With InterOil suffering from recurring losses and cash costs from its operations, PWC's report stated that InterOil had a working deficiency of $US49.9 million (K136.61 million) due to the classification of the fully-drawn secured bridging facility of $US130 million as a current liability.

"This raises substantial doubt about the company's ability to continue as a going concern," PWC said in its report, which was quoted in the Post Courier newspaper.

The bridge financing with Merrill Lynch and Clarion Finanz is due for repayment on May 3, with InterOil planning to refinance this debt before the deadline.

InterOil is also reviewing a proposal from the two financiers to renew the bridging facility.

InterOil president Bill Jasper told the Post Courier the company was negotiating with major international finance houses to meet short and mid-term cash operational requirements.

He said the financial community understands InterOil is a relatively young company and continuously needs new capital to become established in the market.

"That is why we have continued to receive strong support from bankers like Merrill Lynch and Clarion Finanz," he said.

"If there was any doubt about our potential or the future of our endeavours we would not have been the beneficiaries of such support."

Jasper said InterOil's financial performance was constrained by a pricing formula that did not reflect the realities of the international crude oil market.

InterOil recently recorded a $US28.9 million loss for 2007 with a fourth quarter loss of $C2.7 million.