InterOil Says Elk-2 Results Encouraging

InterOil filed the Elk-2 well technical review and final drilling report of its Elk-2 appraisal well in Papua New Guinea. "The drilling and subsequent testing of the Elk-2 appraisal well has confirmed conductive fractures, porosity and deliverability and a larger rock volume and better than anticipated reservoir quality, which indicate increased potential gas resource in the Elk structure. The results from the Elk-2 well continue to support a significant hydrocarbon column and potential gas resource required to underpin a proposed LNG project in Papua New Guinea by our joint-venture," said Mr. Phil Mulacek, Chief Executive Officer of InterOil. Results from drilling and subsequent logging, coring and testing of the Elk-2 appraisal well, indicate the following:

- Primary targeted Puri Limestone stratigraphic thickness is 1,749 feet (533 meters) and the Mendi Limestone is 958 feet (292 meters) both thicker than pre-drill estimates.

- Logged net reservoir is 663 feet (202 meters) measured thickness with average log porosity of 4.5%.

- Mendi Limestone average porosity of 6.3%.

- The fracture conductivity measured with the FMI log was supported by the DST's which resulted in flow capacities (kh) as high as 472,000 millidarcy-feet and water flow rates of up to 2,565 barrels per day in lower part of the well.

- Comprehensive understanding of the reservoir from technical data obtained from the full suite of logs including FMI, VSP and extensive sidewall coring.

- Most pre-drill expectations have been achieved and future drilling on the Elk structure will be undertaken to confirm oil/gas reserves.

Our plan is to suspend the Elk-2 for possible re-entry at a later date and move the rig to the Elk-4 location, which lies approximately 1 mile (1.6 km) south of the Elk-1 discovery well in preparation for drilling.

InterOil Corporation is developing a vertically integrated energy business with its primary focus in Papua New Guinea and the immediately surrounding region. InterOil's assets consist of petroleum licenses covering about nine million acres, an oil refinery, and retail and commercial distribution assets, all located in Papa New Guinea. During 2006, InterOil announced a gas and condensate discovery, completed an optimization program at the refinery, and doubled its downstream business. In addition, InterOil is participating in a joint venture established to construct Papua New Guinea's first LNG plant on a site adjacent to its refinery.