InterOil: Elk-2 Spuds in Papua New Guinea

InterOil Corp., a Canadian company with operations in Papua New Guinea, announced that drilling has commenced on the Elk-2 appraisal well. The Elk-2 is located approximately 2.9 miles (4.7 km) northwest of the Elk-1 discovery well in Petroleum Prospecting License 238 and is planned to test the entire 2,000 feet Puri and Mendi limestone section located in a down dip position. The Elk-2 well is expected to take up to 90 days to reach the proposed total measured depth of approximately 10,000 feet (3,050 meters) at an estimated cost of US$12.5 million.

"Drilling this well is targeted to delineate the natural gas resource and determine the existence of an oil leg," said Mr. Phil Mulacek, Chairman and CEO. "Upon reaching the total planned depth, we will conduct an extensive testing program designed to better understand the natural gas potential in the Elk structure which could underpin a Liquefied Natural Gas (LNG) Project," Mr. Mulacek added.

An estimated forward program presentation: "InterOil Elk Appraisal, February 2007" may be viewed on InterOil's website:

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, retail and commercial distribution assets and targeting expansion into Liquefied Natural Gas (LNG). 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.