InterOil Says Funding for Drilling Program Now Unconditional

InterOil Corporation (TSX:IOL) (AMEX:IOC) (ASX/POMSoX:IOC), a Canadian company with operations in Papua New Guinea, has received waivers from the Australian Stock Exchange (ASX) and the Port Moresby Stock Exchange (POMSoX). These waivers allow US$33 million of indirect participation interest issued to be closed, as part of the US$125 million issuance of indirect participation interest to fund InterOil's exploration program in Papua New Guinea. Investors holding the US$33 million of indirect participation interest may elect to convert all of their interest in the second half of 2006, and upon conversion they would receive 877,420 common shares.

In addition, the POMSoX has agreed to consider allowing InterOil to maintain its PNG listing so long as it meets its home exchange listing rules, by waiving any POMSoX rules that may conflict with rules of its home exchange. As a result, InterOil will remain listed on the POMSoX under the symbol IOC and will continue to trade in full common shares.

"We are pleased the POMSoX recognized the conflict that can arise from being listed on numerous exchanges, and has allowed us to remain listed on the POMSoX under our primary stock exchange listing requirements," stated Mr. Phil Mulacek, CEO and Chairman. "This will allow for continued investment support within Papua New Guinea."

InterOil is developing a vertically integrated energy company whose primary focus is Papua New Guinea and the surrounding region. Its assets comprise an oil refinery, upstream petroleum exploration licenses, and retail and commercial distribution assets. The majority of the refined products from InterOil's refinery are secured by off-take contracts with Shell and InterOil's wholly-owned subsidiary, InterOil Products Limited. BP Singapore is InterOil's agent for crude oil supplied to the refinery. InterOil is also undertaking an extensive petroleum exploration program within its eight million acre license area located in Papua New Guinea.

InterOil's common shares trade on the Toronto Stock Exchange under the symbol IOL in Canadian dollars; on the American Stock Exchange under the symbol IOC in US dollars; and on the Australian Stock Exchange in CHESS Depositary Interests in Australian dollars under the symbol IOC which trade on a 10:1 basis to common shares.