Profile: InterOil Corporation (IOC)

InterOil Corporation (InterOil) is an integrated energy company operating in Papua New Guinea. The Company operates in four business segments: Upstream, Midstream, Downstream and Corporate. Upstream includes Exploration and Production, which explores oil and natural gas in Papua New Guinea. Midstream Refining produces refined petroleum products at Napa Napa in Port Moresby, Papua New Guinea for the domestic market and for exports, and Midstream Liquefaction includes developing an onshore liquefied natural gas (LNG) processing facility in Papua New Guinea. Downstream includes Wholesale and Retail Distribution, which markets and distributes refined petroleum products domestically in Papua New Guinea. Corporate engages in business development and improvement activities, and providing general and administrative services and management, undertakes financing and treasury activities, and is responsible for government and investor relations.

Upstream

During the year ended December 31, 2008, the Company had interests in four petroleum prospecting licenses (PPL) in Papua New Guinea covering approximately 8.7 million gross acres, of which approximately 8 million net acres are operated by InterOil. PPL’s 236, 237 and 238 are located in the Eastern Papuan Basin northwest of Port Moresby. The Company has a 100% working interest in PPL 236. It has a 100% working interest in PPL 237. In 2007, 28 miles (44 kilometers) of the 144 mile (230 kilometers) Elk appraisal two-dimensional (2D) seismic program were acquired over PPL 237. The Company has a 100% working interest in PPL 238. InterOil has a 15% working interest in PPL 244. Talisman Oil Ltd. is the operator of this license.

Midstream

InterOil’s refinery is located across the harbor from Port Moresby, the capital city of Papua New Guinea. Jet fuel, diesel and gasoline are the primary products that the Company produces for the domestic market. The refining process also results in the production of naphtha and low sulfur waxy residue. To the extent that it does not convert naphtha to gasoline, the Company exports it to the Asian markets in two grades, light naphtha and mixed naphtha, which are predominately used as petrochemical feedstocks. Low sulfur waxy residue can be and is being sold as fuel and is valued by refineries as cracker feedstock.

Downstream

The Company’s downstream business supplies petroleum products in Papua New Guinea through a portfolio of retail service stations and commercial customers. This business includes bulk storage, transportation distribution, wholesale and retail facilities for refined petroleum products. InterOil’s retail and wholesale distribution business distributes diesel, jet fuel, gasoline, kerosene and fuel oil, as well as Shell and BP-branded commercial and industrial lubricants, such as engine and hydraulic oils. In general, all of the refined products sold pursuant to its wholesale and retail distribution business are purchased from its refinery. The Company imports the commercial and industrial lubricants and fuel oil, which constitute a small percentage of its sales.

InterOil delivers refined products from its refinery to two tankers. These tankers deliver the refined products to distribution terminals and depots, including those owned by it. It does not own these tankers but rather leases them on a full time charter basis. The Company is responsible for the scheduling of all the deliveries made by these tankers to the petroleum industry participants and customers in Papua New Guinea. Its inland depots are supplied by road tankers, which are owned and operated by third-party independent transport operators. The Company’s terminal and depot network distributes refined petroleum products to retail service stations and commercial customers. It supplies retail service stations and commercial customers with petroleum products using trucks or, in the case of some commercial customers, coastal ships.

As of December 31, 2008, InterOil provided petroleum products to 51 retail service stations that operate under the InterOil brand name. Of the 51 service stations that it supplies, 19 are either owned by or leased to the Company with a sublease to company approved operators. The remaining 32 service stations are independently owned and operated. It supplies products to each of these service stations pursuant to distribution supply agreements. The Company also provides fuel pumps and related infrastructure to the operators of the retail service stations that are not owned or leased by the Company and also operates 12 aviation refueling stations throughout Papua New Guinea. The Company owns and operates six large terminals and 11 depots that it uses to supply product throughout Papua New Guinea. The Company enters into commercial supply agreements with mining, agricultural, fishing, logging and similar commercial clients whereby it supplies their petroleum product needs.

The Company competes with ExxonMobil.