MEDIA RELEASE PR40690
InterOil Executes Definitive Joint Venture Operating Agreement with Mitsui on
Condensate Stripping Project
CAIRNS, Australia and HOUSTON, Aug. 4 /PRNewswire-AsiaNet/ --
MITSUI EARNS OPTION TO ACQUIRE UP TO 5% OF ELK AND ANTELOPE
FIELDS AND 5% IN LNG PROJECT
InterOil Corporation (NYSE: IOC) (POMSoX: IOC) today announced that a Joint
Venture Operating Agreement ("JVOA") for the Company's proposed Condensate Stripping
Plant ("CSP") has been finalized with Mitsui & Co., Ltd. ("Mitsui"). The JVOA sets out
the rights and obligations of the participants of the joint venture to develop a CSP
at InterOil's Elk and Antelope field site in Gulf Province, Papua New Guinea. The JVOA
replaces the preliminary joint venture works agreement announced in April 2010.
InterOil and Mitsui also executed an Option Deed. After reaching final
investment decision on the CSP, Mitsui has options to acquire interests of up
to a 5% in the Elk and Antelope fields and in the liquefied natural gas (LNG)
Project on equal terms, yet to be determined, to those agreed with a future
industry partner, as follows:
1) After mechanical completion of the CSP, Mitsui has a right to convert
its contributed investment in the CSP into a 2.5% interest in the Elk
and Antelope fields and the proposed LNG Plant.
2) Mitsui also has conditional rights under a separate call option to
purchase an additional 2.5% interest in the Elk and Antelope fields
and the proposed LNG Plant.
Certain regulatory approvals will be required from the Papua New Guinea
State for the options to be effective.
Joint Venture Operating Agreement
Under the JVOA, InterOil and Mitsui will each have a 50% ownership stake,
before the State of Papua New Guinea's statutory right to acquire up to 22.5%
in the CSP. An InterOil subsidiary is the operator under the joint venture.
InterOil expects that the CSP will be designed to process approximately 400
million standard cubic feet per day (mmscf/day) of wellhead gas with an
anticipated yield of approximately 9,000 barrels (bbls) of condensate per
day. Dry gas may be reinjected into the reservoir for storage depending on
the timing of the development of the proposed LNG Plant. The condensate is
expected to be barged to the InterOil refinery in Port Moresby for processing
and sale.
The wells and condensate transport from the CSP (located approximately 30
km southwest of the fields adjacent to the Purari River) will be the
responsibility of the owners of the Elk and Antelope fields, including
InterOil and its upstream partners. The capital cost for the CSP is currently
estimated at $550 million, with approximately $32 million of this being
expended for front end engineering design. Mitsui will be responsible for
arranging or providing financing for the capital costs of the plant.
Final Investment Decision by the JVOA partners is expected by the end of
March 2011, following completion of engineering and design work, financing
agreements and further regulatory approvals. The CSP facilities are projected
to be operational no later than mid-2013. In the event that a positive Final
Investment Decision is not reached or made, InterOil will be required to
refund Mitsui's capital expenditure incurred within a specified period and
the option and conversion deeds will be terminated.
Phil Mulacek, Chief Executive Officer of InterOil, commented, "Since
April, front end engineering and design studies have been ongoing and we have
now concluded certain definitive agreements with Mitsui for the CSP and
Mitsui's right to acquire up to 5% in the Elk and Antelope fields and the
proposed LNG project. We welcome Mitsui as our partner, and are very pleased
with the progress made in the development of our CSP, which we expect will
enable us to monetize our Elk and Antelope liquid resources. This is a key
step in the monetization of our natural gas resources through LNG."
About InterOil
InterOil Corporation is developing a vertically integrated energy
business whose primary focus is Papua New Guinea and the surrounding region.
InterOil's assets consist of petroleum licenses covering about 3.9 million
acres, an oil refinery, and retail and commercial distribution facilities,
all located in Papua New Guinea. In addition, InterOil is a shareholder in a
joint venture established to construct an LNG plant on a site adjacent to
InterOil's refinery in Port Moresby, Papua New Guinea. InterOil's common
shares trade on the NYSE in US dollars.
Investor Contacts for InterOil:
Wayne Andrews, V. P. Capital Markets
Wayne.Andrews@InterOil.com
The Woodlands, TX USA
Phone: +1-281-292-1800
Forward-Looking Statements
This press release may include "forward-looking statements" as defined in
United States federal and Canadian securities laws. All statements, other
than statements of historical facts, included in this press release that
address activities, events or developments that the InterOil expects,
believes, plans, projects or anticipates will or may occur in the future are
forward-looking statements. In particular, this press release includes
forward-looking statements concerning the development and completion of the
CSP, the costs and timing of such CSP, the capacity of the CSP, the ownership
interests in the Elk and Antelope fields, any future project partners, the
use of any condensate, and timing of the final investment decision. These
statements are based on certain assumptions made by the Company based on the
terms of the JVOA, the option and conversion deeds in addition to its
experience and perception of current conditions, expected future developments
and other factors it believes are appropriate in the circumstances. No
assurances can be given however, that these events will occur, including, in
particular the development of the proposed CSP or LNG plant. Actual results
will differ, and the difference may be material and adverse to the Company
and its shareholders. Such statements are subject to a number of assumptions,
risks and uncertainties, many of which are beyond the control of the Company,
which may cause our actual results to differ materially from those implied or
expressed by the forward-looking statements. Some of these factors include
the risk factors described in the company's filings with the Securities and
Exchange Commission and SEDAR, including but not limited to those in the
Company's Annual Report for the year ended December 31, 2009 on Form 40-F and
its Annual Information Form for the year ended December 31, 2009. In
particular, there is no established market for natural gas in Papua New
Guinea, and no guarantee that gas, gas condensate or oil from the
Elk/Antelope field will ultimately be able to be extracted and sold
commercially.
Investors are urged to consider closely the disclosure in the Company's
www.sec.gov and its and its Annual Information Form available on SEDAR at
www.sedar.com, including in particular the risk factors discussed in the
Company's filings.
We currently have no reserves as defined in Canadian National Instrument
51-101 Standards of Disclosure for Oil and Gas Activities. All information
contained herein regarding resources are references to undiscovered resources
under Canadian National Instrument 51-101, whether stated or not.
SOURCE InterOil Corporation
CONTACT: Investors, Wayne Andrews, V.P. Capital Markets, InterOil,
+1-281-292-1800, Wayne.Andrews@InterOil.com
NEWS 
