Eight and a half years ago Wayne Andrews was still at Raymond James and Interoil thought they were going to become a major integrated OIL company. I believe no thought had been given to massive gas discoveries, condensate stripping plants (CSP’s) and LNG plants with the associated required infrastructure.

They thought they might have as much as 4.6 Billion Barrels of oil in 10 prospects with the oil being split between the Pale Sandstone (2.5 billion Bbl) and the Miocene Limestone (2.1 billion Bbl). See

http://www.citronresearch.com/wp-content/uploads/2007/03/raymondjamesreport.pdf  Page 22.

So what have we done in the last eight and a half years to exploit these potential oil resources?

1. We drilled Black Bass No.1 http://www.businesswire.com/news/home/20050718005574/en/InterOil-Black-Bass-Exploration-Update The well was drilled to 5,953 feet and encountered both sandstones and limestone. The mud was gas cut to the point that gas was flared at the surface. The well was drilled without sufficient seismic data and was not on the crest of the structure. The well was abandoned pending the acquisition of additional seismic data.

2. Moose-1 and Moose-2 were drilled through the limestone section which contained low pressure oil (326 psi at 2,650 feet). Moose-2 ST-1 was drilled to 4,987 feet but neither well penetrated the Pale sandstone which was the primary target. The shale being drilled was the same age as the Pale Sandstone.

3. Triceratops-1 was drilled (again off the crest of the structure with insufficient seismic data) and plugged as a dry hole.

4. Elk-1 discovered gas. We now have the Elk/Antelope Field with contingent resources (Best Case) estimated at 1.646 BBOE but this is of course mostly gas with the liquid portion being 135.4 MMBbl.

5. Triceratops-2 was drilled higher on the structure and resulted in a significant gas discovery. Presently it is only being given a contingent resource estimate (Best Case) of 71.9 MMBOE.

So our integrated oil company dreams have so far resulted in IOC accidentally becoming primarily a gas producer instead of an oil producer. But where do we stand on the evaluation of these 2004 oil prospects?

We have drilled 4 of the 10. Sterling Mustang was a dry hole and we gave up the license area where it is located. Black Bass was drilled off structure, produced some gas and was plugged. Moose was drilled but did not reach the primary objective, the Pale Sandstone, but found low pressure oil in the Puri Limestone. Elk-1 resulted in the discovery of the Elk/Antelope gas field in the Puri limestone but wells have not been drilled deep enough to test the Pale/Subu Sandstones.

The other six 2004 oil prospects-Bison, Longhorn, Marlin, Mastodon, Rhino and Whale- remain untested. In 2004 these six prospects were thought to be prospective for 4.1 Billion barrels of oil, yet they remain untested. The bulk of this oil was thought to be in the Whale, Mastodon and Rhino prospects with more than half of the oil thought to be in the Pale Sandstone.

IOC has never tested the Pale Sandstone in any prospect.

If we really think these prospects contain oil we ought to put a well into these three prospects and test the Pale/Subu oil hypothesis. All of these prospects would be fairly shallow and, therefore, should be reasonably cheap to test. The Duri Field in Sumatra Indonesia is less than 1,000 feet deep and has produced more than 2 billion barrels.

So we now have 1.718 Billion BOE (1.003 Billion BOE net IOC) in contingent gas resources (Best Case) but we still have these Undiscovered and Untested Oil prospects that could contain as much as another 4 Billion barrels of oil and we have an untold amount of yet to be discovered gas resources in limestone and limestone reef prospects that have not yet been drilled.