InterOil's PNG Well Notes Increasing CGR Rate

InterOil provided an update on its operations.

InterOil Chief Executive Officer Phil Mulacek said, "The Antelope-2 horizontal well has accomplished multiple objectives. First, it has confirmed an increasing condensate-to-natural gas ratio (CGR) of 18 barrels per million cubic feet of natural gas, 12% higher than observed at the top of the reservoir. Second, the horizontal demonstrated dolomitization and higher porosity deeper in the reservoir than previously modeled. These results assist the already economic returns estimated for the project with our joint venture partner Mitsui & Co."

Antelope-2 Horizontal Extended Reach

The Antelope-2 horizontal well, drilled in an easterly direction, achieved a length of 2,569 feet (783 meters) beyond liner shoe reaching a total of 3,066 feet (934 meters) from vertical well bore. At a true vertical depth (TVD) of 7,668 feet (2,337 meters), the well encountered a gradual lithology change, including increased dolomite, observed while drilling with mud returns for the first 1,460 feet (445 meters). The Company converted to "managed pressure drilling" from 9,394 feet (2,863 meters) measured depth to TD.

Electric Logs Confirm Increased Porosity

Electric logs from the Antelope-2 horizontal indicate increased porosity of 11.1%, an 80% increase from the comparable zone in the vertical wellbore which averaged approximately 6.0 % in the comparable horizon. The horizontal well encountered a dolomitized zone which enhanced reservoir porosity. Porosity measurements exceed the year-end 2009 reservoir model for this portion of the reservoir.

Antelope-2 Horizontal Drill Stem Test #4 Confirms Higher CGR

Drill Stem Test #4, performed on lateral section of the well from 7,933 feet (2,418 meters) to 10,502 feet (3,201 meters) measured depth (MD), recovered 18 Bbls/MMcf, a 12% increase over the 16 Bbls/MMcf recovered in DST#1 at the top of the reservoir. During the 46 hour test the well flowed at a maximum rate of 11 MMcf/d through a 1/2 inch choke, a rate that was restricted by drill pipe and downhole equipment. The pressure draw down during the test averaged 3-4 psi with flowing bottom hole pressure of 3,699 psi. The minimal pressure draw down is in indicator of the ultimate flow capacity of the well which results from the higher porosity encountered.

Exploration Activities

At Antelope, processing of the 100 km of 2D seismic acquired has been completed. Seismic interpretation and reservoir geophysical studies are well advanced. In the joint program with LNG Energy, a 27 km line has been acquired in an area of mutual interest and is currently in final processing. Furthermore, on the Wolverine prospect 20 km of seismic acquisition has been completed and the crew is currently shooting another 20 km at the Bwata prospect. The seismic program is designed to prioritize our exploration inventory in time for deployment of our second drilling rig.

The new rig is packed and ready for shipment. The rig will depart New Zealand near the end of the month and arrive in PNG around mid-July. Once in PNG it will be moved to our facilities at Napa Napa where preparations for jungle operations will be completed. The Company anticipates mobilizing the rig into the field in the 4th quarter.

Operations are currently preparing for DST#5 to isolate and test the furthest and deepest section of the horizontal over the last 492 feet (150 meters).