According to its 2007 financial report, InterOil had a net loss last year of US$28.9 million and also has overall contractual obligations of $US306.7 million due over the next five years.
This total takes into account that the company's LNG venture partner, Merrill Lynch, said it would replace its $US130 million two-year bridging loan facility to InterOil - due in May - with long-term secured loans and warrants.
In its financial report, InterOil said it could not assure that its business would generate cash flow from operations or that future borrowings would be available to it in an amount sufficient to pay its maturing indebtedness.
"We may need to refinance all or a portion of this debt, or to secure new financing before maturity," InterOil said.
"This, to some extent, is subject to general economic, financial, legislative and regulatory factors and other factors that are beyond our control.
"We cannot be sure that we will be able to obtain the refinancing or new financing on reasonable terms or at all."
To maintain its ownership in the joint venture for the LNG project, InterOil has estimated it would need an additional equity contribution of around $US400 million for its share of the LNG facility construction costs.
Meanwhile, the Overseas Private Investment Corporation (OPIC) has agreed to defer InterOil's principal loan payments until 2015.
OPIC provided InterOil with a loan of $US85 million secured over the assets of InterOil's oil refinery in 2001.
InterOil's total contractual obligations - due in the next 12 months - are $US141.16 million and an extra $US111.88 million is due by the end of the following 12 months.
The latter amount includes an indirect participation interest of $US96 million, where the holders can possibly convert their interests into a joint venture interest or shares in InterOil.
Further complications may arise from the PNG Government's examination of the Import Price Parity (IPP) system, which is expected to complete a revised IPP formula after an independent review.
InterOil said it might not be successful in negotiating a favourable price for selling refined product in PNG which, "if not revised, may reduce our profit and cause us to cease operating the refinery".
For the second half of last year the refinery sold an average of 12,000 barrels per day, well under its nominal capacity of 32,500bpd.
This may be partly due to the company's inability to export gasoline or middle distillates in 2007, due to the tightened product quality specifications in the Australian market.
Currently the refinery provides about two-thirds of the country's needs while InterOil said its competitor, ExxonMobil, controls about 25% of PNG's retail market.
InterOil acknowledged that major oil and gas companies such as ExxonMobil have greater resources and "could expand much more rapidly in this market than we can".
Despite a current projection for the completion of its LNG plant in 2012, which will commercialise the gas discovered by its Elk-1 well, the Elk-2 well - 4.7km north of Elk-1 - has had no commercial oil or gas flows in drill stem testing.
The Elk-4 well is being drilled 1.5km north of Elk-1. Plans have been made to drill Antelope-1, 4km south of Elk-1 on a separate fault structure.
In November and December last year InterOil raised $US23.5 million through the private placement of more than 1 million shares.
