik licenses in a farmout that will likely be at least as big. I think it’s likely they will so that’s $100 plus million. Those two projects’ P50 in place potential is close to 2 billion barrels (up to 40% recoverable). On their own, they are company builders, and as such I think already justify a higher market capitalization than Manas’s current $30 million.

Drilling at last
I don’t know how you may feel about this but I have to admit the last two years have been very frustrating as we have waited for drilling to begin at the Kyrgyz project. Critically, as Manas outlined in this week’s press release, Santos is about to begin drilling and these exploration wells which are literally surrounded by already producing oilfields. While we never really know for sure how a well will turn out until it is drilled, a shallow well next to production (one prospect is less than 2 miles from producing fields on both its southern and northern sides), is usually as easily drilled and as easy to produce as its neighbors (which in this case have been producing for 60 years).

When I first started in this business my boss used to say: “if you are on the way to the bank to get $100 and you see $50 on ground you stop to pick it up.” How this relates to Santos is that while Santos was shooting seismic with the intent to better define the already known Kyrgyz deep high impact light oil plays, they managed to acquire very high quality seismic covering a series of smaller but still very robust and likely easily drilled shallow prospects. If successful these shallow prospects could easily end up producing a combined several thousand barrels of oil per day. And there are more like them in the area so I would not be surprised if Santos kept drilling. Santos is acting similar to the proverbial man on his way to the bank who sees $50 on the ground and stops to pick it up: they are stopping to take advantage of what looks to be easily drilled and produced oil, just as they are on their way to drill the really big prospects early next year.

Like a freight train
I think the recent trading activity reminds me of the quiet rumbling I have heard while walking near a railway track as a freight train approached in the distance. Manas shares have broken out of a year-long downtrend, bottomed and now have decisively begun moving higher. Like the distant rumbling, the independent studies of Manas projects tell us why we should pay attention to its shares re-awakening. The culmination of Manas Petroleum’s many years and over $24 million spent amassing these giant projects is the onset of drilling which is about to begin.

Manas Chart bullish showing clear bottom and upside breakout
At this phase Manas shares have broken out to the upside on a very healthy volume of 200-500,000 shares per day. Prior to its breakout, the company’s chart formed what technical analysts refer to as a saucer pattern - among the most reliable indicators of a bottom and subsequent bull phase. At the same time weekly RSI, stochastics and OBV issued buy signals.

So What’s next?
So what else is likely to happen as Santos drills wells in Kyrgyzstan? I think given the improved environment my bet is that Manas will soon farm out its Albania play – especially the appraisal of the Spiragu light oil discovery. Recall that until the stock market had collapsed management had no intention of farming out Albania. The company’s management began looking for a partner only over the past few months - after the stock market had crashed. And my oil industry friends tell me that even in this market getting a partner to drill the appraisal of an already discovered onshore light oil pool in Europe should not be all that hard.

After all, the numbers speak for themselves, and they are compelling. For example the estimated cost of production of any oil produced at the Spiragu is likely around $2 a barrel (using a Gustavson economic study for nearby prospects) while the chance of successfully drilling the Spiragu is estimated at 70%. As important is the Spiragu’s immense size: estimated to be from 250 to 350 million barrels. Much more speculative are two big similar sized exploration prospects in the vicinity of the Spiragu. At the same time an independent study of other fractured limestone (Manas held) light oil prospects to the north increase the potential of the Spiragu’s deep fractured limestone play to over 3 billion barrels recoverable – all within Europe.

So this is where we get back to my freight train analogy. Santos is beginning to drill small shallow wells imminently, and the impact on Manas shares is evident – they have moved higher on bullishly expanding volume. But I believe this is just a taste of what is to come. What happens if and when (as they have already committed to doing) Santos starts drilling wells 10 times the size in the coming months? We don’t even need higher oil prices to make this play more attractive, although I think by this fall that will happen too. And then there is Albania. Will it be farmed out? (I think likely). If so, what would be the effect of the drilling the Spiragu on Manas Petroleum’s share price? My bet is that the drilling of deep high impact wells by Santos combined with drilling of a giant appraisal play in Albania is not going to make its share price go down. More likely is that given the size of these wells, Manas Petroleum’s shares should be moving higher with all the force of a freight train.

Our last resource pick, InterOil, hit the biggest natural gas well in history as an astounding 380 million cubic feet of gas per day discovery has been made! I am now staking my reputation on Manas Petroleum (MNAP.OB).

Call me at 1-800-404-8982 to find out why. I would be delighted to hear from you.

Very Sincerely,

Kevin McKnight
1-800-404-8982
http://www.undiscoveredequities.com/

Manas Petroleum (OTCBB: MNAP) Final Step in Mongolian PSC Approval Process Completed

Undiscovered Equities, Inc. 1515 S Federal Hwy, Ste 207
Boca Raton, FL 33432, Telephone 1-800-404-8982
www.undiscoveredequites.com

Manas Petroleum (OTCBB: MNAP) Final Step in Mongolian PSC Approval Process Completed

Manas Petroleum Corporation (OTCBB: MNAP) announces that its wholly-owned subsidiary, DWM Petroleum AG, has signed production contracts with the Petroleum Authority of Mongolia for blocks 13 and 14 at the Hotel Khan Palace Kempinsky in Ulaanbaatar, Mongolia, on April 21, 2009. The production contracts were signed by Dashzeveg Amarsaikhan, the Chairman of the Petroleum Authority of Mongolia, and by Alex Becker on behalf of DWM Petroleum AG in a televised ceremony. Jamiansurengiyn Batsuuri, Vice-Minister of the Ministry of Mineral Resources and Energy, Dr. Ariunsan Baldanjav, Economic Policy Advisor of the Prime Minister's office, and several distinguished members of Parliament also attended the televised ceremony. The signing ceremony follows a review process by Mongolian Government and Security Council and formal ratification by parliament. Subject to payment of fees, this represented the final step in assigning these blocks for exploration and exploitation according to Mongolian law.

Manas owns a 74% interest in blocks 13 and 14, which cover an aggregate of over 20,000 square kilometers, or almost five million acres, of land located on Mongolia's southern border. The production contracts provide for a five-year exploration period (with two optional six month extensions allowed) beginning on the effective date of April 21, 2009, and a twenty-year exploitation period (with two five year extensions allowed). The remaining 26% interest in blocks 13 and 14 is held by a Mongolian oil and gas company and two investors.

Erik Herlyn, CEO of Manas Petroleum Corp. commented, "I think it is important to note the potential of the blocks. They cover an immense area and we believe they show great potential for exploration as evidenced by, among other things, multiple oil seeps and extensive source rocks."

Manas has already identified several leads from previous seismic. It plans to begin a US $1.6 million exploration program during the summer of 2009. Manas expects that this exploration program should include reconnaissance and geological mapping, gravimetric profiling and lithographic and paleontologic stratigraphic work and reprocessing of seismic. Manas has US $2 million currently set aside in Mongolia to fund exploration.

For more information, please contact us at 1-800-404-8982.

Very Truly Yours,

Kevin McKnight
President
Undiscovered Equities
1-800-404-8982
www.undiscoveredequities.com




It is important to note that Undiscovered Equities, Inc. has been paid by Manas Petroleum for I/R services. For a full disclaimer please log on to www.undiscoveredequities.com

Why I think the current oil sector correction is an incredible buying opportunity

Undiscovered Equities, Inc. 1515 S Federal Hwy, Ste 207
Boca Raton, FL 33432, Telephone 1-800-404-8982
www.undiscoveredequities.com

Why I think the current oil sector correction is an incredible buying opportunity

The fear and pessimism that has accompanied oil's correction is a classic (and from a contrarian viewpoint it’s a compelling) buy signal on its own.

One fear is that a slowdown in China might clobber oil consumption. For insight into this possibility we defer to Goldman Sachs. They predict a re-acceleration of China’s growth. Critically, China’s Central bank just said it has switched its priorities from fighting inflation to ensuring China’s 10+ percent economic growth continues. With most countries we might be skeptical. But China has both the need (a few 100 million poor that will not tolerate any postponement of economic growth) and the means (over a trillion dollars in surplus reserves.) We take its statement as a buy signal.

This is just one example of the growing list of reasons for consumption to remain strong and oil prices to soon rebound. But while many investors worry about falling oil prices the real story to watch is about falling oil supply. And now the world’s perennial supply optimists, the International Energy Administrations have finally started to come to grips with what is a dire situation. They have recently increased the global depletion rate from 4% to 5.2%. The translation is that nearly 4 million barrels per day of additional production must be developed per year just to keep oil supplies stable, never mind accommodate future consumption growth.

Consider that, according to the renowned McKinsey Global Institute, in the next 15 years China will have added more than 300 million people to its Urban population – that is car-driving, air conditioner-using energy consumers – that is more than the entire population of the United States. Consider that currently America consumes more than 20 million barrels of oil per day.

If this is the case, as the world struggles to keep up with exploding energy demand, higher oil prices and a renewed spectacular oil stock bull market (especially high growth junior oil stocks), are in my estimation a near certainty.

With this thought, I invite you to read my investment letter and would like to bring to your attention Manas Petroleum Corp. our number one oil growth story.

For more information, please contact us at 1-800-404-8982.

Very Truly Yours,

Kevin McKnight,
President
Undiscovered Equities,Inc. (My personal line is 1-800-404-8982)

www.undiscoveredequities.com

It is important to note that Undiscovered Equities, Inc. has been paid by Manas Petroleum for I/R services. For a full disclaimer please log on to www.undiscoveredequities.com.

Undiscovered Equities: InterOil (NYSE: IOC) (POMSoX: IOC) Announces First Quarter 2009 Financial Results

InterOil Announces First Quarter 2009 Financial Results

Visit http://www.undiscoveredequities.com/ for more on IOC as well as our Top Picks for 2009 which includes IOC

InterOil Corporation (NYSE: IOC) (POMSoX: IOC) announces financial results for the first quarter ending March 31, 2009. For the quarter, InterOil reported net income of $2.6 million ($0.07 per share), a $5.0 million improvement over the equivalent quarter in the prior year when a loss of $2.4 million was reported. EBITDA, (Earnings before Interest, Taxes, Depreciation and Amortization)(i) for the quarter totalled $10.9 million, an improvement of $3.8 million over 2008 first quarter EBITDA, despite sales and operating revenues of $161.7 million, which was a $30.8 million decrease from the first quarter of 2008.






Business Segment Results
During the quarter the Midstream Refining business generated a net profit of $10.3 million, compared with a net profit $0.2 million for the same quarter in 2008. This was primarily due to gains resulting from lower cost of sales in the quarter following the December write-down, an improved Naptha premium, a gain on hedge accounted transactions and non-hedge accounted contracts, as well as positive price movements applicable to sales of our refined products in Papua New Guinea under the applicable pricing formula. Gains were partially offset by adverse currency fluctuations and decreased margins on low sulphur waxy residue. Refining EBITDA in the quarter totalled $14.7 million, up from $5.7 million in the previous year.
The Company's Midstream Liquefaction segment posted a net loss of $2.6 million for the quarter, being our share of expenses incurred by the PNG LNG Inc. joint venture during the quarter to progress the Liquefied Natural Gas (LNG) project in Papua New Guinea.
The Downstream segment derived a net profit of $1.0 million compared with a net profit of $2.2 million in the first quarter of 2008. The decrease was mainly due to lower petroleum product pricing upon which this segment's margins are based. Downstream EBITDA in the quarter totalled $3.2 million compared to $4.5 million in the prior year period.
During the first quarter, the Upstream business segment recorded a net loss of $2.1 million, in line with a net loss of $2.0 million in the comparable 2008 quarter. Decreased rig and administrative expenses were offset by higher interest expense resulting from inter-company loan balances.

Liquidity and Capital Resources
As at March 31 2009, the Company's relatively strengthened financial position has benefited from the repayment in May 2008 of its $130.0 million secured credit bridging facility by means of conversion of a $60.0 million portion of the facility into equity and the repayment of the remainder funded by the issuance of $95 million principal amount of 8% convertible debentures maturing in May 2013. These transactions reduced our Debt-To-Capital Ratio (Long term Debt/(Shareholders' equity + Long term Debt) to 34% at March 31, 2009, substantially down from 68% at the same time in 2008.


Summary of Debt Facilities

----------------------------------------------------------------------------
Balance
outstanding
Organization Facility March 31, 2009 Maturity date

----------------------------------------------------------------------------
----------------------------------------------------------------------------
OPIC secured loan $62,500,000 $62,500,000 December 2015
Unsecured 8% convertible
debentures $95,000,000 $78,975,000 May 2013
BNP Paribas working
capital facility $190,000,000 $26,403,359(1) August 2009
Westpac working capital
facility $27,200,000 $9,242,663 October 2011
BSP working capital
facility $23,800,000 $7,674,525 August 2009
----------------------------------------------------------------------------
(1) Excludes letters of credit totalling US$27.6 million
At March 31, InterOil held cash, cash equivalents and restricted cash of $60.0 million (March 2008 - $37.5 million), of which $17.4 million (March 2008 - $20.4 million) was restricted under the BNP Paribas working capital facility utilization requirements. Our cash inflows from operations for the quarter were $18.6 million, compared with an inflow of $10.1 million for the quarter ended March 31, 2008. The improved cash flows from operations were mainly due to improved refining margins, cash received on the close out of long term hedges and reduced working capital requirements as a result of lower crude prices.


Consolidated Balance Sheets

As at
----------------------------------------------------------------------------
March 31, December 31, March 31,
2009 2008 2008
$ $ $
----------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents
(note 5) 42,644,319 48,970,572 17,089,197
Cash restricted (note 7) 17,100,097 25,994,258 20,019,672
Trade receivables (note 8) 41,437,218 42,887,823 84,102,363
Commodity derivative contracts
(note 7) - 31,335,050 -
Other assets 1,499,007 167,885 1,092,881
Inventories (note 9) 73,669,643 83,037,326 132,316,904
Prepaid expenses 2,137,765 4,489,574 1,502,302
----------------------------------------------------------------------------
Total current assets 178,488,049 236,882,488 256,123,319
Cash restricted (note 7) 281,527 290,782 344,858
Goodwill (note 14) 5,761,940 - -
Plant and equipment (note 10) 219,930,265 223,585,559 230,075,255
Oil and gas properties (note 11) 145,768,637 128,013,959 96,667,367
Future income tax benefit 2,740,725 3,070,182 2,896,122
----------------------------------------------------------------------------
Total assets 552,971,143 591,842,970 586,106,921
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities and shareholders'
equity
Current liabilities:
Accounts payable and accrued
liabilities (note 12) 64,173,145 78,147,736 138,715,939
Commodity derivative contracts
(note 7) 265,400 - 1,690,325
Working capital facility
(note 15) 43,320,547 68,792,402 33,025,778
Current portion of secured loan
(note 18) 9,000,000 9,000,000 8,991,667
Current portion of indirect
participation interest - PNGDV
(note 19) 540,002 540,002 541,105
----------------------------------------------------------------------------
Total current liabilities 117,299,094 156,480,140 182,964,814
Secured loan (note 18) 52,421,319 52,365,333 190,591,507
8% subordinated debenture
liability (note 23) 65,767,840 65,040,067 -
Preference share liability
(note 22) - - 7,797,312
Deferred gain on contributions
to LNG project (note 13) 13,076,272 17,497,110 12,203,867
Indirect participation interest
(note 19) 72,471,966 72,476,668 96,086,369
Indirect participation interest
- PNGDV (note 19) 844,490 844,490 843,387
----------------------------------------------------------------------------
Total liabilities 321,880,981 364,703,808 490,487,256
----------------------------------------------------------------------------
Non-controlling interest
note 20) 7,305 5,235 4,107
----------------------------------------------------------------------------
Shareholders' equity:
Share capital (note 21) 386,424,549 373,904,356 259,324,133
Authorised - unlimited
Issued and outstanding -
36,636,623
(Dec 31, 2008 - 35,923,692)
(Mar 31, 2008 - 31,026,356)
Preference shares (note 22) - - 6,842,688
(Authorised - 1,035,554, issued
and outstanding - nil)
8% subordinated debentures
(note 23) 10,837,394 10,837,394 -
Contributed surplus (note 24) 16,644,827 15,621,767 11,042,795
Warrants (note 25) 2,119,034 2,119,034 2,119,034
Accumulated Other Comprehensive
Income 15,460,503 27,698,306 7,234,123
Conversion options (note 19) 17,140,000 17,140,000 19,840,000
Accumulated deficit (217,543,450) (220,186,930) (210,787,215)
----------------------------------------------------------------------------
Total shareholders' equity 231,082,857 227,133,927 95,615,558
----------------------------------------------------------------------------
Total liabilities and
shareholders' equity 552,971,143 591,842,970 586,106,921
----------------------------------------------------------------------------
----------------------------------------------------------------------------



Consolidated Statement of Operations

Quarter ended
----------------------------------------------------------------------------
March 31, March 31,
2009 2008
$ $
----------------------------------------------------------------------------

Revenue
Sales and operating revenues 160,840,555 191,372,275
Interest 76,061 316,528
Other 745,711 725,294
----------------------------------------------------------------------------
161,662,327 192,414,097
----------------------------------------------------------------------------

Expenses
Cost of sales and operating expenses 136,410,715 176,983,684
Administrative and general expenses 7,162,792 5,312,749
Derivative (gain)/loss (1,276,710) 1,618,425
Legal and professional fees 1,240,686 2,107,231
Exploration costs, excluding exploration
impairment (note 11) 216,046 (237,268)
Exploration impairment (note 11) - 25,331
Short term borrowing costs 1,064,795 1,557,044
Long term borrowing costs 3,571,146 4,401,854
Depreciation and amortization 3,380,575 3,484,758
Gain on sale of oil and gas properties (note
11) - -
Foreign exchange loss/(gain) 6,389,914 (1,300,177)
----------------------------------------------------------------------------
158,159,959 193,953,631
----------------------------------------------------------------------------

Income/(loss) before income taxes and
non-controlling interest 3,502,368 (1,539,534)

Income taxes
Current 688,116 (842,330)
Future (1,544,934) (15,683)
----------------------------------------------------------------------------
(856,818) (858,013)
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Income/(loss) before non-controlling interest 2,645,550 (2,397,547)
----------------------------------------------------------------------------

Non-controlling interest (note 20) (2,070) 185

----------------------------------------------------------------------------
Net income/(loss) 2,643,480 (2,397,362)
----------------------------------------------------------------------------

Basic income/(loss) per share (note 26) 0.07 (0.08)
Diluted income/(loss) per share (note 26) 0.07 (0.08)
Weighted average number of common shares
outstanding
Basic 35,780,538 31,026,356
Basic and diluted 36,012,528 31,026,356
----------------------------------------------------------------------------



Consolidated Statement of Cash Flows

Quarter ended
----------------------------------------------------------------------------
March 31, March 31,
2009 2008
$ $
----------------------------------------------------------------------------
Cash flows provided by (used in):

Operating activities
Net profit/(loss) 2,643,480 (2,397,362)
Adjustments for non-cash and non-operating
transactions
Non-controlling interest 2,070 (185)
Depreciation and amortization 3,380,575 3,484,758
Future income tax asset 329,457 (28,810)
Gain on sale of plant and equipment - (16,250)
Gain on sale of exploration assets - -
Amortization of discount on debentures
liability 727,773 -
Amortization of deferred financing costs 55,986 84,108
Gain on unsettled hedge contracts 75,100 -
Increase/(decrease) due to timing difference
between derivatives recognised and settled 15,339,450 (269,975)
Stock compensation expense 1,424,453 705,247
Inventory revaluation 205,546 -
Non-cash interest on secured loan facility - 1,584,039
Non-cash interest settlement on preference
shares - -
Non-cash interest settlement on debentures - -
Oil and gas properties expensed 216,046 (211,937)
Loss/(gain) on proportionate consolidation of
LNG project 724,357 (236,666)
Unrealized foreign exchange gain (1,933,145) (1,300,177)
Change in operating working capital
Increase in trade receivables (1,815,112) (24,271,409)
Increase in unrealised hedge gains 10,277,125 -
Decrease in other assets and prepaid expenses 1,020,687 2,654,349
Decrease/(increase) in inventories 6,714,079 (47,326,665)
(Decrease)/Increase in accounts payable,
accrued liabilities and income tax payable (20,801,421) 77,652,080
----------------------------------------------------------------------------
Net cash from operating activities 18,586,506 10,105,145
----------------------------------------------------------------------------

Investing activities
Expenditure on oil and gas properties (23,620,864) (14,187,187)
Proceeds from IPI cash calls 1,972,250 4,340,000
Expenditure on plant and equipment 274,719 (1,004,041)
Proceeds received on sale of assets - 312,500
Proceeds received on sale of exploration assets - -
Decrease in restricted cash held as security on
borrowings 8,903,416 2,019,830
Change in non-cash working capital
Increase in accounts payable and accrued
liabilities 5,148,486 2,490,282
----------------------------------------------------------------------------
Net cash (used in)/from investing activities (7,321,993) (6,028,616)
----------------------------------------------------------------------------

Financing activities
Repayments of secured loan - -
(Repayments of)/proceeds from bridging
facility, net of transaction costs - -
Proceeds from PNG LNG cash call - 2,626,500
Proceeds from Clarion Finanz for Elk option
agreement 3,577,288 -
Proceeds from Petromin for Elk participation
agreement 3,435,000 -
Repayments of working capital facility (25,471,855) (33,475,594)
Proceeds from issue of
common shares/conversion of debt, net of
transaction costs 868,801 -
-----------------------------------------------
Proceeds from issue of debentures, net of
transaction costs - -
----------------------------------------------------------------------------
Net cash used in financing activities (17,590,766) (30,849,094)
----------------------------------------------------------------------------

Decrease in cash and cash equivalents (6,326,253) (26,772,565)
Cash and cash equivalents, beginning of period 48,970,572 43,861,762
----------------------------------------------------------------------------
Cash and cash equivalents, end of period
(note 5) 42,644,319 17,089,197
----------------------------------------------------------------------------



Consolidated Statements of Shareholders' Equity

Quarter ended Year ended Quarter ended
----------------------------------------------------------------------------
March 31, December 31, March 31,
2009 2008 2008
$ $ $
----------------------------------------------------------------------------
Share capital

At beginning of period 373,904,356 259,324,133 259,324,133
Issue of capital stock
(note 21) 12,520,193 114,580,223 -
----------------------------------------------------------------------------
At end of period 386,424,549 373,904,356 259,324,133
----------------------------------------------------------------------------
Preference shares

At beginning of period - 6,842,688 6,842,688
Issue of preference shares
(note 22) - - -
Converted to common shares
(note 22) - (6,842,688) -
----------------------------------------------------------------------------
At end of period - - 6,842,688
----------------------------------------------------------------------------
8% subordinated debentures

At beginning of period 10,837,394 - -
Issue of debentures (note 23) - 13,036,434 -
Conversion to common shares
during the year - (2,199,040) -
----------------------------------------------------------------------------
At end of period 10,837,394 10,837,394 -
----------------------------------------------------------------------------
Contributed surplus

At beginning of period 15,621,767 10,337,548 10,337,548
Fair value of options
exercised transferred to share
capital (note 24) (401,393) (456,867) -
Stock compensation expense
(note 24) 1,424,453 5,741,086 705,247
----------------------------------------------------------------------------
At end of period 16,644,827 15,621,767 11,042,795
----------------------------------------------------------------------------
Warrants

At beginning of period
(note 25) 2,119,034 2,119,034 2,119,034
Movement for period - - -
----------------------------------------------------------------------------
At end of period 2,119,034 2,119,034 2,119,034
----------------------------------------------------------------------------
Accumulated Other Comprehensive
Income
Deferred hedge (loss)/gain
At beginning of period 18,012,500 - -
Deferred hedge movement for
period, net of tax (note 7) (5,908,775) 18,012,500 -
----------------------------------------------------------------------------
Deferred hedge gain at end of
period 12,103,725 18,012,500 -
----------------------------------------------------------------------------
Foreign currency translation
reserve
At beginning of period 9,685,806 6,025,019 6,025,019
Foreign currency translation
movement for period, net of tax (6,329,028) 3,660,787 1,209,104
----------------------------------------------------------------------------
Foreign currency translation
reserve at end of period 3,356,778 9,685,806 7,234,123
----------------------------------------------------------------------------
Accumulated other
comprehensive income at end of
period 15,460,503 27,698,306 7,234,123
----------------------------------------------------------------------------
Conversion options

At beginning of period 17,140,000 19,840,000 19,840,000
Movement for period (note 19) - (2,700,000) -
----------------------------------------------------------------------------
At end of period 17,140,000 17,140,000 19,840,000
----------------------------------------------------------------------------
Accumulated deficit

At beginning of period (220,186,930) (208,389,853) (208,389,853)
Net loss for period 2,643,480 (11,797,077) (2,397,362)
----------------------------------------------------------------------------
At end of period (217,543,450) (220,186,930) (210,787,215)
----------------------------------------------------------------------------
Shareholders' equity at end of
period 231,082,857 227,133,927 95,615,558
----------------------------------------------------------------------------
----------------------------------------------------------------------------
NON-GAAP EBITDA Reconciliation
Earnings before interest, taxes, depreciation and amortization, commonly referred to as EBITDA, represents our net income/(loss) plus total interest expense (excluding amortization of debt issuance costs), income tax expense, depreciation and amortization expense. EBITDA is used by us to analyze operating performance. EBITDA does not have a standardized meaning prescribed by United States or Canadian generally accepted accounting principles and, therefore, may not be comparable with the calculation of similar measures for other companies. The items excluded from EBITDA are significant in assessing our operating results. Therefore, EBITDA should not be considered in isolation or as an alternative to net earnings, operating profit, net cash provided from operating activities and other measures of financial performance prepared in accordance with GAAP. Further, EBITDA is not a measure of cash flow under GAAP and should not be considered as such. For reconciliation of EBITDA to the net income (loss) under GAAP, refer to the following table.
The following table reconciles net income (loss), a GAAP measure, to EBITDA, a non-GAAP measure for each of the last eight quarters.


----------------------------------------------------------------------------
Quarters
ended 2009 2008 2007
($ thou-
sands) Mar-31 Dec-31 Sep-30 Jun-30 Mar-31 Dec-31 Sep-30 Jun-30
----------------------------------------------------------------------------
Upstream (470) (2,483) 231 10,164 (1,135) (3,128) (5,015) (5,492)
Midstream -
Refining 14,747 (13,976) 17,516 16,329 5,724 9,589 (1,332) 3,775
Midstream -
Liquefac-
tion (2,360) (2,501) (1,570) (1,784) (1,636) (797) (4,104) (444)
Downstream 3,241 (7,244) 610 7,893 4,529 3,627 3,301 2,760
Corporate 3,052 226 764 (2,155) 1,796 2,145 6,248 3,329
Consoli-
dation
Entries (7,286) (2,866) (736) (3,092) (2,143) (4,540) (9,353) 1,630
----------------------------------------------------------------------------
Earnings
before
interest,
taxes,
deprecia-
tion
and
amortiza-
tion 10,924 (28,844) 16,815 27,355 7,135 6,896 (10,255) 5,558
----------------------------------------------------------------------------
Subtract:
----------------------------------------------------------------------------
Upstream (1,552) (1,345) (1,137) (841) (704) (474) (177) (178)
Midstream -
Refining (1,786) (2,771) (2,113) (2,263) (2,761) (4,397) (8,155) (2,156)
Midstream -
Lique-
faction (158) (65) (63) (60) (53) (53) (53) -
Downstream (1,142) (2,232) (885) (715) (1,005) (1,145) (3,320) 66
Corporate (2,325) (2,320) (2,484) (2,871) (3,091) (3,005) (2,870) (2,808)
Consoli-
dation
Entries 2,922 2,866 2,636 1,823 2,425 3,629 9,353 218
----------------------------------------------------------------------------
Interest
expense (4,041) (5,867) (4,046) (4,927) (5,189) (5,445) (5,222) (4,858)
----------------------------------------------------------------------------
Upstream - - - - - - - -
Midstream -
Refining - - - - - (44) 69 12
Midstream -
Liquefac-
tion (13) (12) (25) (49) (24) (13) - -
Downstream (485) 4,297 82 (3,213) (753) (1,112) 261 (32)
Corporate (359) (163) (21) (122) (81) (11) 212 (15)
Consoli-
dation
Entries (2) 4 (3) (2) 0 (1) 2 0
----------------------------------------------------------------------------
Income taxes
and non-
controlling
interest (859) 4,126 33 (3,386) (858) (1,181) 544 (35)
----------------------------------------------------------------------------
Upstream (112) (175) (134) (135) (154) (134) 299 (338)
Midstream -
Refining (2,611) (2,742) (2,742) (2,723) (2,761) (2,158) (2,781) (2,748)
Midstream -
Liquefac-
tion (21) (19) (19) (16) (15) (15) - -
Downstream (651) (722) (693) (582) (573) (700) (497) (552)
Corporate (18) (19) (18) (16) (15) (12) (12) (12)
Consoli-
dation
Entries 32 32 32 32 32 34 33 33
----------------------------------------------------------------------------
Depreciation
and
amorti-
sation (3,381) (3,645) (3,574) (3,440) (3,486) (2,985) (2,958) (3,617)
----------------------------------------------------------------------------
Upstream (2,134) (4,003) (1,039) 9,188 (1,993) (3,736) (4,893) (6,009)
Midstream -
Refining 10,349 (19,490) 12,660 11,345 201 2,990 (12,199) (1,117)
Midstream -
Liquefac-
tion (2,553) (2,596) (1,677) (1,910) (1,727) (878) (4,157) (444)
Downstream 964 (5,900) (886) 3,383 2,197 670 (254) 2,242
Corporate 350 (2,276) (1,759) (5,164) (1,390) (882) 3,578 494
Consoli-
dation
Entries (4,333) 35 1,929 (1,240) 314 (877) 34 1,881
----------------------------------------------------------------------------
Net profit
(loss) per
segment 2,643 (34,230) 9,228 15,602 (2,398) (2,713) (17,891) (2,953)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
COMPANY DESCRIPTION
InterOil Corporation is developing a vertically integrated energy business whose primary focus is Papua New Guinea and the surrounding region. InterOil's assets consist of petroleum licenses covering about 4.6 million acres, an oil refinery, and retail and commercial distribution facilities, all located in Papua New Guinea. In addition, InterOil is a shareholder in a joint venture established to construct an LNG plant on a site adjacent to InterOil's refinery in Port Moresby, Papua New Guinea.

InterOil's common shares trade on the NYSE in US dollars

Our Current Favorite: Manas Petroleum (OTCBB: MNAP)

Our latest newsletter can be seen at http://www.undiscoveredequities.com/newsletter_4_09.pdf. There is some great information on Manas petroleum here and why we think this company is set to really breakout in the short term. Here is some background on Manas:

Manas Petroleum is an international oil and gas company with primary focus on exploration and development in south-eastern Europe, Central Asia and South America.

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