InterOil Corporation, a Canadian company with operations in Papua New Guinea announced that drilling has commenced on the Elk-2 appraisal well.

The Elk-2 is located approximately 2.9 miles (4.7 km) northwest of the Elk-1 discovery well in Petroleum Prospecting License 238 and is planned to test the entire 2,000 feet Puri and Mendi limestone section located in a down dip position. The Elk-2 well is expected to take up to 90 days to reach the proposed total measured depth of approximately 10,000 feet (3,050 meters) at an estimated cost of US$12.5 million.

"Drilling this well is targeted to delineate the natural gas resource and determine the existence of an oil leg," said Mr. Phil Mulacek, Chairman and CEO. "Upon reaching the total planned depth, we will conduct an extensive testing program designed to better understand the natural gas potential in the Elk structure which could underpin a Liquefied Natural Gas (LNG) Project," Mr. Mulacek added.