Report of Foreign Issuer (6-k)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO

RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2015

Commission File Number: 001-32179

INTEROIL CORPORATION

(Exact name of registrant as specified in its charter)

YUKON, CANADA

(Province or other jurisdiction of incorporation or organization)

163 PENANG ROAD

#06-02 WINSLAND HOUSE II

SINGAPORE 238463

(Address of principal executive offices)

Registrant’s telephone number, including area code: +65 6507-0222

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ¨ Form 40-F þ

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	INTEROIL CORPORATION

	By:	/s/ Michael Hession
		Michael Hession
		Chief Executive Officer

	Date: May 12, 2015

INTEROIL CORPORATION

FORM 6-K FOR THE MONTH OF MAY 2015

Exhibit Index

Management’s Discussion and Analysis for the quarter ended March 31, 2015.

Unaudited Condensed Consolidated Interim Financial Statements for the quarter ended March 31, 2015 and 2014.

Exhibit 99.1

InterOil Corporation

Management

Discussion and Analysis

For the quarter ended March 31, 2015

May 12, 2015

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS	2
ABBREVIATIONS AND EQUIVALENCIES	3
CONVERSION	3
OIL AND GAS DISCLOSURES	4
GLOSSARY OF TERMS	4
INTRODUCTION	6
BUSINESS STRATEGY	6
OPERATIONAL HIGHLIGHTS	7
SELECTED FINANCIAL INFORMATION AND HIGHLIGHTS	9
DISCOUNTINUED OPERATIONS	14
LIQUIDITY AND CAPITAL RESOURCES	14
RISK FACTORS	17
CRITICAL ACCOUNTING ESTIMATES	18
NEW ACCOUNTING STANDARDS	18
NON-GAAP MEASURES AND RECONCILIATION	18
PUBLIC SECURITIES FILINGS	19
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING	19

This MD&A (as defined herein) should be read in conjunction with our Condensed Consolidated Interim Financial Statements (as defined herein) and accompanying notes, the Consolidated Financial Statements (as defined herein) and 2014 AIF (as defined herein). This MD&A was prepared by management and provides a review of our performance for the quarter ended March 31, 2015, and of our financial condition and future prospects.

Our financial statements and the financial information contained in this MD&A have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board applicable to the preparation of financial statements and are presented in United States dollars (“USD” or “$”) unless otherwise specified.

In this MD&A, references to “we,” “us,” “our,” “the Company,” and “InterOil” refer to InterOil Corporation or InterOil Corporation and its subsidiaries as the context requires. Information is presented in this MD&A as at March 31, 2015 and for the quarter ended March 31, 2015 unless otherwise specified. A listing of specific defined terms can be found in the “Glossary of Terms” section of this MD&A.

Management Discussion and Analysis INTEROIL CORPORATION 1

FORWARD-LOOKING STATEMENTS

This MD&A contains “forward-looking statements” as defined in U.S. federal and Canadian securities laws. Such statements are generally identifiable by the terminology used such as “may,” “plans,” “believes,” “expects,” “anticipates,” “intends,” “estimates,” “forecasts,” “budgets,” “targets” or other similar wording suggesting future outcomes or statements regarding an outlook. We have based these forward-looking statements on our current expectations and projections about future events. All statements, other than statements of historical fact, included in or incorporated by reference in this MD&A are forward-looking statements.

Forward-looking statements include, without limitation, statements regarding our business strategies and plans; plans for and anticipated timing of our exploration and appraisal (including drilling plans) and other business activities and results therefrom; anticipated timing of certain well testing and resource certifications under the Total SSA (as defined herein); characteristics of our properties; construction and development of a proposed liquefaction plant in Papua New Guinea; the timing and cost of such construction and development; commercialization and monetization of any resources; whether sufficient resources will be established; the likelihood of successful exploration for gas and gas condensate or other hydrocarbons; cash flows from operations; sources of capital and its sufficiency; operating costs; contingent liabilities; environmental matters; and plans and objectives for future operations; and timing, maturity and amount of future capital and other expenditures.

Many risks and uncertainties may affect matters addressed in these forward-looking statements, including but not limited to:

the uncertainty associated with the availability, terms and deployment of capital;

our ability to obtain and maintain necessary permits, concessions, licenses and approvals from relevant State (as defined herein) authorities to develop our gas and condensate resources within reasonable periods and on reasonable terms or at all;

inherent uncertainty of oil and gas exploration;

we will be transitioning the operatorship of PRL 15 (as defined here in) to Total (as defined herein) in accordance with the provisions of the JVOA (as defined herein);

the difficulties with recruitment and retention of qualified personnel;

the political, legal and economic risks in Papua New Guinea;

landowner claims and disruption;

compliance with and changes in Papua New Guinean laws and regulations, including environmental laws;

the exploration and production businesses are competitive;

the inherent limitations in all control systems, and misstatements due to errors that may occur and not be detected;

exposure to certain uninsured risks stemming from our operations;

contractual defaults;

weather conditions and unforeseen operating hazards;

compliance with environmental and other government regulations could be costly and could negatively impact our business;

general economic conditions, including further economic downturn, availability of credit, European sovereign debt-credit crisis, downgrading of United States government debt and the decline in commodity prices;

risk of legal action against us; and

law enforcement difficulties.

Forward-looking statements and information are based on our current beliefs as well as assumptions made by, and information currently available to us concerning anticipated financial conditions and performance, business prospects, strategies, regulatory developments, the ability to attract joint venture partners, future hydrocarbon commodity prices, the ability to secure adequate capital funding, the ability to obtain equipment and qualified personnel in a timely manner to develop resources, the ability to obtain financing on acceptable terms, and the ability to develop reserves and production through development and exploration activities.

Management Discussion and Analysis INTEROIL CORPORATION 2

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate, and, therefore, we cannot assure you that the forward-looking statements will eventuate.

In light of the significant uncertainties inherent in our forward-looking statements, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved.

Some of these assumptions and other risks and uncertainties that could cause actual results to differ materially from such forward-looking statements are more fully described under the heading “Risk Factors” in our 2014 AIF.

Further, forward-looking statements contained in this MD&A are made as of the date hereof and, except as required by applicable law, we will not update publicly or revise any of these forward-looking statements. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement.

ABBREVIATIONS AND EQUIVALENCIES

Abbreviations

Crude Oil and Natural Gas Liquids		Natural Gas
bbl	one barrel equalling 34.972 Imperial gallons or 42 U.S. gallons	btu	British Thermal Units
bblspd	barrels per day	mcf	thousand standard cubic feet
boe⁽¹⁾	barrels of oil equivalent	mcfpd	thousand standard cubic feet per day
boepd	barrels of oil equivalent per day	mmbtu	million British Thermal Units
bpsd	barrels per stream day	mmbtupd	million British Thermal Units per day
mboe	thousand barrels of oil equivalent	mmcf	million standard cubic feet
mbbl	thousand barrels	mmcfpd	million standard cubic feet per day
MMbbls	million barrels	mtpa	million tonnes per annum
MMboe	million barrels of oil equivalent	scfpd	standard cubic feet per day
WTI	West Texas Intermediate crude oil delivered at Cushing, Oklahoma	tcfe	trillion standard cubic feet equivalent
bscf	billion standard cubic feet	psi	pounds per square inch

Note:

(1)

All calculations converting natural gas to crude oil equivalent have been made using a ratio of six mcf of natural gas to one barrel of crude equivalent. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of six mcf of natural gas to one barrel of crude oil equivalent is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

(2)

Tcfes may be misleading, particularly if used in isolation. A Tcfe conversion ratio of one barrel of oil to six thousand cubic feet of gas is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

CONVERSION

This table outlines certain standard conversions between Standard Imperial Units and the International System of Units (metric units).

Management Discussion and Analysis INTEROIL CORPORATION 3

To Convert From	To	Multiply By
mcf	cubic meters	28.317
cubic meters	cubic feet	35.315
bbls	cubic meters	0.159
cubic meters	bbls	6.289
feet	meters	0.305
meters	feet	3.281
miles	kilometers	1.609
kilometers	miles	0.621
acres	hectares	0.405
hectares	acres	2.471

OIL AND GAS DISCLOSURES

We are required to comply with Canadian Securities Administrators’ NI 51-101 (as defined herein), which prescribes disclosure of oil and gas reserves and resources. GLJ Petroleum Consultants Ltd., an independent qualified reserve evaluator based in Calgary, Canada, has evaluated our resources data as at December 31, 2014 in accordance with NI 51-101. This evaluation is summarized in our 2014 AIF available at www.sedar.com. We do not have any production or reserves, including proved reserves, as defined under NI 51-101 or as per the guidelines set by the SEC, as at March 31, 2015.

The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved, possible and probable reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We include in this MD&A information that the SEC’s guidelines generally prohibit U.S registrants from including in filings with the SEC.

GLOSSARY OF TERMS

“2014 AIF” means InterOil’s Annual Information Form for the year ended December 31, 2014.

“ANZ” means Australia and New Zealand Banking Group (PNG) Limited.

“BNP Paribas” means BNP Paribas Capital (Singapore) Limited.

“Board” means the board of directors of InterOil.

“BP” means BP (formerly known as British Petroleum) or a subsidiary or affiliate of that company.

“BSP” means Bank of South Pacific Limited.

“CBA” means Commonwealth Bank of Australia.

“Condensate” means a component of natural gas which is a liquid at surface conditions.

“Condensed Consolidated Interim Financial Statements” means the unaudited condensed consolidated interim financial statements for the quarter ended March 31, 2015.

“Consolidated Financial Statements” means the audited consolidated financial statements for the years ended December 31, 2014, 2013 and 2012.

Management Discussion and Analysis INTEROIL CORPORATION 4

“Convertible Notes” means the 2.75% convertible senior notes of InterOil due November 15, 2015.

“Credit Suisse” means Credit Suisse A.G.

"crude oil" means a mixture consisting mainly of pentanes and heavier hydrocarbons that exists in the liquid phase in reservoirs and remains liquid at atmospheric pressure and temperature. Crude oil may contain small amounts of sulfur and other non-hydrocarbons but does not include liquids obtained from the processing of natural gas.

"DPE" means the Department of Petroleum and Energy, a PNG government department responsible for regulating oil and gas activities in PNG.

“EBITDA” represents net income/(loss) plus total interest expense (excluding amortization of debt issuance costs), income tax expense, depreciation and amortization expense. EBITDA is a non-GAAP measure used to analyze operating performance. See “Non-GAAP Measures and Reconciliation”.

“GAAP” means Canadian generally accepted accounting principles.

“gas” means a mixture of lighter hydrocarbons that exist either in the gaseous phase or in solution in crude oil in reservoirs but are gaseous at atmospheric conditions. Gas may contain sulfur or other non-hydrocarbon compounds.

“GCA” means Gaffney Cline & Associates who is a recognized certifier under the Total SSA.

“JVOA” means Joint Venture Operating Agreement.

“LIBOR” means daily reference rate based on the interest rates at which banks borrow unsecured funds from banks in the London, United Kingdom, wholesale money market.

“LNG” means liquefied natural gas. Natural gas may be converted to a liquid state by pressure and severe cooling for transportation purposes, and then returned to a gaseous state to be used as fuel. LNG, which is predominantly artificially liquefied methane, is not to be confused with NGLs, natural gas liquids, which are heavier fractions that occur naturally as liquids.

“LNG Project” means the proposed development by us of liquefaction facilities in Papua New Guinea with potential partners, including Total and the State.

“Macquarie” means Macquarie Group Limited.

“MD&A” means this Management’s Discussion and Analysis for the quarter ended March 31, 2015.

“MUFG” means Bank of Tokyo-Mitsubishi UFJ, Ltd.

“natural gas” means a naturally occurring mixture of hydrocarbon and non-hydrocarbon gases found in porous geological formations beneath the earth's surface, often in association with petroleum. The principal constituent is methane.

“NI 51-101” means National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities adopted by the Canadian Securities Administrators.

“Oil Search” means Oil Search Limited, a company incorporated in Papua New Guinea; an oil and gas exploration and development company that has been operating in Papua New Guinea since 1929.

"PNG LNG" means PNG LNG, Inc., a joint venture company established in 2007 to hold the interests of certain joint venturers in the proposed venture to construct the proposed liquefaction facilities referred to in the LNG Project Agreement.

Management Discussion and Analysis INTEROIL CORPORATION 5

“PNGDV” means PNG Drilling Ventures Limited, an entity with which we entered into an amended and restated indirect participation agreement on May 1, 2006.

“PPL” means the Petroleum Prospecting License, an exploration tenement granted under the Oil & Gas Act 1997 (PNG).

“PRE” means Pacific Rubiales Energy Corp., a company incorporated under the laws of British Columbia, Canada.

“PRL” means the Petroleum Retention License, the tenement granted under the Oil & Gas Act 1997 (PNG) to allow the license holder to evaluate the commercial and technical options for the potential development of an oil and/or gas discovery.

“Puma” means Puma Energy Pacific Holdings Pte Ltd, a subsidiary of Trafigura, that focuses on midstream and downstream, oil businesses.

“Puma Transaction” means the transaction by which Puma acquired all of the shares of certain of our subsidiaries that held our refinery and petroleum products distribution businesses for approximately $524.6 million. The transaction was completed on June 30, 2014.

“SEC” means the United States Securities and Exchange Commission.

“SocGen” means Societe Generale Hong Kong branch.

“State” or “PNG” means the independent State of Papua New Guinea.

“Total” means Total S.A., a French multinational integrated oil and gas company and its subsidiaries.

“Total SSA” means the share purchase agreement under which Total acquired, through the purchase of all of the shares of SPI (200) Limited, a wholly owned subsidiary, a gross 40.1275% interest in PRL 15. This agreement replaced the Total SPA on March 26, 2014.

“UBS” means UBS A.G.

“Westpac” means Westpac Bank PNG Limited.

INTRODUCTION

We are an independent upstream oil and gas business with a sole focus on PNG. Our assets include licenses covering the Elk, Antelope and Triceratops fields and, Raptor and Bobcat discoveries in the Gulf Province of PNG, and exploration licenses covering about 16,000 square kilometers (about 4 million acres) in PNG. We have our main offices in Singapore and Port Moresby. We are listed on the New York Stock Exchange and the Port Moresby Stock Exchange. At March 31, 2015, we had 352 full-time employees.

BUSINESS STRATEGY

Our strategy is to unlock significant value to shareholders by finding oil and gas safely and competitively; enable its development through the right partnerships, funding and project development capability; and to repeat this process. Running an effective and efficient business is the core component of this strategy. This business model is founded on exploration and drilling discipline and success, strong commercial and project development acumen and being a “partner of choice”. The focus areas for our strategy are to:

Continue to develop as a prudent and responsible business operator;

Management Discussion and Analysis INTEROIL CORPORATION 6

Enable our discovered resources with strategic joint venture partners;

Maximize the value of our exploration assets; and

Position for long-term success.

Further details of our business strategy can be found under the heading “Business Strategy” in our 2014 AIF available at www.sedar.com.

OPERATIONAL HIGHLIGHTS

Summary of operational highlights

A summary of the key operational matters and events for the quarter for continuing operations is as follows:

Airborne Field Survey

On January 17, 2015, we commenced the acquisition of high resolution airborne Falcon gravity gradiometry over all our licenses. This survey is expected to be completed in the third quarter of 2015.

Seismic

The 2014 Murua Seismic Survey in PPL 474 commenced on November 1, 2014, with acquisition completed in March 2015.

In late 2014, we began planning and initial preparation for an appraisal seismic program over the Raptor discovery. The Raptor seismic program commenced January 2015 and is currently underway, with expected completion in May 2015.

Appraisal seismic acquisition over the Bobcat discovery is also currently underway in conjunction with the Raptor program. The 2015 Bobcat Seismic Survey commenced in March 2015 with acquisition expected to be completed in June 2015.

On April 15, 2015, the 2015 Triceratops Seismic Survey in PRL 39 commenced field production, with acquisition expected to be completed in July 2015.

Further planning is now underway for possible seismic surveys in PPL 474 and PPL 476.

PPL 474 - Wahoo drilling program

Wahoo-1 exploration well is about 170 kilometers southeast of our Elk and Antelope gas fields. On July 14, 2014, we announced that we had suspended drilling the Wahoo-1 well in PPL 474 after intersecting gas and higher-than expected pressures. The DPE approved this suspension to enable us to re-evaluate the drilling plan.

The mobilization of crew to site is currently ongoing, and we intend to resume drilling in the second quarter of 2015.

PPL 475 – Raptor drilling program

Raptor-1 exploration well is about 12 kilometers west of our Elk and Antelope gas fields. On November 14, 2014, we notified the DPE of a discovery at the Raptor-1 well.

We have started the appraisal seismic program as noted above, and will continue comprehensive planning of future Raptor appraisal work, which will include appraisal drilling and a comprehensive testing program.

PPL 476 – Bobcat drilling program

Bobcat-1 exploration well is about 30 kilometers northwest of our Elk and Antelope gas fields. In 2014, we notified the DPE of a discovery at the Bobcat-1 well. The well was further deepened in 2014 as the first part of the appraisal program to appraise reservoir quality.

We have started the appraisal seismic program as noted above to further evaluate the commerciality of the field.

Management Discussion and Analysis INTEROIL CORPORATION 7

PRL 15 – Antelope-4, Antelope-5 and Antelope-6 drilling program

On September 16, 2014, we spudded the Antelope-4 appraisal well. The Antelope-4 appraisal well intersected the top reservoir at 1,911 meters. During January 2015, a derrick structural member was noted as being slightly bowed outside tolerance. The repairs were carried out and drilling recommenced. The cores were cut in the upper part of the reservoir as planned, resulting in a recovery of 33 meters of dolomite. On April 27, 2015, we announced the suspension of the Antelope-4 appraisal well drilling at 2,134 meters. The PRL 15 Joint Venture is currently evaluating the information obtained from the well.

On December 23, 2014, we spudded the Antelope-5 appraisal well. On February 16, 2015, we announced the Antelope-5 appraisal well had intersected the top reservoir at 1,534 meters. The well reached a total depth of 2,453 meters on February 24, 2015. We are currently continuing with the reservoir evaluation program, and we plan to conduct an extended well test at Antelope-5 with pressure gauges monitoring pressure drawdown in other appraisal wells.

On April 27, 2015, we began flow testing at the Elk-Antelope gas field as part of the field appraisal.

Site preparation and pre-spud of Antelope-6 appraisal well has commenced, with the current expectation that the well will be spudded in the third quarter of 2015.

PRL 15 – Total SSA

On February 27, 2015, all participants in PRL 15 unanimously voted to appoint Total as operator of the PRL 15 Joint Venture. The appointment will take effect in accordance with an operator transition plan and the terms of the JVOA. The appointment is subject to all necessary PNG government approvals.

Progress continues with engineering and technical studies being conducted by Total towards concept selection (including selection of the location of the LNG Project) which is expected to be completed by June 2015. The early development work is expected to begin in 2016 and awarding of construction contracts is expected to take place in 2017.

PRL 39 – Triceratops-3 appraisal well

Site preparation and pre-spud (including mobilization of rig to site) is currently ongoing, with the well expected to be spudded in the second quarter of 2015.

Financing

On March 17, 2015, we signed an amendment to further extend the maturity date on the $300.0 million syndicated, senior secured capital expenditure facility to the end of 2016 with Credit Suisse, CBA, ANZ, UBS, Macquarie, BSP, Westpac, MUFG and SocGen participating in the extension.

Other matters

On January 1, 2015, Dr. Ellis Armstrong, former BP Group E&P - Chief Financial Officer, was appointed as a non-executive director. Dr. Armstrong has more than 30 years of international oil and gas experience covering strategy and operations, major integrations, acquisitions and disposals and government relations.

On January 1, 2015, Ms. Katherine Hirschfeld, former Australasia BP Executive Director, was appointed as a non-executive director. Ms. Hirschfeld has board experience and international oil and gas experience covering oil refining, logistics, exploration and production in Australia, New Zealand, the United Kingdom and Turkey.

On March 13, 2015, Mr. Yap Chee Keong, the current Chairman and non-executive independent director of CityNet Infrastructure Management Pte Ltd, was appointed as a non-executive director. Mr. Yap is also a director of several Singapore based companies and also serves as a board member of the Accounting and Corporate Regulatory Authority and as a member of Singapore’s Public Accountants Oversight Committee. He replaced Mr. Samuel Delcamp as a director, who formally retired from the Board on March 12, 2015.

Management Discussion and Analysis INTEROIL CORPORATION 8

SELECTED FINANCIAL INFORMATION AND HIGHLIGHTS

Consolidated Results for the Quarter Ended March 31, 2015 and 2014

Consolidated – Operating results	Quarter ended March 31,
($ thousands, except per share data)	2015			2014
Interest revenue		11,412			53
Other		1,803			1,850
Total revenue		13,215			1,903
Adminstrative and general expenses		(6,354	)		(9,986	)
Legal and professional fees		(1,937	)		(2,345	)
Exploration costs, excluding exploration impairment		(19,261	)		(8,696	)
Finance costs, excluding interest expense		(6,671	)		(6,014	)
Gain on conveyance of exploration and evaluation assets		-			340,540
Foreign exchange gains		691			1,558
Share of net losses of joint venture partnership accounted for using the equity method		-			(11	)
EBITDA ⁽¹⁾		(20,317	)		316,949
Depreciation and amortization		(5	)		(1,440	)
Interest expense		(1,477	)		(4,170	)
(Loss)/profit for the period from continuing operations before income taxes		(21,799	)		311,339
Income tax expense		(70	)		(514	)
(Loss)/profit for the period from continuing operations		(21,869	)		310,825
Profit for the period from discontinued operations, net of tax		-			7,812
(Loss)/profit for the period		(21,869	)		318,637
Basic (loss)/earning per share		(0.44	)		6.46
From continuing operations		(0.44	)		6.30
From discontinued operations		0.00			0.16
Diluted (loss)/earnings per share		(0.44	)		6.38
From continuing operations		(0.44	)		6.22
From discontinued operations		0.00			0.16
Total assets		1,318,120			1,737,189
Total liabilities		307,685			641,605
Total long-term liabilities		96,000			218,783

Notes:

(1)

EBITDA is a non-GAAP measure and is reconciled to IFRS under the heading “Non-GAAP Measures and Reconciliation”.

Management Discussion and Analysis INTEROIL CORPORATION 9

Analysis Comparing Financial Condition as at March 31, 2015 and 2014

As at March 31, 2015, our debt-to-capital ratio (being debt divided by [shareholders’ equity plus debt]) was 6%, compared to 22% as at March 31, 2014, well below our targeted maximum gearing level of 50%. Gearing targets are based on several factors including operating cash flows, future cash needs for development, capital market and economic conditions, and are assessed regularly. Our current ratio (being current assets divided by current liabilities), which measures our ability to meet short-term obligations, was 4.2 times as at March 31, 2015, compared to 1.7 times as at March 31, 2014. The current ratio satisfied our internal target of above 1.5 times as at March 31, 2015.

Variance in Total Assets:

As at March 31, 2015, our total assets amounted to $1,318.1 million, compared with $1,737.2 million as at March 31, 2014. The decrease of $419.1 million, or 24%, from March 31, 2014 was primarily due to:

$177.5 million decrease in cash and cash equivalents and restricted cash, mainly attributable to the expenditure on exploration and evaluation assets incurred during the period.

$33.4 million decrease in trade and other receivables mainly due to the timing/receipt of joint venture partners’ cash calls during the period.

$17.5 million decrease in investments accounted for using equity method, which is attributable to our share of losses incurred by the PNG LNG joint venture resulting from the impairment of joint venture assets, as we are now progressing the LNG Project development jointly with Total.

The Puma Transaction resulted in the decrease in plant and equipment by $232.8 million, inventories by $190.0 million and deferred tax assets by $48.6 million.

These decreases have been partially offset by:

$284.7 million increase in exploration and evaluation assets, primarily associated with the drilling costs incurred for Wahoo-1 well in PPL 474, Triceratops-3 appraisal well in PRL 39 and Raptor-1 well in PPL 475, Bobcat-1 exploration well in PPL 476, Antelope-4 and Antelope-5 appraisal well in PRL 15.

Variance in Total Liabilities:

As at March 31, 2015, our total liabilities amounted to $307.7 million, compared with $641.6 million at March 31, 2014. The decrease of $333.9 million, or 52%, from March 31, 2014 was primarily due to:

A decrease of $253.2 million in secured and unsecured loans payable due to the full repayment in June 2014 of the BSP and Westpac combined secured loan facility, the ANZ, BSP Paribas and BNP syndicated loan facility and the full repayment in April 2014 of the Credit Suisse led syndicated secured loan post receipt of the Total SSA completion payment.

$48.0 million decrease in trade and other payables, mainly due to the sale of the refinery and distribution businesses; however, this decrease has partly been offset by the $58.3 million increase in seismic and drilling accruals as at March 31, 2015.

The Puma Transaction also resulted in the decrease in working capital facilities by $12.7 million and income tax payable by $17.8 million.

Analysis of Consolidated Financial Results Comparing Quarter Ended March 31, 2015 and 2014

Our net loss for the quarter ended March 31, 2015 was $21.9 million, compared with a net profit of $318.6 million for the same quarter in 2014, a decrease of profit by $340.5 million, which primarily resulted from the recognition of the $340.5 million gain on conveyance of oil and gas properties in relation to the completion of the Total SSA during the quarter ended March 31, 2014.

The table below analyzes key movements, the net of which primarily explains the variance in results between the quarters ended March 31, 2015 and 2014:

Management Discussion and Analysis INTEROIL CORPORATION 10

	Quarterly Variance *($ millions)*
	*($340.5)*	*Net (loss)/profit variance for the comparative periods primarily due to:*
Ø	($340.5)	Gain on conveyance of exploration and evaluation assets in relation to the completion of the Total SSA recognized during the quarter ended March 31, 2014 under which Total acquired, through the purchase of all shares of a wholly owned subsidiary, a gross participating interest of 40.1275% (net 31.0988%, after the State back-in right of 22.5%) in PRL 15, which contains the Elk and Antelope gas fields.
Ø	($7.8)	Decrease in profit from discontinued operations during first quarter of 2014.
Ø	$3.6	Decrease in administrative and general expenses was mainly due to the new cost methodology employed since the fourth quarter of 2014, whereby operational costs were allocated to exploration and evaluation assets, rather than a standard cost recharge process used prior to the change, which previously resulted in expensing of under recovered costs incurred for joint venture projects. A total of $1.8 million from the administrative and general expenses for the quarter ended March 31, 2015 was charged to Puma as other revenue for certain transition services provided post divestment. These transitional services mainly related to the computing and communications services and occupancy expenses in PNG.
Ø	$11.4	Increase in interest income was attributable to the interest accretion income on the receivables recognized in relation to interim resource payments expected under the Total SSA for the Elk and Antelope fields in accordance with the resource certification mechanics found in the Total SSA and the range of resources contemplated therein.
Ø	($10.6)	Increase in exploration costs primarily attributable to the expensing of seismic activities over the Murua lead in PPL 474 and exploration seismic over PPL 475, and airborne gravity survey costs incurred for PPL 476, PPL 477 and PRL 15.
Ø	$2.7	Decrease in interest expense was largely due to the non-utilization of the Credit Suisse led syndicated facility during the quarter as compared to $150.0 million drawn under the facility in the prior year quarter.
Ø	$1.4	Decrease in depreciation expense due to capitalization of the depreciation relating to supporting assets to the respective projects undertaken during the quarter. Depreciation in relation to assets supporting the exploration costs expensed has been included in the exploration costs line above.

Analysis of Consolidated Cash Flows Comparing Quarters Ended March 31, 2015 and 2014

As at March 31, 2015, we had cash, cash equivalents, and restricted cash of $304.7 million (March 31, 2014 - $482.2 million), of which $8.3 million (March 31, 2014 - $61.5 million) was restricted. Of the total restricted cash at March 31, 2015, $8.0 million was restricted as a debt reserve under the Credit Suisse led syndicated secured loan and the balance was made up of a cash deposit on office premises and term deposits on our PPLs.

Cash flows from discontinued operations have been combined with the cash flows from continuing operations in the consolidated statements of cash flows for the quarter ended March 31, 2014.

	Quarter ended March 31,
($ thousands)	2015			2014
Net cash (outflows)/inflows from:
Operations		(33,353	)		(15,244	)
Investing		(63,666	)		347,994
Financing		-			25,951
Net cash movement		(97,019	)		358,701
Opening cash		393,405			61,967
Closing cash		296,386			420,668

Management Discussion and Analysis INTEROIL CORPORATION 11

Cash flows used in operating activities

Cash outflows from operating activities for the quarter ended March 31, 2015 were $33.4 million compared with an outflow of $15.2 million for the quarter ended March 31, 2014, a net increase in cash outflows of $18.2 million.

This table outlines key variances in the cash inflows/(outflows) from operating activities between the quarters ended March 31, 2015 and 2014:

	*Quarterly variance* *($ millions)*
	*($18.2)*	*Variance for the comparative periods primarily due to:*
Ø	($19.8)	Increase in cash used in operations, prior to changes in operating working capital for the quarter, was mainly due to the increase in net loss from operations adjusted for the increased accretion income on receivable, gain on conveyance of PRL 15 pursuant to the Total SSA and a decrease in depreciation expense incurred during the current quarter ended March 31, 2015.
Ø	$1.6	Decrease in cash used in the operations relating to changes in operating working capital for the quarter was due to a $23.2 million increase in trade and other receivables, a $32.7 million decrease in inventories, a $7.6 million decrease in accounts payable and accrued liabilities, and a $0.3 million increase in other current assets and prepaid expenses.

Cash flows (used in)/generated from investing activities

Cash outflows from investing activities for the quarter ended March 31, 2015 were $63.7 million compared with an inflow of $348.0 million for the quarter ended March 31, 2014.

This table outlines key variances in cash (outflows)/inflows from investing activities between the quarters ended March 31, 2015 and 2014:

	Quarterly variance *($ millions)*
	*($411.7)*	*Variance for the comparative periods primarily due to:*
Ø	($401.3)	Receipt of a $401.3 million completion payment from Total in accordance with the Total SSA during the quarter ended March 31, 2014.
Ø	($24.6)	Increase in cash outflows on exploration and development expenditures was mainly due to the site preparation and pre-spud costs for the Triceratops-3, Wahoo-1 Side Track and Antelope 6 well, and drilling costs incurred for the Antelope-4 and Antelope-5 wells.
Ø	$53.0	Higher cash calls and related inflows from joint venture partners relating to the receipt of cash called funds from PRE, Oil Search and Total during the quarter ended March 31, 2015.
Ø	$5.2	Movement in expenditure on plant and equipment was mainly due to the expenditures on discontinued operations (tank and upgrade projects) during the quarter ended March 31, 2014
Ø	$8.3	The reduction in restricted cash requirements held as security was mainly due to the transfer of restricted cash balances (and the associated working capital facilities) in relation to the BNP Paribas led working capital facilities as part of the Puma Transaction.
Ø	($53.0)	Movement in non-operating working capital was primarily related to trade payables and accruals in our exploration and development operations.

Management Discussion and Analysis INTEROIL CORPORATION 12

Cash flows generated from financing activities

Cash flow movement from financing activities for the quarter ended March 31, 2015 amounted to $Nil, compared with an inflow of $26.0 million for the quarter ended March 31, 2014.

This table outlines key variances in cash (outflows)/inflows from financing activities between quarters ended March 31, 2015 and 2014:

	*Quarterly variance* *($ millions)*
	*($26.0)*	*Variance for the comparative periods primarily due to:*
Ø	$2.0	Net repayment of the BSP and Westpac combined secured loan facility during quarter ended March 31, 2014.
Ø	($50.0)	Drawdown of $50.0 million from the Credit Suisse led syndicated secured loan facility during the quarter ended March 31, 2014.
Ø	$23.7	Movement in utilization of the BNP Paribas working capital facility in our discontinued operations during March 31, 2014.
Ø	($1.7)	Movement due to cash receipts from the exercise of stock options during the quarter ended March 31, 2014.

Summary of Consolidated Quarterly Financial Results for Past Eight Quarters

This table contains consolidated results for the eight quarters ended March 31, 2015 on a consolidated basis.

Quarters ended ($ thousands except per share	2015			2014											2013
data)	Mar-31			Dec-31			Sep-30			Jun-30			Mar-31		Dec-31			Sep-30			Jun-30
Total revenues		13,215			(13,182	)		10,749			13,689			1,903		712			617			831
EBITDA ⁽¹⁾		(20,317	)		(60,443	)		(12,135	)		(10,252	)		316,949		(27,272	)		(99	)		(11,293	)
Net (loss)/profit		(21,869	)		(64,205	)		(16,931	)		52,266			318,637		(24,812	)		(6,318	)		(13,230	)
From continuing operations		(21,869	)		(62,474	)		(14,622	)		(15,764	)		310,825		(32,024	)		(3,555	)		(15,240	)
From discontinued operations		-			(1,731	)		(2,309	)		68,030			7,812		7,212			(2,763	)		2,010
Basic (loss)/earnings per share		(0.44	)		(1.30	)		(0.34	)		1.05			6.46		(0.50	)		(0.13	)		(0.27	)
From continuing operations		(0.44	)		(1.26	)		(0.29	)		(0.31	)		6.30		(0.65	)		(0.07	)		(0.31	)
From discontinued operations		-			(0.04	)		(0.05	)		1.36			0.16		0.15			(0.06	)		0.04
Diluted (loss)/earnings per share		(0.44	)		(1.30	)		(0.34	)		1.05			6.38		(0.50	)		(0.13	)		(0.27	)
From continuing operations		(0.44	)		(1.26	)		(0.29	)		(0.31	)		6.22		(0.65	)		(0.07	)		(0.31	)
From discontinued operations		-			(0.04	)		(0.05	)		1.36			0.16		0.15			(0.06	)		0.04

(1)

EBITDA is a non-GAAP measure and is reconciled to IFRS under the heading “Non-GAAP Measures and Reconciliation”.

Management Discussion and Analysis INTEROIL CORPORATION 13

DISCOUNTINUED OPERATIONS

We had previously organized our operations into four major segments - Upstream, Midstream, Downstream and Corporate. On June 30, 2014, we disposed of our Midstream Refining and Downstream businesses in connection with the Puma Transaction and as a result, these businesses have been classified as discontinued operations for reporting purpose. In addition, the shipping business which was previously included within the Corporate segment has also been classified as a discontinued operation as the activities previously carried out by that business have been transferred with the sale of the refining and distribution businesses. At March 31, 2015, no additional discontinued operations have been recognized.

Further details in relation to discontinued operations can be found under the heading “Discontinued Operations” in our 2014 AIF available at www.sedar.com.

LIQUIDITY AND CAPITAL RESOURCES

Summary of Debt Facilities

This table summarizes the debt facilities available to us and the balances outstanding as at March 31, 2015:

Organization	Facility		Balance outstanding March 31, 2015		Weighted average interest rate			Maturity date
Credit Suisse led syndicated, senior secured capital expenditure facility	$	300,000,000	$	Nil		Nil	%	December 2016
Convertible Notes	$	70,000,000	$	69,998,000		7.91	%⁽¹⁾	November 2015

(1)

Effective rate after bifurcating the equity and debt components of the $70.0 million principal amount of 2.75% convertible senior notes due 2015.

Credit Suisse led Syndicated Secured Loan

On June 17, 2014, we replaced our $250.0 million syndicated loan led by Credit Suisse with a $300.0 million syndicated, senior secured capital expenditure facility through a consortium of banks led by Credit Suisse. CBA, ANZ, UBS, Macquarie, BSP, BNP Paribas and Westpac, each of which was a participating lender under the original facility, in addition to new banks, MUFG and SocGen, support the facility. The facility had an annual interest rate of LIBOR plus 5% and was to mature at the end of 2015.

On March 17, 2015, we signed an amendment to further extend the maturity date on this facility to the end of 2016 with Credit Suisse, CBA, ANZ, UBS, Macquarie, BSP, Westpac, MUFG and SocGen participating in the extension. No drawdowns have been made under this facility as at March 31, 2015. As at March 31, 2015, we are in compliance with the applicable debt covenants, which included a defined calculation for gearing not to exceed 60% at any time, and the equity does not fall below $500 million at any time.

Unsecured 2.75% Convertible Notes

On November 10, 2010, we completed the issuance of $70.0 million of Convertible Notes with a maturity of five years (November 10, 2015). The Convertible Notes rank junior to any secured indebtedness and to all existing and future liabilities of us and our subsidiaries, including the Credit Suisse led syndicated secured loan facility, trade payables and lease obligations.

We pay interest on the Convertible Notes semi-annually on May 15 and November 15. The Convertible Notes are convertible into cash or our common shares, based on an initial conversion rate of 10.4575 common shares per $1,000 principal amount, which represents an initial conversion price of approximately $95.625 per common share. The initial conversion price is subject to standard anti-dilution provisions designed to maintain the value of the conversion option in the event we take certain actions with respect to our common shares, such as stock splits, reverse stock splits, stock dividends and cash dividends, that affect all of the holders of our common shares equally and that could have a dilutive effect on the value of the conversion rights of the holders of the Convertible Notes or that confer a benefit on our current shareholders not otherwise available to the Convertible Notes. On conversion, holders will receive cash, common shares or a combination thereof, at our option. The Convertible Notes are redeemable at our option if our share price has been at least 125% ($119.53 per share) of the conversion price for at least 15 trading days during any 20 consecutive trading day period. On a fundamental change, which would include a change of control, holders may require us to repurchase their Convertible Notes for cash at a purchase price equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest.

Management Discussion and Analysis INTEROIL CORPORATION 14

Only $2,000 of the Convertible Notes have been converted into cash since issuance.

Other Sources of Capital

Our share of expenditures on exploration wells, appraisal wells and extended well programs is funded by capital raising activities, debt, cash calls from joint venture partners and asset sales.

Cash calls are made on Total, Oil Search and PNGDV for their share and carry (where applicable) of expenditure on appraisal wells and extended well programs under agreements we have with them. Cash calls will also be made on PRE for exploration activities in PPL 475 and appraisal activities in the Triceratops field.

Capital Expenditure

Net expenditure on exploration and evaluation assets

Net capital expenditures on our exploration and evaluation assets in PNG for the quarter ended March 31, 2015 were $57.8 million.

This analysis outlines key net expenditures in the quarter ended March 31, 2015:

	*Quarterly* *movement* *($ millions)*
	*$325.0*		*Opening balance of exploration and evaluation assets*
	*$57.8*		*Net capital expenditure consisting of following:*
Ø	($1.2	)	True up of costs for drilling and testing of the Raptor-1 well.
Ø	$1.3		Costs for care and maintenance of the suspended Wahoo-1 well.
Ø	$1.3		Costs for site preparation and pre-spud work of the Wahoo side track well.
Ø	$8.1		Costs for testing of the Bobcat-1 well.
Ø	$8.1		Costs for site preparation and pre-spud work for the Triceratops-3 well.
Ø	$7.9		Costs for drilling of the Antelope-4 well.
Ø	$7.3		Costs for drilling of the Antelope-5 well.
Ø	$1.4		Costs for site preparation, pre-spud work and rig standby costs of the Antelope-6 well.
Ø	$8.8		Appraisal seismic over the Raptor field.
Ø	$1.6		Appraisal seismic over the Bobcat and Triceratops field.
Ø	$1.8		Expenditure on drilling inventory.
Ø	$7.4		Expenditure relating to concept select studies led by Total for PRL 15.
Ø	$4.0		Other expenditures, including equipment purchases, site preparation costs of the Antelope South well, and a portion of the Antelope-4, Antelope-5 and Antelope-6 and Antelope South well costs that have been carried by Total but included in our net share of costs as the carry has been offset against the interim resource payment receivable from Total under Total SSA.
	*$382.8*		*Closing balance of exploration and evaluation assets*

Management Discussion and Analysis INTEROIL CORPORATION 15

Gross expenditure on exploration and evaluation assets

Gross capital expenditures on our exploration and evaluation assets in PNG for the quarter ended March 31, 2015 was $129.0 million.

This analysis outlines key gross expenditures in the quarter ended March 31, 2015:

	*Quarterly* *movement* *($ millions)*
	*$129.0*		*Gross capital expenditure consisting of following:*
Ø	($1.6	)	True up of costs for drilling and testing of the Raptor-1 well.
Ø	$8.7		Appraisal seismic over the Raptor field.
Ø	$1.3		Costs for care and maintenance of the suspended Wahoo-1 well.
Ø	$1.3		Costs for site preparation and pre-spud work of the Wahoo side track well.
Ø	$10.2		Costs for testing of the Bobcat-1 well.
Ø	$1.6		Appraisal seismic over the Bobcat and Triceratops field.
Ø	$11.9		Costs for site preparation and pre-spud work for Triceratops-3 well.
Ø	$22.8		Costs for drilling of the Antelope-4 well.
Ø	$40.3		Costs for drilling of the Antelope-5 well.
Ø	$6.8		Costs for site preparation, pre-spud work and rig standby costs of the Antelope-6 well.
Ø	$0.9		Costs for site preparation of the Antelope South well.
Ø	$1.8		Expenditure on drilling inventory.
Ø	$20.1		Expenditure relating to concept select studies led by Total for PRL 15.
Ø	$2.9		Other expenditure, including equipment and asset purchases.

Capital Requirements

Existing cash balances will be sufficient to settle debt obligations and facilitate further development of the Elk and Antelope fields, appraisal of Triceratops field and exploration activities planned to meet our license commitment requirements. However, oil and gas exploration and development and liquefaction are capital intensive and our business plans involve raising capital, which depends on market conditions when we raise such capital. Additionally, our joint venture share of the costs of construction of an liquefaction plant and other infrastructure associated with the proposed liquefaction plant may amount to hundreds of millions of dollars and thus exceed our existing cash balances. No assurance can be given that we will be successful in obtaining new capital on terms that are acceptable to us, particularly with market volatility.

Management Discussion and Analysis INTEROIL CORPORATION 16

Noted below are our contractual obligations and commitments over the next five years which are required at a minimum to maintain our licenses in good standing.

Contractual Obligations and Commitments

This table contains information on payments to meet our contracted exploration and debt obligations for each of the next five years and beyond. It should be read in conjunction with our Condensed Consolidated Interim Financial Statements, Consolidated Financial Statements and respective notes thereto.

	Payments Due by Period
Contractual obligations ($ thousands)	Total		Less than 1 year		1 – 2 years		2 – 3 years		3 – 4 years		4 – 5 years		More than 5 years
Petroleum prospecting and retention licenses		404,665		40,025		89,525		87,952		97,650		89,513		-
Convertible Notes obligations		71,281		71,281		-		-		-		-		-
Total		475,946		111,306		89,525		87,952		97,650		89,513		-

The amount pertaining to the petroleum prospecting and retention licenses represents the amount we have committed on these licenses as at March 31, 2015. On March 6, 2014, our applications for new petroleum prospecting licenses were approved with PPL 474 replacing PPL 236, PPL 475 replacing PPL 237, and PPL 476 and PPL 477 replacing PPL 238 and included new license commitments. The new commitments require us to spend $359.0 million over the remainder of their six year term.

Further, the terms of grant of PRL 39 requires us to spend $45.6 million on the license area by the end of 2018.

Off Balance Sheet Arrangements

Neither during the quarter ended, nor as at March 31, 2015, did we have any off balance sheet arrangements or any relationships with unconsolidated entities or financial partnerships.

Transactions with Related Parties

No related party transaction took place during the quarter ended March 31, 2015.

Share Capital

Our authorized share capital consists of an unlimited number of common shares and unlimited number of preferred shares, of which 1,035,554 Series A preferred shares are authorized (none of which are outstanding). As of March 31, 2015, we had 49,510,114 common shares issued and outstanding (50,740,867 common shares on a fully diluted basis) and no preferred shares issued and outstanding. The potential dilutive instruments outstanding as at March 31, 2015 included employee stock options and restricted stock in respect of 498,749 common shares and 732,004 common shares relating to the $70.0 million of Convertible Notes.

As of May 7, 2015, we had 49,510,114 common shares issued and outstanding (50,790,552 common shares on a fully diluted basis) and no preferred shares issued and outstanding. The potential dilutive instruments outstanding as at May 7, 2015 included employee stock options and restricted stock in respect of 548,434 common shares and 732,004 common shares relating to the $70.0 million of Convertible Notes.

RISK FACTORS

Our business operations and financial position are subject to risks. A summary of the key risks that may affect matters addressed in this document have been included under “Forward Looking Statements” above. Detailed risk factors can be found under “Risk Factors” in our 2014 AIF available at www.sedar.com.

Management Discussion and Analysis INTEROIL CORPORATION 17

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in accordance with IFRS requires our management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Interim Financial Statements and accompanying notes. Actual results could differ from those estimates. The effect of changes in estimates on future periods have not been disclosed in the Condensed Consolidated Interim Financial Statements as estimating it is impracticable. During the quarter ended March 31, 2015, there were no changes in the critical accounting estimates disclosed in our 2014 MD&A.

For a discussion of those accounting policies, please refer to Note 2 of the notes to our Consolidated Financial Statements for the year ended December 31, 2014, available at www.sedar.com, which summarizes our significant accounting policies.

NEW ACCOUNTING STANDARDS

New accounting standards not yet applicable as at March 31, 2015

These new standards have been issued but are not yet effective for the financial year beginning January 1, 2015 and have not been early adopted:

–

IFRS 9 ‘Financial Instruments’ (effective from January 1, 2018): This addresses the classification and measurement of financial assets. The standard is not applicable until January 1, 2018 but is available for early adoption. We have yet to assess IFRS 9’s full impact, but we do not expect any material changes due to this standard. We have not yet decided whether to early adopt IFRS 9.

–

IFRS 14 ‘Regulatory deferral accounts’ (effective from January 1, 2016): This standard permits first-time adopters to continue to recognize amounts related to rate regulation in accordance with their previous GAAP requirements when they adopt IFRS. However, the effect of rate regulation must be presented separately from other items. This standard will have no impact on InterOil.

–

IFRS 15 ‘Revenue from contracts with customers’ (effective from January 1, 2017): The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer, so the notion of control replaces the existing notion of risks and rewards. We are currently evaluating the impact of adopting this standard.

NON-GAAP MEASURES AND RECONCILIATION

Non-GAAP measures, including EBITDA, included in this MD&A are not defined nor have a standardized meaning prescribed by IFRS or our previous GAAP. Accordingly, they may not be comparable to similar measures provided by other issuers.

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 GAAP (i.e. IFRS) 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 IFRS. Further, EBITDA is not a measure of cash flow under IFRS and should not be considered as such.

This table reconciles net (loss)/profit from continuing operations, a GAAP measure, to EBITDA from continuing operations, a non-GAAP measure for each of the last eight quarters.

Management Discussion and Analysis INTEROIL CORPORATION 18

Quarters ended	2015			2014												2013
($ thousands)	Mar-31			Dec-31			Sep-30			Jun-30			Mar-31			Dec-31			Sep-30			Jun-30
Earnings before interest, taxes, depreciation and amortization		(20,317	)		(60,443	)		(12,135	)		(10,252	)		316,949			(27,272	)		(99	)		(11,293	)
Interest expense		(1,477	)		(1,464	)		(1,367	)		(4,409	)		(4,170	)		(2,546	)		(2,212	)		(2,082	)
Income taxes		(70	)		(211	)		(198	)		(195	)		(514	)		(791	)		239			(458	)
Depreciation and amortisation		(5	)		(356	)		(922	)		(908	)		(1,440	)		(1,415	)		(1,483	)		(1,407	)
From continuing operations		(21,869	)		(62,474	)		(14,622	)		(15,764	)		310,825			(32,024	)		(3,555	)		(15,240	)
From discontinued operations		-			(1,731	)		(2,309	)		68,030			7,812			7,212			(2,763	)		2,010
Net (loss)/profit		(21,869	)		(64,205	)		(16,931	)		52,266			318,637			(24,812	)		(6,318	)		(13,230	)

PUBLIC SECURITIES FILINGS

You may access additional information about us, including our 2014 AIF, in documents filed with the Canadian Securities Administrators at www.sedar.com, and in documents, including our Form 40-F, filed with the U.S. SEC at www.sec.gov. Additional information is also available on our website www.interoil.com.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have designed, or caused to be designed under their supervision, disclosure controls and procedures to provide reasonable assurance that: (i) material information relating to us is made known to our Chief Executive Officer and Chief Financial Officer by others, particularly during the period in which the annual and interim filings are being prepared; and (ii) information required to be disclosed by us in our annual filings, interim filings or other reports filed or submitted by us under securities legislation is recorded, processed, summarized and reported within the time specified in securities legislation. Such officers have evaluated, or caused to be evaluated under their supervision, the effectiveness of our disclosure controls and procedures at our financial year-end and have concluded that our disclosure controls and procedures are effective at December 31, 2014 for the foregoing purposes.

While our Chief Executive Officer and Chief Financial Officer believe that our disclosure controls and procedures provide reasonable assurance that they are effective, they do not expect that the disclosure controls and procedures will necessarily prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

Internal Controls over Financial Reporting

Our Chief Executive Officer and Chief Financial Officer have designed, or caused to be designed under their supervision, internal controls over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Such officers have evaluated, or caused to be evaluated under their supervision, the effectiveness of our internal controls over financial reporting at our financial year-end and concluded that our internal control over financial reporting is effective, at December 31, 2014, for the foregoing purpose.

Management Discussion and Analysis INTEROIL CORPORATION 19

Material Changes in Internal Control over Financial Reporting

No material change in our internal controls over financial reporting were identified during the quarter ended March 31, 2015, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

A control system, including our disclosure and internal controls and procedures, can provide only reasonable, but not absolute, assurance that the objectives of the control system will be met, no matter how well it is conceived, and it should not be expected that the disclosure and internal controls and procedures will prevent all errors or fraud.

Management Discussion and Analysis INTEROIL CORPORATION 20

Exhibit 99.2

InterOil Corporation
Condensed Consolidated Interim Financial Statements
(Unaudited, Expressed in United States dollars)
Quarter ended March 31, 2015 and 2014

InterOil Corporation

Condensed Consolidated Interim Financial Statements

(Unaudited, Expressed in United States dollars)

Table of contents

Consolidated Balance Sheets	1

Consolidated Income Statements	2

Consolidated Statements of Comprehensive Income	3

Consolidated Statements of Changes in Equity	4

Consolidated Statements of Cash Flows	5

Notes to the Condensed Consolidated Interim Financial Statements	6

InterOil Corporation
Consolidated Balance Sheets

(Unaudited, Expressed in United States dollars)

	As at
	March 31,			December 31,		March 31,
	2015			2014		2014
	$			$		$

Assets
Current assets:
Cash and cash equivalents		296,385,832			393,405,198		420,668,190
Cash restricted		7,961,221			7,959,859		32,402,896
Trade and other receivables (note 5)		585,141,451			566,362,745		66,634,767
Derivative financial instruments		-			-		53,313
Other current assets		2,370,386			2,742,316		1,175,741
Inventories		-			-		189,979,031
Prepaid expenses		2,014,521			2,312,626		7,067,916
Total current assets		893,873,411			972,782,744		717,981,854
Non-current assets:
Cash restricted		328,405			341,274		29,114,776
Plant and equipment		11,451,970			12,263,365		244,291,146
Exploration and evaluation assets (note 6)		382,765,854			325,041,973		98,102,235
Deferred tax assets		-			-		48,558,269
Other non-current receivables		29,700,534			29,700,534		581,593,476
Investments accounted for using the equity method		-			-		17,547,023
Total non-current assets		424,246,763			367,347,146		1,019,206,925
Total assets		1,318,120,174			1,340,129,890		1,737,188,779
Liabilities and shareholders' equity
Current liabilities:
Trade and other payables		134,945,095			139,716,105		182,991,664
Income tax payable		1,792,065			1,809,742		19,908,377
Working capital facilities		-			-		12,658,495
Unsecured loan and current portion of secured loans (note 7)		-			-		199,814,163
Current portion of indirect participation interest		7,449,409			7,449,409		7,449,409
2.75% convertible notes liability		67,498,043			66,501,994		-
Total current liabilities		211,684,612			215,477,250		422,822,108
Non-current liabilities:
Secured loans (note 7)		-			-		53,386,003
2.75% convertible notes liability		-			-		63,601,172
Other non-current liabilities		96,000,000			96,000,000		96,752,001
Asset retirement obligations		-			-		5,044,158
Total non-current liabilities		96,000,000			96,000,000		218,783,334
Total liabilities		307,684,612			311,477,250		641,605,442
Equity:
Equity attributable to owners of InterOil Corporation:
Share capital (note 8)		996,714,524			991,693,780		998,660,596
Authorized - unlimited
Issued and outstanding - 49,510,114
(Dec 31, 2014 - 49,414,801)
(Mar 31, 2014 - 50,022,600)
2.75% convertible notes		14,297,627			14,297,627		14,297,627
Contributed surplus		16,902,044			18,270,837		26,736,901
Accumulated Other Comprehensive Income		-			-		3,571,209
Accumulated (deficit)/earnings		(17,478,633	)		4,390,396		52,317,004
Total equity attributable to owners of InterOil Corporation		1,010,435,562			1,028,652,640		1,095,583,337
Total liabilities and equity		1,318,120,174			1,340,129,890		1,737,188,779

See accompanying notes to the condensed consolidated interim financial statements

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 1

InterOil Corporation

Consolidated Income Statements

(Unaudited, Expressed in United States dollars)

	Quarter ended
	March 31,			March 31,
	2015			2014
	$			$

Revenue
Interest revenue (note 9)		11,412,033			52,534
Other revenue		1,802,665			1,850,915
		13,214,698			1,903,449

Administrative and general expenses		(6,351,983	)		(9,985,159	)
Legal and professional fees		(1,937,189	)		(2,345,005	)
Exploration costs, excluding exploration impairment (note 6)		(19,261,332	)		(8,696,289	)
Finance costs (note 10)		(8,148,158	)		(10,184,426	)
Depreciation and amortization		(5,428	)		(1,441,688	)
Gain on conveyance of exploration and evaluation assets (note 6)		-			340,540,011
Foreign exchange gains		690,655			1,558,343
Share of net loss of joint venture partnership accounted for using the equity method		-			(10,815	)
		(35,013,435	)		309,434,972
(Loss)/profit from continuing operations before income taxes		(21,798,737	)		311,338,421

Income taxes
Current tax expense		(70,292	)		(564,778	)
Deferred tax benefit		-			51,265
		(70,292	)		(513,513	)

(Loss)/profit for the period from continuing operations		(21,869,029	)		310,824,908

Profit for the period from discontinued operations, net of tax (attibutable to owners of InterOil Corporation) (note 4)		-			7,811,555
(Loss)/profit for the period		(21,869,029	)		318,636,463

(Loss)/profit is attributable to:
Owners of InterOil Corporation		(21,869,029	)		318,636,463
		(21,869,029	)		318,636,463

(Loss)/earnings per share from continuing and discontinued operations attributable to owners of InterOil Corporation during the period
Basic (loss)/earnings per share
From continuing operations		(0.44	)		6.30
From discontinued operations		-			0.16
From (loss)/profit for the period		(0.44	)		6.46
Diluted (loss)/earnings per share
From continuing operations		(0.44	)		6.22
From discontinued operations		-			0.16
From (loss)/profit for the period		(0.44	)		6.38
Weighted average number of common shares outstanding
Basic (Expressed in number of common shares)		49,436,766			49,368,378
Diluted (Expressed in number of common shares)		49,436,766			50,200,242

See accompanying notes to the condensed consolidated interim financial statements

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 2

InterOil Corporation

Consolidated Statements of Comprehensive Income

(Unaudited, Expressed in United States dollars)

	Quarter ended
	March 31,			March 31,
	2015			2014
	$			$

(Loss)/profit for the period		(21,869,029	)		318,636,463

Other comprehensive loss:
Items that may be reclassified to profit or loss:
Exchange loss on translation of foreign operations, net of tax		-			(970,704	)
Other comprehensive loss for the period, net of tax		-			(970,704	)
Total comprehensive (loss)/income for the period		(21,869,029	)		317,665,759

Total comprehensive (loss)/income for the period is attributable to:
Owners of InterOil Corporation		(21,869,029	)		317,665,759
		(21,869,029	)		317,665,759

See accompanying notes to the condensed consolidated interim financial statements

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 3

InterOil Corporation

Consolidated Statements of Changes in Equity

(Unaudited, Expressed in United States dollars)

	Quarter ended
	March 31,			March 31,
	2015			2014
Transactions with owners as owners:	$			$
Share capital
At beginning of period		991,693,780			953,882,273
Issue of capital stock (note 8)		5,020,744			44,778,323
At end of period		996,714,524			998,660,596
2.75% convertible notes
At beginning and end of period		14,297,627			14,297,627
Contributed surplus
At beginning of period		18,270,837			26,418,658
Fair value of options and restricted stock transferred to share capital		(5,282,522	)		(1,515,695	)
Stock compensation expense		3,913,729			1,833,938
At end of period		16,902,044			26,736,901
Accumulated Other Comprehensive Income
*Foreign currency translation reserve*
At beginning of period		-			4,541,913
Foreign currency translation movement for the period, net of tax		-			(970,704	)
Foreign currency translation reserve at end of period		-			3,571,209
Accumulated other comprehensive income at end of period		-			3,571,209
Accumulated (deficit)/earnings
At beginning of period		4,390,396			(266,319,459	)
Net (loss)/profit for the period		(21,869,029	)		318,636,463
At end of period		(17,478,633	)		52,317,004
Total InterOil Corporation shareholders' equity at end of period		1,010,435,562			1,095,583,337

See accompanying notes to the condensed consolidated interim financial statements

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 4

InterOil Corporation

Consolidated Statements of Cash Flows

(Unaudited, Expressed in United States dollars)

	Quarter ended
	March 31,			March 31,
	2015			2014
		$			$

Cash flows generated from/(used in):

Operating activities
Net (loss)/profit for the period		(21,869,029	)		318,636,463
*Adjustments for non-cash and non-operating transactions*
Depreciation and amortization		5,428			5,479,476
Deferred tax		-			(327,581	)
Gain on conveyance of exploration assets		-			(340,540,011	)
Accretion of convertible notes liability		996,051			938,544
Amortization of deferred financing costs		-			4,808,670
Timing difference between derivatives recognized and settled		-			(1,922,566	)
Stock compensation expense, including restricted stock		3,913,729			1,833,938
Accretion of asset retirement obligation liability		-			96,141
Accretion of receivable from Total S.A. (note 5)		(10,851,196	)		-
Share of net loss of joint venture partnership accounted for
using the equity method		-			10,815
Unrealized foreign exchange gain		-			(2,668	)
*Change in operating working capital*
Decrease in trade and other receivables		210,609			23,443,367
Decrease in other current assets and prepaid expenses		670,033			936,460
Increase in inventories		-			(32,731,446	)
(Decrease)/increase in trade and other payables		(6,429,119	)		4,096,709
Net cash used in operating activities		(33,353,494	)		(15,243,689	)

Investing activities
Expenditure on oil and gas properties		(127,315,813	)		(102,681,272	)
Proceeds from joint venture cash calls		60,898,293			7,870,104
Expenditure on plant and equipment		(181,154	)		(5,386,660	)
Proceeds from disposal of plant and equipment		720,000			-
Proceeds from Total for interest in PRL 15 (note 6)		-			401,338,497
Decrease/(increase) in restricted cash held as security on borrowings		11,507			(8,303,128	)
*Change in non-operating working capital*
Increase in trade and other payables		2,201,295			55,156,441
Net cash (used in)/generated from investing activities		(63,665,872	)		347,993,982

Financing activities
Repayments of BSP and Westpac secured facility		-			(2,065,006	)
Proceeds from drawdown of Credit Suisse secured facility, net of transaction costs		-			50,000,000
Repayments of working capital facility		-			(23,720,536	)
Proceeds from issue of common shares, net of transaction costs		-			1,736,900
Net cash generated from financing activities		-			25,951,358

(Decrease)/increase in cash and cash equivalents		(97,019,366	)		358,701,651
Cash and cash equivalents, beginning of period		393,405,198			61,966,539
Cash and cash equivalents, end of period		296,385,832			420,668,190
Comprising of:
Cash on Deposit		50,918,859			420,440,091
Short Term Deposits		245,466,973			228,099
Total cash and cash equivalents, end of period		296,385,832			420,668,190

See accompanying notes to the condensed consolidated interim financial statements

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 5

InterOil Corporation

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited, Expressed in United States dollars)

General information

InterOil Corporation (the "Company" or "InterOil") is a publicly traded, upstream oil and gas exploration and production company operating in Papua New Guinea (“PNG”). The Company is incorporated and domiciled in Canada and was continued under the Business Corporations Act (Yukon Territory) on August 24, 2007. The address of its registered office is 300-204 Black Street, Whitehorse, Yukon, Canada.

These condensed consolidated interim financial statements were approved by the Directors for issue on May 7, 2015. The board of directors have the power to amend and reissue the financial report.

Significant accounting policies

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as applicable to the preparation of interim financial statements including IAS 34 – ‘Interim Financial Reporting’, and should be read in conjunction with the annual financial statements for the year ended December 31, 2014 which have been prepared in accordance with IFRS, as issued by the IASB.

The condensed consolidated interim financial statements for the quarter ended March 31, 2015 have been prepared under the historical cost convention, except for derivative financial instruments, which are measured at fair value.

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.

(a)

Statement on liquidity, capital resources and capital requirements

These condensed consolidated interim financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they become due.

The net current assets as at March 31, 2015 amounted to $682.2 million compared to $295.2 million as at March 31, 2014. The Company has cash, cash equivalents and cash restricted of $304.7 million as at March 31, 2015 (March 2014 - $482.2 million), of which $8.3 million is restricted (March 2014 - $61.5 million).

The Company’s primary use of capital resources has been the exploration and development activities. The Company has to execute exploration activities within a set timeframe to meet the minimum license commitments in relation to the Company’s Petroleum Prospecting Licenses (“PPLs”) and Petroleum Retention Licenses (“PRLs”). Refer to note 12 for further information on these commitments. Subject to meeting the license commitment requirements, the Company’s capital expenditure can be accelerated or decelerated at its discretion.

Existing cash balances will be sufficient to settle debt obligations and to facilitate further necessary development of the Elk and Antelope fields, appraisal of Triceratops field and exploration activities planned to meet our license commitment requirements. However, oil and gas exploration and development and liquefaction are capital intensive and our business plans involve raising capital, which depends on market conditions when we raise such capital. Additionally, our joint venture share of the costs of construction of an LNG plant and other infrastructure associated with a proposed LNG plant may amount to hundreds of millions of dollars and thus exceed our existing cash balances. No assurance can be given that we will be successful in obtaining new capital on terms that are acceptable to us, particularly with market volatility. Accordingly, these consolidated financial statements have been prepared on a going concern basis in the belief that the Company will realize its assets and settle its liabilities and commitments in the normal course of business and for at least the amounts stated, for a period not less than one year from the date of this financial report.

(b)

Accounting policies

The accounting policies followed in these condensed consolidated interim financial statements are consistent with those of the previous financial year.

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 6

InterOil Corporation

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited, Expressed in United States dollars)

Significant accounting policies (cont’d)

(c)

New standards issued but not yet effective

The following new standards have been issued but are not yet effective for the financial year beginning January 1, 2015 and have not been early adopted:

IFRS 9 ‘Financial Instruments’ (effective from January 1, 2018): This addresses the classification and measurement of financial assets. The standard is not applicable until January 1, 2018 but is available for early adoption. The Company is yet to assess IFRS 9’s full impact, but does not expect any material changes due to this standard. The Company has not yet decided to early adopt IFRS 9.

IFRS 15 ‘Revenue from contracts with customers’ (effective from January 1, 2017): The new standard is based on the principle that revenue is recognized when control of a good or service transfers to a customer, so the notion of control replaces the existing notion of risks and rewards. The Company is currently evaluating the impact of this standard.

Financial risk management

The Company’s activities expose it to a variety of financial risks: market risk, credit risk, liquidity risk and geographic risk. The Company’s overall risk management program focuses on the unpredictability of markets and seeks to minimize potential adverse effects on the financial performance of the Company.

Risk Management is carried out under policies approved by the board of directors of InterOil. The Finance Department identifies, evaluates and actively mitigates financial risks in close cooperation with the Company’s operations. The board of directors of InterOil provides written principles for overall risk management, as well as written policies covering specific areas. The Company’s overall risk management program seeks to minimize potential adverse effects on the Company’s financial performance.

(a)

Fair values

	March 31, 2015				December 31, 2014				March 31, 2014				Fair value	Method of
	Carrying amount		Fair value		Carrying amount		Fair value		Carrying amount		Fair value		hierarchy level	measurement
	$		$		$		$		$		$		(as required) *
Financial instruments
Financial assets
*Loans and receivables*
Cash and cash equivalents		296,385,832		296,385,832		393,405,198		393,405,198		420,668,190		420,668,190		Amortized Cost
Cash restricted		8,289,626		8,289,626		8,301,133		8,301,133		61,517,672		61,517,672		Amortized Cost
Receivables		585,141,451		585,141,451		566,362,745		566,362,745		66,634,767		66,634,767		Amortized Cost
Other non-current receivable		29,700,534		29,700,534		29,700,534		29,700,534		581,593,476		581,593,476		Amortized Cost
*Held for trading*
Derivative contracts		-		-		-		-		53,313		53,313	Level 2	Fair Value - See (i) below
Financial liabilities
*Current liabilities:*
Accounts payable and accrued liabilities		134,945,095		134,945,095		139,716,105		139,716,105		182,991,664		182,991,664		Amortized Cost
Working capital facilities		-		-		-		-		12,658,495		12,658,495		Amortized Cost
2.75% Convertible notes liability		67,498,043		67,498,043		66,501,994		66,501,994		-		-		Amortized Cost
Unsecured loans and current portion of secured loans		-		-		-		-		199,814,163		199,814,163		Amortized cost See (ii) below
*Non-current liabilities*
Secured loans		-		-		-		-		53,386,003		53,386,003		Amortized cost See (ii) below
2.75% Convertible notes liability		-		-		-		-		63,601,172		63,601,172		Amortized Cost
Other non-current liabilities		96,000,000		96,000,000		96,000,000		96,000,000		96,752,001		96,752,001		Amortized Cost

* Where fair value of financial assets or liabilities is approximated by its carrying value, designation under the fair value hierarchy is not required.

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 7

InterOil Corporation

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited, Expressed in United States dollars)

Financial risk management (cont’d)

The net fair value of cash and cash equivalents and non-interest bearing financial assets and financial liabilities of the Company approximates their carrying amounts.

The carrying values (less impairment provision if provided) of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The carrying value of financial liabilities approximates their fair values which, for disclosure purposes, are estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Company for similar financial instruments.

Commodity derivative contracts’ is the only item from the above table that is measured at fair value on a recurring basis. All the remaining financial assets and financial liabilities are measured at a fair value on a non-recurring basis and are maintained at historical amortized cost.

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The Company has classified the fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and

Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

(i) Derivative contracts classified as being at fair value through profit and loss are fair valued by comparing the contracted rate to the current market rate for a contract with the same remaining period to maturity. The fair value of the Company’s derivative contracts were based on price indications provided to us by an external brokerage who entered into derivative transactions with counter parties on the Company’s behalf. The contracts related to the hedging of certain product price risk exposures were transferred to Puma Energy Pacific Holdings Pte Ltd (“Puma”) on completion of the sale of the Midstream Refining operation on June 30, 2014.

(ii) All secured loans are subject to floating interest rates and as such the carrying values of these loans are assumed to approximate their fair values. These secured loans were repaid during the quarter ended June 30, 2014.

Discontinued operations

On June 30, 2014, the Company entered into share sale and purchase agreements with Puma for the sale of InterOil subsidiaries that hold the oil refinery and petroleum products distribution businesses, which were previously included within the Midstream Refining and Downstream segments respectively. The results of operations for these sold businesses have been presented as discontinued operations in the consolidated income statement for the quarter ended March 31, 2014. In addition, the shipping business which was previously included within the Corporate segment has also been classified as a discontinued operation in the consolidated income statements for the quarter ended March 31, 2014, as the activities previously being carried out by the business have been transferred to Puma with the sale of the refining and distribution businesses.

Cash flows from these discontinued operations have been combined with the cash flows from continuing operations in the consolidated statements of cash flows for the quarter ended March 31, 2015 and 2014. Cash flows generated from/(used in) the discontinued operations are presented in the following table.

	Quarter ended
	March 31,		March 31,
	2015		2014
	$		$

Net cash generated from operating activities		-		23,145,057
Net cash used in investing activities		-		(1,002,376	)
Net cash used in financing activities		-		(23,010,919	)

Total cash flows		-		(868,238	)

The results of operations associated with all discontinued operations are presented in the following table.

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 8

InterOil Corporation

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited, Expressed in United States dollars)

Discontinued operations (cont’d)

	Quarter ended
	March 31,		March 31,
	2015		2014
		$		$

Revenue		-		309,875,674
Expenses		-		(299,625,043	)
Profit before tax from discontinued operations		-		10,250,631
Income tax expense		-		(2,439,076	)
Profit from discontinued operations		-		7,811,555

Trade and other receivables

	March 31,		December 31,		March 31,
	2015		2014		2014
	$		$		$
Trade and other receivables		31,504,682		21,207,984		66,634,767
Sale proceeds receivable from Total		553,636,769		545,154,761		-
Total		585,141,451		566,362,745		66,634,767

The reduction in trade and other receivables as at March 31, 2015 compared to the balance as at March 31, 2014 is due to the divestment of the operating businesses on June 30, 2014. Other receivables mainly relates to cash calls receivable from joint venture partners.

Refer to note 6 for details of the Total transaction. The Interim Resource Payment, as defined under the share sale agreement (“Total SSA”) with Total S.A. (“Total”), which is due to the Company, following the interim certification has been calculated to be $593,887,429 based on a resource estimate of 7.10 Tcfe in accordance with the resource certification mechanics found in the Total SSA and the range of resources contemplated therein. The Company has recognized $10,851,196 as a result of unwinding the discount on the receivable as interest income during the quarter ended March 31, 2015. In addition, this receivable has been reduced by $2,369,188 during the quarter ended March 31, 2015, which represents a portion of the carry received from Total for development activities undertaken over PRL 15, which is to be offset against the Interim Resource Payment when due. The following table shows the movement in the receivable during the period.

	March 31,				December 31,				March 31,
	2015				2014				2014
	$			$				$
Balance at beginning of period		545,154,761				-				-
Initial recognition of receivable from Total		-				551,892,942				551,892,942
Interest accretion income on receivable from Total		10,851,196				24,826,440				-
Adjustment due to change in timing of estimated cash flows		-				(24,206,783	)			-
less amounts received from Total for carry of appraisal costs		(2,369,188	)			(7,357,838	)			-
Balance at end of period		553,636,769				545,154,761				551,892,942

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 9

InterOil Corporation

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited, Expressed in United States dollars)

Exploration and evaluation assets

Costs of exploration and evaluation assets which are not subject to depletion are as follows:

	March 31,		December 31,		March 31,
	2015		2014		2014
	$		$		$
Infrastructure and drilling and construction equipment		3,520,588		1,759,251		2,332,035
Drilling consumables and spares		34,451,211		32,659,831		27,241,523
Petroleum Retention License drilling programs (Unproved)		120,295,048		83,939,901		49,662,920
Petroleum Prospecting License drilling programs (Unproved)		224,499,007		206,682,990		18,865,757
Gross Capitalized Costs		382,765,854		325,041,973		98,102,235
Accumulated depletion and amortization
Unproved oil and gas properties		-		-		-
Proved oil and gas properties		-		-		-
Net Capitalized Costs		382,765,854		325,041,973		98,102,235

The majority of the costs capitalized under ‘Petroleum Retention License drilling programs’ above relates to the exploration and development expenditure on the Elk, Antelope and Triceratops fields. The majority of the costs capitalized under ‘Petroleum Prospecting License drilling programs (Unproved)’ above relates to the exploratory drilling costs relating to Wahoo-1, Bobcat-1 and Raptor-1 wells.

The following table discloses a breakdown of the exploration and evaluation costs incurred for the periods ended:

	Quarter ended			Year ended			Quarter ended
	March 31,			December 31,			March 31,
	2015			2014			2014
	$			$			$
Opening balance		325,041,973			584,807,023			584,807,023
Property Acquisition Costs		-			-			-
Exploration Costs		11,183,341			256,562,981			45,472,375
Development Costs		117,119,592			194,291,826			57,208,896
Add: Premium paid on indirect participating interest buyback transactions		-			41,525,728			41,525,728
Less: Indirect participating interest conveyance accounting offset against properties		-			(12,097,363	)		(12,097,363	)
Less: Total conveyance accounting offset against properties		-			(611,939,426	)		(611,939,426	)
Less: Costs recovered through cash calls from joint venture partners		(70,579,052	)		(128,108,796	)		(6,874,998	)
Total Costs capitalized		57,723,881			(259,765,050	)		(486,704,788	)
Closing balance		382,765,854			325,041,973			98,102,235
Charged to expense
Geophysical and other costs		19,261,332			34,529,478			8,696,289
Total charged to expense		19,261,332			34,529,478			8,696,289
Exploration and Evaluation Assets Net Additions (capitalized and expensed)		76,985,213			(225,235,572	)		(478,008,499	)

Total Sale and Purchase Agreement for PRL 15:

On March 26, 2014, the Company signed and closed the Total SSA, under which Total acquired through the purchase of all of the shares in a wholly owned subsidiary of InterOil, a gross 40.1275% interest in PRL 15, which contains the Elk and Antelope gas fields. InterOil received $401.3 million for closing the transaction, and became entitled to receive $73.3 million upon a final investment decision for an Elk and Antelope LNG project, and $65.5 million upon the first LNG cargo from such LNG project. In addition to these fixed amounts, Total is obliged to make variable payments for gas amounts in PRL 15 that are in excess of 3.5 Tcfe, based on certification by two independent certifiers following the drilling of up to three appraisal wells to be drilled in PRL 15. The gas resource payment for amounts greater than 5.4 Tcfe will be paid at certification. The conveyance accounting for the sale of property under the Total SSA was accounted for in the quarter ended March 31, 2014.

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 10

InterOil Corporation

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited, Expressed in United States dollars)

Secured and unsecured loans

Credit Suisse led Syndicated Secured Loan Facility

On June 17, 2014, the Company replaced the $250.0 million facility with a $300.0 million syndicated, senior secured capital expenditure facility through a consortium of banks led by Credit Suisse AG (“Credit Suisse”). The facility was supported by the participating lenders under the original facility (Commonwealth Bank of Australia (“CBA”), Australia and New Zealand Banking Group (PNG) Limited (“ANZ”), UBS A.G. (“UBS”) , Macquarie Group Limited (“Macquarie”), Bank of South Pacific Limited (“BSP”), BNP Paribas Capital (Singapore) Limited (“BNP Paribas”) and Westpac Bank PNG Limited (“Westpac”)) in addition to new banks, The Bank of Tokyo-Mitsubishi UFJ (“MUFJ”) and Societe Generale S.A. (“SocGen”). The new facility has an annual interest rate of LIBOR plus 5% and was to mature at the end of 2015.

On March 17, 2015, the Company has signed an amendment to further extend the maturity date on this facility to the end of 2016 with Credit Suisse, CBA, ANZ, UBS AG, Macquarie, BSP, Westpac, MUFJ and SocGen participating in the extension. No draw downs have been made under the facility as at March 31, 2015. As at March 31, 2015, the Company is in compliance with the applicable debt covenants, which included a defined calculation for gearing not to exceed 60% at any time, and the equity does not fall below $500 million at any time.

During the quarter ended March 31, 2015, the total interest expense included in finance costs was nil (March 2014 - $2,004,858). In addition, financing costs relating to the loan of $6,670,871 (of which $4,829,641 relates to the refinancing completed in March 2015) were expensed during the quarter ended March 31, 2015 (March 2014 - $5,465,348).

Share capital and reserves

The authorized share capital of the Company consists of an unlimited number of common shares with no par value and an unlimited number of preferred shares, of which 1,035,554 series A preferred shares are authorized. Each common share entitles the holder to one vote.

Common shares - Changes to issued share capital were as follows:

	Number of shares			$

January 1, 2014		49,217,242			953,882,273

Shares issued on exercise of options under Stock Incentive Plan		127,400			3,623,272
Shares issued on vesting of restricted stock units under Stock Incentive Plan		111,505			7,283,299
Shares issued on buyback of IPI interest in PRL 15		688,654			41,525,728
Shares buyback		(730,000	)		(14,620,792	)

December 31, 2014		49,414,801			991,693,780

Shares issued on vesting of restricted stock units under Stock Incentive Plan		95,313			5,020,744

March 31, 2015		49,510,114			996,714,524

Preferred shares - No preferred shares are issued, or were issued at any time during the quarter ended March 31, 2015 (March 2014 – nil).

Interest revenue

	Quarter ended
	March 31,		March 31,
	2015		2014
		$		$

Interest income on short term deposits		560,837		52,534
Interest accretion income on receivable from Total (note 5)		10,851,196		-
Interest revenue		11,412,033		52,534

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 11

InterOil Corporation

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited, Expressed in United States dollars)

10.

Finance costs

	Quarter ended
	March 31,		March 31,
	2015		2014
		$		$

Interest expense on Credit Suisse Secured Loan		-		2,004,858
Interest expense on Westpac and BSP Secured Loan		-		699,703
Interest expense on Convertible Notes		481,236		481,236
Interest accretion on Convertible Notes		996,051		938,544
Financing fees on Credit Suisse Secured Loan		6,670,871		5,465,348
Financing fees on Westpac and BSP Secured Loan		-		548,717
Other finance costs		-		46,020
Finance costs		8,148,158		10,184,426

11.

Earnings/(loss) per share

Conversion options, convertible notes, stock options and restricted stock units totaling 1,230,753 common shares at prices ranging from $41.08 to $95.63 were outstanding as at March 31, 2015.

	Number of shares		Number of shares
Potential dilutive instruments outstanding	March 31, 2015		March 31, 2014
Employee stock options		410,000		395,000
Employee Restricted Stock		88,749		197,327
2.75% Convertible notes		732,004		732,004
Total stock options/shares outstanding		1,230,753		1,324,331

12.

Commitments and contingencies

(a) Exploration and debt commitments

Payments due by period contractual obligations are as follows:

	Total		Less than 1 year		1-2 years		2-3 years		3-4 years		4-5 years		More than 5 years
		'000		'000		'000		'000		'000		'000		'000
Petroleum prospecting and retention licenses		404,665		40,025		89,525		87,952		97,650		89,513		-
Convertible notes obligations		71,281		71,281		-		-		-		-		-
		475,946		111,306		89,525		87,952		97,650		89,513		-

The amount pertaining to the PPL’s and PRL’s represents the amount the Company has committed on these licenses as at March 31, 2015. On March 6, 2014, the Company’s applications for new petroleum prospecting licenses were approved with PPL 474 replacing PPL 236, PPL 475 replacing PPL 237, and PPL 476 and PPL 477 replacing PPL 238 and included new license commitments. The new commitments require the Company to spend an $359.0 million over the remainder of their six year term.

Further, the terms of grant of PRL 39 requires the Company to spend $45.6 million on the license area by the end of 2018.

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 12

InterOil Corporation

Notes to Condensed Consolidated Interim Financial Statements

(Unaudited, Expressed in United States dollars)

12.

Commitments and contingencies (cont’d)

(b) Contingencies:

From time to time the Company is involved in various claims and litigation arising in the course of its business. While the outcome of these matters is uncertain and there can be no assurance that such matters will be resolved in the Company’s favor, the Company does not currently believe that the outcome of adverse decisions in any pending or threatened proceedings or any amount which it may be required to pay by reason thereof would have a material adverse impact on its financial position, results of operations or liquidity.

Oil Search Limited dispute under PRL 15 joint venture operating agreement:

On March 27, 2014 the Company received notification from Oil Search Limited of a dispute under the Joint Venture Operating Agreement relating to PRL 15 in Papua New Guinea. The dispute related to the sale by the Company of a subsidiary, SPI (200) Limited, to Total. The entity held a 40.1% interest in PRL 15 at the time of the sale. The matter had been referred to arbitration and was heard in late November 2014 by the International Court of Arbitration (ICC). On February 10, 2015, the ICC arbitration panel delivered its award whereby the panel dismissed all claims against the Company and declared that Total is a party to the PRL 15 Joint Venture Operating Agreement.

Condensed Consolidated Interim Financial Statements INTEROIL CORPORATION 13

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