InterOil Secures Credit Facility for LNG Project
InterOil Corporation states that its $130 million secured credit facility with lenders Merrill Lynch Capital Corporation (Merrill) and Clarion Finanz AG acting through an affiliate, Pacific LNG Operations Ltd (Pacific LNG) was amended to extend the existing 4% interest rate from June 30, 2007 to July 31, 2007. With execution of a shareholder agreement covering the Papua New Guinea liquid natural gas (LNG) project by the company and these lenders on or before July 31, 2007, the interest rate will continue to be 4% for the full term of the loan, which ends May 2008. If an agreement is not finalized, the interest rate will increase to 10% unless the lower rate is further extended by the parties.
"We have made major progress on the negotiations covering the LNG project and are close to finalizing the documentation on a definitive shareholder agreement," InterOil Chairman and CEO Phil Mulacek said. "Both Merrill Lynch and Pacific LNG have reiterated their commitment to the LNG project, following the confirmation of a large gas column in the Elk structure. All parties are encouraged with the interim results of Elk-2, and the overall resource potential in the structure, which can underpin the joint LNG project."
Drilling and evaluation operations continue on Elk-2 with several important outcomes already achieved:
- Drilled to nearly 8,700 feet (2,650 meters) and confirmed over 3,400 feet (1,040 meters) of total limestone formation from the top of Elk-1 to the current depth of Elk-2.
- Confirmed that the natural gas column in the structure extends to over 2,300 feet (700 meters) while not encountering a gas water contact.
- Gas was produced to surface and downhole pressures were recorded leading to a calculated reservoir pressure in excess of 3,800 pounds per square inch.
- Heavy gas and gas liquid compositions were reported on mudlogs data indicating that the natural gas is becoming richer with depth, information critical to the design features of the LNG plant.
"These well results strengthen our ability to secure the natural gas supply to support and maintain the project on track for delivery of LNG in 2012. We are positive about the progress of Elk-2 and continue with our plans to drill, core and test the entire limestone formation, which may demonstrate expanded natural gas resources for future growth of the LNG project," Mulacek said.
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