InterOil Corporation announced positive results from the Elk-2 appraisal well in Papua New Guinea.

“We are now confident that the Elk structure contains sufficient gas to underpin the first train of an LNG plant which will be built by Liquid Niugini Gas Ltd., adjacent to our refinery, and sufficient oil shows to justify sidetracking to confirm an oil leg,” said Mr Phil Mulacek, Chairman and CEO of InterOil.

The Elk-2 appraisal well was originally identified by an extensive seismic program, and was drilled to confirm the extent of the Elk structure, find an oil leg, confirm the matrix porosity in the Puri and Mendi limestone, and drill to the water contact point to determine the thickness of the limestone reservoirs.

Successful drilling efforts and testing activities in the well have confirmed the following:

ü ~ 4,452 feet (1,358 meters) of indicated hydrocarbon column from highest known gas in Elk-1 to lowest indicated hydrocarbons in Elk-2. ü Multiple oil shows throughout a column of 594 feet (181 meters) (fluorescence, free oil in mud, and oil recovered in the core). ü The well has flowed gas and gas liquids to surface during DST. ü Extrapolated initial reservoir pressure, P*, of 3,900 psi. Upper Puri reservoir flow is indicative of fractures. ü Multiple drilling breaks, in conjunction with losses, and hydrocarbon shows indicate porosity and permeability throughout the reservoir section drilled. ü Multiple gas zones, with continuous presence of gas in the mud logs. ü The target reservoirs (Puri and Mendi limestone) are significantly thicker than predrill