InterOil has entered into a contract with Loadmaster Rig Systems of Houston, Texas, under which Loadmaster has agreed to complete the design and engineering and then manufacture a special-purpose built, heli-portable drilling rig to be used for InterOil's exploration program in Papua New Guinea. The contract provides that the rig is to be a 'double' with a minimum depth drilling capability of 13,123 feet (4,000 meters). The rig is expected to be adequate for the majority of our identified drilling targets. Loadmaster has agreed to design the rig so that it can be bundled for efficient helicopter transportation over the difficult terrain within Papua New Guinea. Long lead items for this rig were purchased by InterOil in late 2004. The contracted delivery date to Papua New Guinea is early third quarter 2005; however, the contract provides for a financial incentive if delivery is made to Papua New Guinea in May 2005.
"We are pleased to announce the acquisition of this special-purpose built drilling rig at a time when there is a worldwide shortage of readily available heli-portable rigs. Following two quarters of our engineering, design, and procurement, and the delivery of the rig mid-2005, we expect this rig to significantly benefit our drilling program during 2005 and beyond," said Phil Mulacek, CEO of InterOil.