InterOil applied for the new licenses to obtain the benefit of the newly established 30 percent tax rate in Papua New Guinea. The revised tax rate applies to new licenses and compares favorably to the previous tax rate of up to 65 percent. The area covered by the three licenses was increased by 38 percent to more than eight million acres to ensure all prospects identified in InterOil's previous exploration studies are clearly within InterOil licenses. The new licenses require an active exploration drilling program commitment that will be met by InterOil's 8-well drilling program, located mainly within the boundaries of the new license, PPL 238.
These three licenses are located on the Government of Papua New Guinea's proposed energy infrastructure corridor.
"The Government of Papua New Guinea has delivered tax reform and we are pleased to be able to respond immediately by starting the eight well drilling program" said Andy Carroll, General Manager of Exploration and Production for InterOil. "We are drilling ahead at Moose-1 and will have results by the end of this month. The next seven wells will follow immediately and should be drilled by the end of the year. The award of these licenses and the drilling program provides the foundation for a revitalized oil industry in Papua New Guinea. We are now looking at accelerating and expanding the drilling program to deliver first oil to the Refinery before the end of this year."
InterOil is focused on Papua New Guinea and the surrounding region, and is developing an integrated energy business consisting of an oil refinery, petroleum exploration, and retail assets. The majority of product from the refinery is secured by contracts valued by the Company at approximately US$1.4 billion with Shell Overseas Holdings Ltd. BP Singapore is the exclusive agent for all crude oil supplied to the refinery. The primary debt for the refinery is through a US$85 million loan by the Overseas Private Investment Corporation, "OPIC", an agency of the US Government. In addition to the refinery and retail assets, InterOil has recently announced the largest exploration program in Papua New Guinea history by a single company.
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