INTL PETR ADR 
By
NSX Announcement
31 October 2013
ABN: 76 118 108 615
Corporate Office
32 Harrogate Street
West Leederville, WA 6007
P.O. Box 1385
West Leederville, WA 6901
T +61 8 9388 0744
F +61 8 9382 1411
E admin@intpet.com.au
W www.internationalpetroleum.com.au
International Petroleum Limited (NSX: IOP) ("International Petroleum" or the "Company"), an oil and gas exploration company with assets in Russia, Kazakhstan and Niger, is pleased to present its quarterly activities report for the quarter ended 30 September 2013.
HIGHLIGHTS• US$122,000 cash at bank at 30 September 2013
• Sale of Russian Assets and Kazakhstan Assets for US$60 million cash consideration
• Potential strategic merger with Range Resources Limited
• US$15 million loan from Range Resources Limited
• NSX suspension from official quotation
• Resignation of non-executive directors
CORPORATE Sale of Russian Assets and Kazakhstan Assets for US$60 million cash consideration
On 14 October 2013, the Company announced that it had entered into two binding conditional terms
sheets (individually "Terms Sheet" or together "Terms Sheets") with an unrelated company incorporated in
Hong Kong ("Buyer") to sell its assets in Kazakhstan ("Kazakhstan Assets") and Russia ("Russian Assets")
for US$60 million.
The sale of the Russian Assets is expected to complete by 30 November 2013 and the sale of the
Kazakhstan Assets is expected to complete by 30 April 2014 (on receipt of Government Approval).
The Company will apply the funds received from the transactions towards payment of creditors and loans, general working capital and future exploration expenditure on its Niger licence blocks.
The Company has sent a notice of general meeting to be held on 15 November 2013 to seek the approval of its shareholders for the sales of the Kazakhstan Assets and Russian Assets.
31 October 2013 - 2 -
Potential strategic merger with Range Resources Limited
On 24 April 2013, Range Resources Limited (ASX: RRS, AIM: RRL) ("Range") announced ("RRS Announcement") its intention to undertake a strategic merger to acquire all of the issued shares in International Petroleum ("Merger") by offering three Range shares for every two International Petroleum shares ("Offer").
On 17 June 2013, Range announced that the Offer is likely to be conducted as an off-market takeover offer by Range to International Petroleum shareholders.
However, on 14 October 2013, Range announced that it "will now identify and consider a range of corporate alternatives to the original merger proposal, which may or may not include a merger of the two companies - albeit on terms to be renegotiated" and the Company will continue to negotiate with Range.
During April 2013, Range agreed to advance a total of US$15 million to International Petroleum by way of a secured loan ("Loan").
To date, Range has advanced a total of approximately US$8 million to International Petroleum by way of the Loan and Range has indicated that, once it receives further cash from some transactions that are nearing completion, it would be able to advance further amounts under the Loan to the Company.
Amounts drawn under the Loan have been, and will continue to be, used to pay the Company's trade creditors and meet working capital requirements and will attract interest at the rate of 8% per annum and will be repayable by the earlier to occur of (a) 30 April 2014 and (b) in the event of a default by International Petroleum, five business days after the date on which International Petroleum receives a notice from Range requesting repayment.
Since 27 March 2013, the Company's shares have been suspended from trading on the NSX market, at the Company's request, and suspension from trading is not expected to be lifted until the sale of the Russian Assets has been completed and the Company has filed its half year report for the 6 months ended 30 June
2013.
During August 2013, Mr Antonio (Tony) Antoniou, Mr Pierre Godec and Mr Vladimir Mangazeev resigned as non-executive directors of the Company. Given that, in order to minimise cash outflows, the Company had temporarily ceased its oil and gas exploration and production activities and that it was in discussions with a third party concerning a potential sale of its Russian assets for cash consideration, the three non-executive directors resigned in order to save costs and reflect that their industry expertise was no longer being utilised by the Company.
Extended repayment dates of convertible loans
The Company has extended the repayment date of three of its convertible loans to the earlier of: (a) 31 December 2013,
(b) the date on which an event of default occurs; and
(c) any other date agreed between the parties (the "Repayment Date").
The three convertible loans are owed by the Company to Varesona Participation Corporation, an entity controlled by Frank Timis, a non-executive director and have the following terms:
31 October 2013 - 3 -
1) Loan agreement dated 6 August 2012 - amount borrowed US$2,000,000 - interest rate of 5% per annum - originally repayable by the Company 12 months from the date of the agreement. If the amount borrowed and interest owed (together the "Amount Outstanding") is not repaid by 31
December 2013, the Amount Outstanding will be converted, subject to the receipt of all necessary shareholder approvals, into shares at a deemed issue price equal to A$0.15 per share.
2) Loan agreement dated 14 September 2012 - amount borrowed US$2,000,000 - interest rate of 5% per annum - originally repayable by the Company 12 months from the date of the agreement. If the Amount Outstanding is not repaid by the Repayment Date, the Amount Outstanding will be converted, subject to the receipt of all necessary shareholder approvals, into shares at a deemed issue price equal to A$0.15 per share.
3) Loan agreement dated 16 October 2012 - amount borrowed US$2,000,000 - interest rate of 5% per annum - originally repayable by the Company 12 months from the date of the agreement. If the Amount Outstanding is not repaid by the Repayment Date, the Amount Outstanding will be converted, subject to the receipt of all necessary shareholder approvals, into shares at a deemed issue price equal to A$0.15 per share.
If all necessary shareholder approvals for the conversion of the Amount Outstanding into shares are not obtained, the Company must satisfy the Amount Outstanding in cash and not shares. To allow the Company the future flexibility to determine whether to satisfy the Amount Outstanding in cash or shares, the Company plans to seek all necessary shareholder approvals for the conversion of the Amount Outstanding into shares prior to the Repayment Date.
Yours faithfully
Tony Sage
Non-Executive Chairman
31 October 2013 - 4 -
For further information, please contact:
Tony Sage Non-Executive Chairman International Petroleum Limited Ph: +61 8 9388 0744 | Chris Hopkinson Chief Executive Officer International Petroleum Limited Ph: +44 20 3435 7676 | Claire Tolcon Company Secretary International Petroleum Limited Ph: +61 8 9388 0744 |
Eloise von Puttkammer Investor Relations International Petroleum Limited Ph: +61 8 9388 0744 |
International Petroleum is an oil and gas exploration and production company. The Company is listed on the National Stock Exchange of Australia (NSX: IOP).
The Company owns:
1. a 100% equity interest in a licence over the Zapadno-Novomolodezhny field for geological study of subsoil, prospecting and extraction of oil and gas in the Khanty-Mansiysk Autonomous Region in Western Siberia, the largest oil-producing region of Russia (the "Zapadno- NovomolodezhnyProject").
2. a 100% equity interest in a licence over the Yuzhno-Sardakovsky field for geological study of subsoil, prospecting and extraction of oil and gas in the Khanty-Mansiysk Autonomous Region in Western Siberia (the "Yuzhno-Sardakovsky Project").
3. a 100% equity interest in a licence over the Yanchinsky block for geological study of subsoil and prospecting for oil and gas in the Khanty-Mansiysk Autonomous Region in Western Siberia (the "Yanchinsky Project").
4. a 100% equity interest in two production licences for the Vostochno-Kamskoye oilfield and the Yanlotskoye oilfield, covering a total area of 161 km², and in the exploration rights to four blocks, covering a total area of 1,467 km², located in the Khanty-Mansiysk Autonomous Region in Western Siberia (the "Krasnoleninsky Project").
5. a 75% equity interest in an exploration licence in the Tomsk region of Western Siberia (the "Tomsk
6. a 50% interest in an early stage project covering 24,649 km2 in eastern Kazakhstan (the "Alakol
Project"), which borders the western boundary of the People's Republic of China.7. a 100% interest in four production sharing contracts and four Exclusive Exploration Authorisations relating to four blocks in the Republic of Niger known as Manga 1, Manga 2, Aborak and Ténéré Ouest (the "Niger Project").
Quarterly ReportName of entity
INTERNATIONAL PETROLEUM LIMITEDNSX Quarterly Report
ABN Quarter ended ("current quarter")
76 118 108 615 30 September 2013
Consolidated statement of cash flowsCash flows related to operating activities
1.1 Receipts from customers
1.2 Payments for
(a) staff costs
(b) advertising and marketing (c) research and development (d) leased assets
(e) other working capital
1.3 Dividends received
1.4 Interest and other items of a similar nature received
1.5 Income taxes paid
1.6 Other (provide details if material) (a) business development
Net operating cash flows
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NSX Quarterly Report
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NSX Quarterly Report
Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entitiesCurrent quarter
$US'000
1.24 | Aggregate amount of payments to the parties included in item 1.2 | - |
1.25 | Aggregate amount of loans to the parties included in item 1.11 | - |
1.26 | Explanation necessary for an understanding of the transactions |
2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
In the previous quarter the Company acquired the remaining 25% interest in its subsidiary, Souville Investments Limited, the indirect holder of the group's oil exploration interests in Krasnoleninsky, Russia. Payment of the US$4,381,562 cash consideration will result in the discharge of an existing debt due to the vendor with a current carrying value of US$13.9m.
2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest
N/A
Financing facilities availableAdd notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).
3.1 Loan facilities
3.2 Credit standby arrangements
1 Excluding loan facilities drawn down.
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NSX Quarterly Report
Reconciliation of cashReconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.
Acquisitions and disposals of business entities5.1 Name of entity
5.2 Place of incorporation or registration
5.3 Consideration for acquisition or disposal
5.4 Total net assets
5.5 Nature of business
Compliance statement
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to NSX.
2 This statement gives a true and fair view of the matters disclosed.
Print name: Claire Tolcon Date: 31 October 2013
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NotesNSX Quarterly Report
1. The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
2. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.
• 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss
• 9.2 - itemised disclosure relating to acquisitions
• 9.4 - itemised disclosure relating to disposals
• 12.1(a) - policy for classification of cash items
• 12.3 - disclosure of restrictions on use of cash
• 13.1 - comparative information
3. Accounting Standards. NSX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
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