InterOil Continues Aggressive South American Drilling Campaign

InterOil initiated an intense drilling program in Peru and Colombia during July using three rigs in Peru and one in Colombia.

In Peru two rigs have been used for drilling wells in Block IV and one rig was used in Block III. Most of the wells drilled in Block IV are shallow wells with a target between 1200 and 2400 ft. The cost of the shallow wells are approximately US $350,000 per well.

Currently, 2 wells in Block III and 5 wells in Block IV have been completed and put in production. Two of the wells in Block IV were put in production in late July whilst the remaining wells were ready for production during first week of August. The production from these wells varies between 20 and 120 bopd with a total effect of 400 bopd. This is in-line with what we expected. As a result of these new production wells, our total production is now close to 2700 bopd in Peru. The 3 drilling rigs will continue with their drilling of another 11-13 wells. The drilling campaign in Block IV will continue until late September and until Late October in Block III. One of the wells in Block III will be testing fractured basement in addition to the normal sandstone reservoir. So far the drilling has proved the presence of producible oil from basement. Depending upon the test result InterOil might drill a horizontal well in this reservoir in order to increase the production.

In Colombia we have drilled two wells in the Mana Block. Both the Mana-9 and 10 encountered oil and are presently being tested. Both wells confirm the extension of the Mana Field to the west. The rig will now move to the Mana-14 location south of Mana 10 where it will test a segment between Mana-9 and Mana-10. A total of 5 more wells will be drilled on the Mana Field this year after Mana-10, before the rig will move to the Paraiso Block to drill a deep exploration well targeting a Mana look-alike. The well is expected to reach the target by end November.