InterOil said today its net profit for the quarter ended March 31, 2012 was $9.4 million compared with a net profit of $0.7 million for the same period in 2011, an improvement of $8.7 million.
First Quarter 2012 Highlights and Recent Developments
- As of April 6, 2012, InterOil drilled the Triceratops-2 well in Papua New Guinea through the entire carbonate interval to a total depth of 7,336 feet (2,236 meters). The acquisition of wireline logs was completed on April 14, 2012 and the testing program is ongoing. The logs and DST pressure data indicate two separate, carbonate reservoir intervals with separate pressure systems and potentially separate or stacked hydrocarbon pay. The upper reservoir interval contains gas and condensate which preliminary pressure data indicates is in communication with the gas and condensate tested 3.8 kilometers away in the Bwata-1 well. The deeper zone lies below a 264 feet (80.5 meter) thick marl and argillaceous limestone interval, likely an intra-formational seal, where an independent formation evaluation indicates potential liquid hydrocarbons. The presence of movable hydrocarbons in the lower reservoir interval, at this stage, has not been confirmed with testing. However, a small volume of light oil of condensate composition was recovered.
- Net profit for the quarter ended March 31, 2012 was $9.4 million. The operating segments of Corporate, Midstream Refining and Downstream collectively derived a net profit for the quarter of $28.6 million, while the investments in the development segments of Upstream and Midstream Liquefaction resulted in a net loss of $19.2 million.
- Subsequent to quarter end, InterOil signed a binding Heads of Agreement with Pacific Rubiales Energy to be able to earn a 10.0% net (12.9% gross) participating interest in PPL237, which includes the Triceratops structure. The transaction contemplates staged initial cash payments totaling $116.0 million, an additional carry of 25% of the costs of an agreed exploration work program, and a final resource payment. PRE has paid the initial $20 million of the staged cash payments. Definitive agreements are in the process of being finalized.
InterOil’s Chief Executive Officer Phil Mulacek commented, “We are pleased to report another successful quarter of profitability from our operating business. Additionally, we are excited to welcome Pacific Rubiales as partners in PPL 237, the company brings valuable expertise to our team.”
In regards to the ongoing LNG partnering process, Mr. Mulacek stated “We are continuing to work with our advisors to obtain a strategic partner. We have received conforming and non-conforming bids for the LNG partnering and sell down of an interest in the Elk and Antelope fields that we believe would be accretive to shareholders. We are now set to engage with a shortlist of significant LNG industry participants with a view to concluding discussions and entering into an agreement this quarter. The end result of the partnering process is envisioned to fully satisfy all the terms of the 2009 LNG Project Agreement.”
As to the Triceratops-2 well, Mr. Mulacek noted that, “Despite mechanical difficulties in obtaining a successful drill stem test from zones of interest in the lower hydrocarbon interval, we are very encouraged by gas and liquid hydrocarbon testing ongoing at the Triceratops-2 well. A plan is in place to evaluate the entire drilled interval and would likely include casing the entire interval and perforating zones of interest to obtain definitive results. Our prospect inventory is maturing and we anticipate that it will support our goal of a multi-year, multi-well exploration program. We believe that these achievements, combined with our strong balance sheet, support our continued growth and operational success.”
- InterOil Net Profit Climbs (USA) (mb50.wordpress.com)
By Andrew Stone
Twenty years ago, China had four diplomatic posts in the South Pacific.
For a newly elected head of government from the region, the first foreign port of call is likely to be the Great Hall of the People, and not Canberra, Washington or the Beehive.
Does this matter? Perhaps less so now that tensions between Taiwan and China have cooled. Previously intense rivalry between the two drove chequebook diplomacy.
Taipei and Beijing spent years wooing small Pacific nations to sign up to their particular China brand. Taiwan got six forum countries on board, but a truce has existed since the election of President Ma Ying-Jeou in 2008.
But even as the political courtship has softened, money in the form of soft loans and grants continues to pour into the region. Beijing has put up cash to lift trade, build schools and bridges, train senior military officers and in the case of Fiji, fence the president’s palace.
China is one of the region’s top three aid donors, after Australia and the US. A study by the Sydney based-Lowy Institute puts its 2009 aid to its recognised forum members at US$209 million (NZ$267m). Australia, the top regional donor, gave US$650 million to the 14 forum countries. New Zealand gave about US$100 million.
United States Secretary of State Hillary Clinton thinks the West needs to be awake to China in the region. Last month she railed against cuts sought by Republicans to the US foreign aid programme, telling senators: “Let’s put aside the humanitarian, do-good side of what we believe in. Let’s just talk straight realpolitik. We are in competition with China.”
She noted a “huge energy find” in Papua New Guinea by the oil giant Exxon Mobil, which has begun drilling for natural gas. Clinton said China was jockeying for influence in the region and seeing how it could “come in behind us and come in under us”.
She claimed China had taken the leaders of small Pacific nations to Beijing and “wined them and dined them”. “We have a lot of support in the Pacific Ocean region. A lot of those small countries have voted with us in the United Nations, they are stalwart American allies, they embrace our values.”
Foreign policy expert Associate Professor Stephen Hoadley of Auckland University agrees.
“I would call the impact of China mildly disruptive,” he says.
Beijing did not consult countries with a history in the region, and its investments could seem out of kilter with small island needs.
Adds Hoadley: “They can be a little bit corrupt, they often engage in under-the-table favours. That’s why the leaders in the Pacific Islands are very happy to have these shonky projects, they get VIP trips to Beijing, they may get other things though that is unconfirmed.”
He says the Chinese Government was not necessarily culpable, though it might be negligent in that it sub-contracted work to companies which used inferior supplies, cut corners, ignored the local workforce and left behind projects of dubious value.
“A lot more consultation would be welcome,” suggests Hoadley.
But does China have any discernable workplan to displace the traditional Western players in the region for its own national security?
China has been part of the region for more than 150 years. Thousands of indentured labourers worked in plantations and phosphate mines in the 19th century, becoming the ancestors of the small but often successful Chinese communities in most Pacific Island states.
New Zealand Foreign Minister Murray McCully does not see any “unwholesome motives” in China’s Pacific strategy. He argues the equation is quite simple. Pacific states have minerals, timber and fish – and China is a hungry buyer.
He told a high level gathering of China watchers last week in Wellington: “China is simply doing in our neighbourhood what it is doing in every neighbourhood around the globe: undertaking a level of engagement designed to secure access to resources on a scale that will meet its future needs, and establishing a presence through which it can make its other interests clear.”
But McCully wants Beijing – and Taipei – to be more transparent with the money they shower on island states and has urged China to ensure its loans do not burden small nations with debt.
Political scientist Jian Yang, who has book coming out about China’s strategy in the Pacific, expects Beijing’s influence in the region to grow, along with other major players including Japan, India and the US.
New Zealand, he argues, has historic, cultural and economic ties to the region which are not easily replaced.
“What is crucial is for New Zealand to continue its dialogue with China and the other powers.”
So far, concludes Yang, New Zealand has done well.
10:01 March 28, 2011
Analysis – By Rowan Callick in Port Moresby
Papua New Guinea’s founding father and Prime Minister Sir Michael Somare, aged 75 next month, was found guilty last Monday of 13 charges of misconduct and on Thursday was suspended from office for 14 days.
Until recently, this would have caused a sensation that would have virtually stopped the nation.
That it hasn’t demonstrates how rapidly PNG has changed. It is awash with cash, and corruption. It is wired everywhere, mobiles hanging off every ear, in a way unthinkable under the old government telecommunications corporation.
And its population is already larger than New Zealand’s and heading to overtake Australia this century.
The Leadership Tribunal, chaired by Australian judge Roger Gyles, found Somare guilty of filing incomplete or late returns on his assets and business dealings to the Ombudsman Commission annually as required.
It is Somare’s skills as a leader and a player for 42 years in the PNG political game, which is at once ornate and brutal, that have held together his ruling coalition for almost 10 years.
But this long-anticipated court case has become more a coda to the passing of the old independence era than a decisive central movement of a fresh symphony.
On the cusp
For regardless of Somare’s personal fate, PNG is on the cusp of an extraordinary economic, social and political transition – one the country has not seen since gaining independence from Australia in 1975.
Where this change will take it remains utterly uncertain. But that it is undergoing a convulsion is clear.
A new generation is on the move, born since independence and unburdened by sentiment towards the past.
The election due mid next year, for which the maneuvering is well under way, will indicate who is likely to win or lose from this transition. Usually, more than half the MPs lose their seats, and this time Somare has said he may decide to stand down at last, clearing the way for generational change.
Within 30 years, PNG’s population may start to overtake that of Australia as it stands today. Its capital Port Moresby is already approaching one million and appears set to be bigger than Auckland and Brisbane before long.
Its economy is likely to grow faster than China’s this year, more than 8 percent. Almost every leading resource company in the world is scrabbling over prospects there.
Rio Tinto is back after the Bougainville civil war. BHP Billiton is back after the debacle of its withdrawal from Ok Tedi. The first liquefied natural gas project, costing $16.5 billion, is just beginning four frenetic years of construction in the Southern Highlands and along a pipeline route down to the liquefaction plant in Port Moresby.
Massive mines are being developed elsewhere.
Port Moresby’s burgeoning backstreet lodges are bursting with landowners from gas fields and mine sites desperately seeking their fortunes from government and corporations, from anyone who may be persuaded to compensate them amply for their lost lands.
And life is being transformed especially rapidly by the wild rush into the mobile phone era.
Irish-based company Digicel, which specializes in telecommunications for developing countries, has launched a remarkably cheap service and backed it up by building towers all over PNG, giving its signals a nationwide reach despite its mountainous interior and myriad islands.
Street side betel nut sellers and people offering single cigarettes for 25c now also sell SIM cards.
In bustling Tabari Place in Boroko in the capital, traders have set up booths where they sell mobiles and all the associated paraphernalia, the deals usually being conducted entirely in Tok Pisin, while in the background young preachers try to attract the attention of the milling crowds.
Downtown outside the US embassy, where security guards hold dogs on leashes and parking is restricted to diplomatic staff, people wander the pavements selling China-pirated DVDs of American movies for $4 a time, as well as memory cards and flash drives.
Village phone talk
Papua New Guineans are able to contact relatives back in their villages by phone for the first time. The arrival of 3G has enabled people to go online throughout the country, accelerating the attractions of Facebook, which has already attracted 35,000 users.
Groups of young social and environmental activists — such as Act Now, Patriots, and The Voice, are building their numbers rapidly via such new technology, and also propelled by a growing rejection of the old politics of PNG: the parliamentary numbers game and the domination of money politics.
A “consultancy” firm run by one lobbyist from Enga province in the Highlands, the populous, high-energy but sometimes unruly region that is coming to dominate much of the country’s business and politics, is named, with breathtaking frankness, Money Talks Ltd.
A massive hoarding at the start of the road to the parliament carries the unadorned biblical text of Proverbs 29:2: “When the righteous are in authority the people rejoice. But when the wicked rule, the people suffer.”
Chief Ombudsman Chronox Manek … survived a 2009 assassination attempt. Photo: David Robie/PMC
Chronox Manek is among those sufferers. By rapid evasive action with his car, he only narrowly escaped an assassination attempt 15 months ago by gunmen outside his home but still requires treatment for his left arm where one of the bullets hit home.
He is the Chief Ombudsman, whose most contentious role is to police the Leadership Code that is the prime tool for combating corruption in PNG.
The foyer to the Ombudsman Commission’s office displays posters with cartoons. One shows a sleek politician urging a group of peers: “All those in favor of the construction of this hotel, say aye.” A thought bubble is emerging from his head at the same time: “On my block of land!”
Illegal ‘pay back’ bribes
Another has an Asian figure saying to an official: “I know you can’t accept a bribe. It’s illegal. But this is just a loan. Pay me back whenever you can.”
The stakes have never been higher in PNG, and thus the institutions established at independence by Australia have never been under such siege, especially the legal system.
Manek, who for many years was the top public prosecutor and has been the leading public defender, and has a master’s in law from the University of Melbourne, only pursues a limited number of targets at a time.
It is thus all the more extraordinary that the police have failed to make any charges over this assassination attempt on one of the country’s top constitutional office holders.
Manek says: “I’m left without information about what’s going on” over the case. “But it’s happened, and I’m moving on.”
He believes corruption began its insidious undermining of the country’s governance in the early 1980s, when PNG opened up to the logging industry.
“Our world was no longer an Australian-focused one but a much bigger world”, in this case, that of Asian timber corporations.
‘No sweat, no get’
Manek’s favourite motto is “no sweat, no get”.
He believes that has been undermined by a growing culture of taking short cuts to getting rich. And he is keen to educate the public that it is its right to insist that governments deliver citizens the services they are paying for.
“I want to educate the leadership that the public is right,” Manek says.
Another figure who is urging on this shift to a new form of leadership in PNG is Powes Parkop, a young former journalist, academic and human rights lawyer who is the Governor of Port Moresby.
He has gained a reputation for cleaning up the city and beautifying it, for new fountains, for Christmas lights, for his organizing of family events in the evenings to “reclaim the night” from the rascal gangs, with some positive indications: young hoodlums being chased away from evening big-screen relaying of rugby league games.
“We need to change the political culture and quickly,” Parkop says. “It has gone bad in PNG and we must alter that so that many other changes can happen, too. Too many people have effectively been disenfranchised, socially and economically.
“People have migrated here to Moresby looking for the land of milk and honey, and have found instead a place that is not so rosy.”
Sam Basil is another new-generation MP, a young businessman from Bulolo in Morobe province, scene of an early gold rush 80 years ago and where top global mining houses are building or planning to build world-sized mines.
Basil uses Facebook extensively in communicating his views, with his supporters and others.
He says he is concentrating much of his efforts on helping give the public accounts committee of the parliament the teeth it needs.
Paul Barker, executive director of the private-sector-funded Institute of National Affairs, says it’s crucial that the government ensures that benefits flow broadly from the new resource projects, especially from the ExxonMobil led gas deal.
“If the government doesn’t get its act together and leaders cream off the profits, then PNG will get only the downside, not the upside, from such projects,” he says. “As in the Arab world today, the people in their 30s are the talking generation. But the younger generation below them have no special respect for what’s happened before.”
Australia’s role as PNG enters this difficult transition remains substantially shaped by its aid program, which comprises about 14 per cent of the national budget. It is becoming more focused and more practical, advice giving way to implementation.
Last year AusAID built 400 classrooms, provided 500,000 textbooks and trained 9000 teachers. The aim is to raise this to 800,000 textbooks next year. They will be delivered via an international procurement agency, which is also being deployed for the health project that is following these education successes, aiming to distribute much-needed basic medicines to every aid post and clinic, however remote.
Alternative paths towards PNG’s development are reflected in the Port Moresby landscape.
Structures new at independence in 1975, such as the “pineapple building” where prime ministers once had their offices and the former main government building nearby, have been abandoned for sheer want of maintenance, today decaying skeletons.
Nearby, Malaysian logging giant Rimbunan Hijau — “forever green” — has built a massive mall, the Vision Centre. It is still largely untenanted but is likely to fill steadily, including with a new cinema complex that will be Port Moresby’s first since its old cinemas were shut as crime soared.
There is an intensity in the humid air, a gathering pace of change, as individuals and the nation as a whole dices for the prosperous future that has so far evaded them.
( Original Article )