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InterOil’s Gulf LNG project in good progress

InterOil has confirmed gas flow and an increased condensate ratio in an additional 131 feet (40 metres) of pay, which is the vertical thickness of reservoir rock estimated to contain hydrocarbons and be capable of contributing to production rates in one of its operation sites.

This was announced in the company’s Second Quarter Financial and Operating Results, stating that the results are for lower two reservoir intervals based on ongoing experiments in the Triceratops-2 well in the Gulf Province.

InterOil Chief Executive Officer Phil Mulacek says these test results along with the confirmation of gas in the upper limestone firmly establish the Triceratops structure as a significant discovery for the company, its partners and Papua New Guinea.

Having tested only a small portion of the structure, InterOil is looking forward to working with its partner, Pacific Rubiales, in integrating the new well and potential field data with the aim of designing a seismic data acquisition and six well delineation plan at the Triceratops structure.

The company reported a net loss for the quarter of June 2012 to be $31.7 million.

“The loss for the quarter includes a $23.8 million inventory write-down resulting from the decline in crude oil and related commodity prices during the period. Excluding the $23.8 million inventory write-down, operating segments of Corporate, Midstream Refining and Downstream collectively derived a net profit of $7.5 million while the investments in the development segment of Upstream and Midstream Liquefaction resulted in a net loss of $15.4 million,” Mr Mulacek said.

InterOil’s Rig#2 was released from the Triceratops-2 well on August 13, and is being mobilised to the Antelope-3 drilling location while Rig#3 is being prepared to be deployed to the Elk-3 drilling site in the Gulf province.

The company reported that it is ready to begin drill works at two obligation wells in the petroleum retention license (PRL) 15 area.

The company’s Tuna and Wahoo/Mako prospects in petroleum prospecting licenses (PPL) 236 and 238 are in the drill ready stage and preparations are underway to access proposed drilling locations.

InterOil’s Chief Executive Officer Phil Mulacek commented: “We welcome the pleasure to work with both returning and new ministers of the 9th Parliament of Papua New Guinea to bring an LNG processing facility to Papua New Guinea of a nature and in a manner which will be satisfactory to the State and to the mutual benefit of all stakeholders.”

In regards to the ongoing LNG partnering process, Mr. Mulacek says with the sound backing of the new PNG administration, the company continues to work with their advisors to finalise selection of an LNG equity partner.

“The end result of the partnering process is expected to fully satisfy all the terms of the 2009 LNG Project Agreement,” he said.

As to the Triceratops-2 well, Mr. Mulacek said: “We are very encouraged by the results of the

Triceratops-2 well, the third discovery well. We believe that the Triceratops-2 well is a significant resource discovery. We look forward to continuing to work with the very capable management and technical team of Pacific Rubiales as we delineate Triceratops and further explore PPL 237. Our prospect inventory is maturing and we anticipate that it will support our goal of a multi-year, multiwall exploration program. We believe that these achievements, combined with our strong balance sheet, support our continued growth and operational success.”

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