InterOil Corporation provides update on PNG operations.

Current Operations Highlights • InterOil has received the first payment from Mitsui to fund the Front End-Engineering and Design (FEED) of its proposed joint venture condensate stripping plant. • The Antelope-2 horizontal well has achieved its 1,000-foot (305 meter) objective.

InterOil Chief Executive Officer Mr. Phil Mulacek commented: 'InterOil has made substantial progress on multiple fronts and we continue to demonstrate a track record of success as we move toward monetizing our significant natural gas resources in Papua New Guinea. Our joint venture with Mitsui & Co. Limited is proceeding as anticipated, we have achieved our objective on the length of the Antelope-2 horizontal well, and the profitability of our refining business is off to a great start in the second quarter.'

Condensate Stripping Joint Venture InterOil has received the first payment from its joint venture partner, Mitsui & Co. Limited to fund the Front-End Engineering and Design of the proposed condensate stripping plant. An initial payment of $2.2 million was recently received and is representative of the commitment by Mitsui to further the FEED process. InterOil expects further instalments in the near future to cover costs already incurred by InterOil on the project.

Antelope-2 Horizontal Well InterOil has completed its objective of drilling horizontally ~1,000 feet (305 meters) in the Antelope-2 well and onsite activities are currently drilling ahead. To date, InterOil has drilled 1,040 horizontal feet (317 meters) outside the 5 ½ inch casing. InterOil believes that the well bore stability and drilling conditions warrant further extension of the horizontal section. The Company intends to drill as far as possible with the current drill bit assembly. Logging and well testing will begin promptly following completion of the horizontal section. The horizontal well is designed to determine the condensate-to-gas ratio at the bottom of the reservoir. This ratio will assist InterOil in the final FEED design of the proposed condensate stripping plant.

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