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                                                                     Exhibit 4.2

                         SOUTH PACIFIC INTEROIL LIMITED

                                 BY-LAW NUMBER 1

     A by-law relating generally to the regulation of the affairs of SOUTH
PACIFIC INTEROIL LIMITED

          BE IT ENACTED AND IT IS HEREBY ENACTED as by-law Number 1 of SOUTH
PACIFIC INTEROIL LIMITED (hereinafter called the "Corporation") as follows:

                                   DEFINITIONS

1. In this by-law and all other by-laws of the Corporation, unless the context
otherwise specifies or requires:

     (a)  "Act" means the Business Corporations Act, Statutes of New Brunswick,
          1981, c. B-9.1, as from time to time amended, and every statute that
          may be substituted therefor and, in the case of such amendment or
          substitution, any reference in the by-laws of the Corporation shall
          be read as referring to the amended or substituted provisions
          therefor;

     (b)  "articles" means the articles, as from time to time amended, of the
          Corporation;

     (c)  "by-law" means any by-law of the Corporation from time to time in
          force and effect;

     (d)  "director" means an individual occupying the position of director of
          the Corporation and "directors", "board of directors" and "board"
          includes a single director,

     (e)  "unanimous shareholder agreement" means an agreement as described in
          subsection 99(2) of the Act or a declaration of a shareholder
          described in subsection 99(3) of the Act;

     (f)  words importing the singular number only shall include the plural and
          vice versa; words importing the masculine gender shall include the
          feminine and neuter genders and vice versa; words importing persons
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                                      -2-


          shall include bodies corporate, corporations, companies, partnerships,
          syndicates, trusts and any number or aggregate of individuals;

     (g)  the headings used in any by-law are inserted for reference purposes
          only and are not to be considered or taken into account in construing
          the terms or provisions thereof or to be deemed in any way to clarify,
          modify or explain the effect of any such terms or provisions; and

     (h)  any term contained in any by-law which is defined in the Act shall
          have the meaning given to such term in the Act.

                                REGISTERED OFFICE

2. The Corporation may from time to time by resolution of the board of directors
change the location of the address of the registered office of the Corporation
to another place within New Brunswick,

                                 CORPORATE SEAL

3. The Corporation may have one or more corporate seals which shall be such as
the board of directors may adopt by resolution from time to time.

                                    DIRECTORS

4. Number and Powers. There shall be a board of directors consisting of such
fixed number, or minimum and maximum number, of directors as may be set out in
the articles or as may be determined as prescribed by the articles, or failing
that, as specified by by-law. Subject to any unanimous shareholder agreement,
the directors shall manage the business and affairs of the Corporation and may
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation and are not by the Act, the articles, the by-laws, any
special resolution of the Corporation, any unanimous shareholder agreement or by
statute expressly directed or required to be done in some other manner.

5. Vacancies. If the number of directors is increased, the resulting vacancies
shell be filled at a meeting of shareholders duly called for that purpose.
Notwithstanding the provisions of paragraph 7 of this by-law and subject to the
provisions of the Act, if a vacancy should otherwise occur in the board, the
remaining directors, if constituting a quorum, may appoint a qualified person to
fill the vacancy for the remainder of the term. In the absence of a quorum the
remaining directors shall forthwith call a meeting of shareholders to fill the
vacancy pursuant to subsection 69(2) of the Act. Where a vacancy
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or vacancies exist in the board, the remaining directors may exercise all of the
powers of the board so long as a quorum remains in office.

6. Duties. Every director and officer of the Corporation, in exercising his
powers and discharging his duties shall

     (a)  act honestly and in good faith; and

     (b)  exercise the care, diligence and skill that a reasonably prudent
          person would exercise in comparable circumstances,

in the best interests of the Corporation.

7. Qualification. Every director shall be an individual nineteen (19) or more
years of age and no one who is of unsound mind and has been so found by a court
in Canada or elsewhere or who has the status of a bankrupt or who has been
convicted of an offence under the Criminal Code, chapter C-34 of the Revised
Statutes of Canada, 1970, as amended from time to time, or the criminal law of
any jurisdiction outside of Canada, in connection with the promotion,
formation or management of a corporation or involving fraud (unless three (3)
years have elapsed since the expiration of the period fixed for suspension of
the passing of sentence without sentencing or since a fine was imposed, or
unless the term of imprisonment and probation imposed, if any, was concluded,
whichever is the latest, but the disability imposed hereby ceases upon a pardon
being granted) shall be a director.

8. Term of Office. A director's term of office shall be from the meeting at
which he is elected or appointed until the annual meeting next following or
until his successor is elected or appointed, or until, if earlier, he dies or
resigns, or is removed or disqualified pursuant to the provisions of the Act.

9. Vacation of Office, The office of a director shall ipso facto be vacated if

     (a)  he dies;

     (b)  by notice in writing to the Corporation he resigns his office and such
          resignation, if not effective immediately, becomes effective in
          accordance with its terms;

     (c)  he is removed from office in accordance with section 67 of the Act; or

     (d)  be ceases to be qualified to be a director.
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10. Election and Removal. (1) Directors shall be elected by the shareholders by
ordinary resolution in general meeting on a show of hands unless a poll is
demanded and if a poll is demanded such election shall be by ballot. All the
directors then in office shall cease to hold office at the close of the meeting
of shareholders at which directors are to be elected. A director if qualified,
is eligible for re-election.

     (2) Subject to sections 65 and 67 of the Act, the shareholders of the
Corporation may by ordinary resolution at a special meeting remove any director
before the expiration of his term of office and may, by a majority of the votes
cast at the meeting, elect any person in his stead for the remainder of his
term.

     (3) Each shareholder entitled to vote at an election of directors has the
right to case a number of votes equal to the number of votes attached to the
shares held by him multiplied by the number of directors to be elected, and he
may cast all such votes in favour of one candidate or distribute them among the
candidates in any manner.

     (4) A separate vote of shareholders shall be taken with respect to each
candidate nominated for director unless a resolution is passed unanimously
permitting two (2) or more persons to be elected by a single resolution.

     (5) If a shareholder has voted for more than one candidate without
specifying the distribution of his votes among the candidates, he shall be
deemed to have distributed his votes equally among the candidates for whom he
voted.

     (6) If the number of candidates nominated for director exceeds the number
of positions to be filled, the candidates who receive the least number of votes
shall be eliminated until the number of candidates remaining equals the number
of positions to be filled.

     (7) A retiring director shall retain office until the adjournment or
termination of the meeting at which his successor is elected unless such meeting
was called for the purpose of removing him from office as a director in which
case the director so removed shall vacate office forthwith upon the passing of
the resolution for his removal.

11. Validity of Acts. An act by a director or officer is valid notwithstanding
an irregularity in his election or appointment or a defect in his qualification.

                              MEETINGS OF DIRECTORS

12. Place of Meeting. Subject to the articles, meetings of directors may be held
at any place within or outside New Brunswick as the directors may from time to
time determine or as the person convening the meeting may give notice. A meeting
of the
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directors may be convened by the chairman of the board (if any), the president
or any director at any time. The secretary shall upon direction of any of the
foregoing officers or director convene a meeting of the directors.

13. Notice. (1) Notice of the time and place for the holding of any such meeting
shall be delivered, mailed, telegraphed, cabled, telexed or transmitted by
facsimile to each director at his latest address as shown on the records of the
Corporation not less than four (4) days (exclusive of the day on which the
notice is delivered, mailed, telegraphed, cabled, telexed or transmitted by
facsimile but inclusive of the day for which notice is given) before the date of
the meeting, or shall be given to each director by telephone not less than 48
hours before the time of the meeting, provided that meetings of the directors
may be held at any time without notice if all the directors have waived notice.

     (2) For the first meeting of the board of directors to be held immediately
following the election of directors at an annual or special meeting of the
shareholders, no notice of such meeting need be given to the newly elected or
appointed director or directors in order for the meeting to be duly constituted,
provided a quorum of the directors is present.

     (3) A notice of a meeting of directors shall specify any matter referred to
in subsection 73(2) of the Act that is to be dealt with at the meeting but,
unless a by-law otherwise provides, need not otherwise specify the purpose of or
the business to be transacted at the meeting.

14. Waiver of Notice. Notice of any meeting of the directors or any irregularity
in any meeting or in the notice thereof may be waived by any director in writing
or by telegram, cable, telex or facsimile transmission addressed to the
Corporation or in any other manner, and such waiver may be validly given either
before or after the meeting to which such waiver relates. The attendance of a
director at a meeting of directors is a waiver of notice of the meeting except
where a director attends a meeting for the express purpose of objecting to the
transaction of any business on the grounds that the meeting is not lawfully
called.

15. Telephone Participation. A director may participate in a meeting of
directors or of a committee of directors by means of such telephone or other
communication facilities that permit all persons participating in the meeting to
hear each other, and a director participating in such a meeting by such means
shall be deemed to be present at that meeting.

16. Adjournment. Any meeting of the directors may be adjourned from time to time
by the chairman of the meeting, with the consent of the meeting, to a fixed time
and place and no notice of the time and place for the continuance of the
adjourned meeting
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need be given to any director if the time and place of the adjourned meeting is
announced at the original meeting. Any adjourned meeting shall be duly
constituted if held in accordance with the terms of the adjournment and a quorum
is present thereat. The directors who formed a quorum at the original meeting
are not required to form the quorum at the adjourned meeting. If there is no
quorum present at the adjourned meeting, the original meeting shall be deemed to
have terminated forthwith after its adjournment.

17. Quorum and Voting. Subject to the articles, a majority of directors shall
constitute a quorum for the transaction of business at any meeting of directors.
No business shall be transacted by the directors except at a meeting of
directors at which a quorum of the board is present. Questions arising at any
meeting of the directors shall be decided by a majority of votes cast. In case
of an equality of votes, the chairman of the meeting shall not have a second or
casting vote. Where the Corporation has only one director, that director may
constitute a meeting.

18. Resolution in lieu of meeting. A resolution in writing, signed by all the
directors or signed counterparts of such resolution by all the directors
entitled to vote on that resolution at a meeting of directors or a committee of
directors, is as valid as if it had been passed at a meeting of directors or
committee of directors duly called, constituted and held. A copy of every such
resolution or counterpart thereof shall be kept with the minutes of the
proceedings of the directors or such committee of directors.

                            REMUNERATION OF DIRECTORS

19. Subject to the articles or any unanimous shareholder agreement, the
remuneration to be paid to the directors shall be such as the board of directors
shall from time to time determine and such remuneration shall be in addition to
the salary paid to any officer of the Corporation who is also a member of the
board of directors. The directors may also by resolution award special
remuneration to any director undertaking any special services on the
Corporation's behalf other than the routine work ordinarily required of a
director by the Corporation. The confirmation of any such resolution or
resolutions by the shareholders shall not be required. The directors shall also
be entitled to be paid their travelling and other expenses properly incurred by
them in connection with the affairs of the Corporation.

                     SUBMISSION OF CONTRACTS OR TRANSACTIONS
                          TO SHAREHOLDERS FOR APPROVAL

20. The directors in their discretion may submit any contract, act or
transaction for approval, ratification or confirmation at any annual meeting of
the shareholders or at any special meeting of the shareholders called for the
purpose of considering the same and any contract, act or transaction that shall
be approved, ratified or confirmed by resolution
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passed by a majority of the votes cast at any such meeting (unless any different
or additional requirement is imposed by the Act or by the articles or any other
by-law) shall be as valid and as binding upon the Corporation and upon all the
shareholders as though it had been approved, ratified and/or confirmed by every
shareholder of the Corporation.

                   FOR THE PROTECTION OF DIRECTOR AND OFFICERS

21. No director or officer for the time being of the Corporation shall be liable
for the acts, receipts, neglects or defaults of any other director or officer or
employee of the Corporation or for joining in any receipt or act for conformity
or for any loss, damage or expense happening to the Corporation through the
insufficiency or deficiency of title to any property acquired by order of the
board of directors for or on behalf of the Corporation or for the insufficiency
or deficiency of any security in or upon which any of the moneys of or belonging
to the Corporation shall be placed out or invested or for any loss or damage
arising from the bankruptcy, insolvency or tortious act of any person, firm or
corporation including any person, firm or corporation with whom or which any
moneys, securities or effects of the Corporation shall be lodged or deposited or
for any loss, conversion, misapplication or misappropriation of or any damage
resulting from any dealings with any moneys, securities or other assets
belonging to the Corporation or for any other loss, damage or misfortune
whatever which may happen to the Corporation in the execution of the duties of
his respective office of trust or in relation thereto, unless the same shall
happen by or through his failure to exercise the powers and to discharge the
duties of his office honestly, in good faith with a view to the best interests
of the Corporation, and in connection therewith to exercise the care, diligence
and skill that a reasonably prudent person would exercise in comparable
circumstances, provided that nothing herein contained shall relieve a director
or officer from the duty to act in accordance with the Act or regulations made
thereunder or relieve him from liability for a breach thereof. The directors for
the time being of the Corporation shall not be under any duty or responsibility
in respect of any contract, act or transaction whether or not made, done or
entered into in the name or on behalf of the Corporation, except such as shall
have been submitted to and authorized or approved by the board of directors. If
any director or officer of the Corporation shall be employed by or shall perform
services for the Corporation, the fact of his being a shareholder, director or
officer of the Corporation shall not disentitle such director or officer or such
firm or body corporate, as the case may be, from receiving proper remuneration
for such services.

                       INDEMNITIES TO DIRECTORS AND OTHERS

22. Subject to section 81 of the Act, except in respect of an action by or on
behalf of the Corporation or Another Body Corporate (as hereinafter defined) to
procure a judgement in its favour, the Corporation shall indemnify each director
and officer of the Corporation and each former director and officer of the
Corporation and each person who
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acts or acted at the Corporation's request as a director or officer of Another
Body Corporate, and his heirs and legal representatives, against all costs,
charges and expenses, including any amount paid to settle an action or satisfy a
judgment, reasonably incurred by him in respect of any civil, criminal or
administrative action or proceeding to which he is made a party by reason of
being or having been a director or officer of the Corporation or Another Body
Corporate, as the case may be, if

     (a)  he acted honestly and in good faith with a view to the best interests
          of the Corporation; and

     (b)  in the case of a criminal or administrative action or proceeding that
          is enforced by a monetary penalty, he had reasonable grounds for
          believing that his conduct was lawful.

"Another Body Corporate" as used herein means a body corporate of which the
Corporation is or was a shareholder or creditor.

                                    OFFICERS

23. Appointment of Officers. Subject to the articles or any unanimous
shareholder agreement, the directors may appoint a chairman of the board, a
president and a secretary and, if deemed advisable, may also appoint one or more
vice-presidents, a treasurer and one or more assistant secretaries and/or one or
more assistant treasurers. None of such officers, except the chairman of the
board, need be a director of the Corporation. Any two or more of such offices
may be held by the same person. In case and whenever the same person holds the
offices of secretary and treasurer he may, but need not, be known as the
secretary-treasurer. The directors may from time to time designate such other
offices and appoint such other officers, employees and agents as it shall deem
necessary who shall have such authority and shall perform such functions and
duties as may from time to time be prescribed by resolution of the directors.

24. Remuneration and Removal of Officers. Subject to the articles or any
unanimous shareholder agreement, the remuneration of all officers, employees and
agents appointed by the directors may be determined from time to time by
resolution of the directors. The fact that any officer, employee or agent is a
director or shareholder of the Corporation shall not disqualify him from
receiving such remuneration as may be so determined. The directors may by
resolution remove any officer, employee or agent at any time, with or without
cause.

25. Duties of Officers may be Delegated. In case of the absence or inability or
refusal to act of any officer of the Corporation or for any other reason that
the directors
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may deem sufficient, the directors may delegate all or any of the powers of such
officer to any other officer or to any director for the time being.

26. Chairman of the Board. The chairman of the board (if any) shall, if present,
preside at all meetings of the directors. He shall sign such contracts,
documents or instruments in writing as require his signature and shall have such
other powers and duties as may from time to time be assigned to him by
resolution of the directors.

27. President. The president shall be the chief executive officer of the
Corporation and shall exercise general supervision over the business and affairs
of the Corporation. The president, in the absence of the chairman of the board,
or if a chairman of the board be not appointed, shall preside at all meetings of
the directors, and he shall act as chairman at all meetings of the shareholders
of the Corporation; he shall sign such contracts, documents or instruments in
writing as require his signature and he shall have such other powers and shall
perform such other duties as may from time to time be assigned to him by
resolution of the directors or as are incident to his office.

28. Vice-President. The vice-president (if any) or, if more than one, the
vice-presidents in order of seniority, shall be vested with all the powers and
shall perform all the duties of the president in the absence or inability or
refusal to act of the president. The vice-president or, if more than one, the
vice-presidents in order of seniority, shall sign such contracts, documents or
instruments in writing as require his or their signatures and shall also have
such other powers and duties as may from time to time be assigned to him or them
by resolution of the directors.

29. Secretary. The secretary shall give or cause to be given notices for all
meetings of the directors or committees thereof (if any) and of shareholders
when directed to do so, and shall have charge, subject to the provisions of
paragraphs 30 and 50 hereof, of the records referred to in section 18 of the Act
and of the corporate seal or seals (if any). He shall sign such contracts,
documents or instruments in writing as require his signature and shall have such
other powers and duties as may from time to time be assigned to him by
resolution of the directors or as are incident to his office.

30. Treasurer. Subject to the provisions of any resolution of the directors, the
treasurer (if any) shall have the care and custody of all the funds and
securities of the Corporation and shall deposit the same in the name of the
Corporation in such bank or banks or with such other depositary or depositaries
as the directors may by resolution direct. He shall prepare, maintain and keep
or cause to be kept adequate books of accounts and accounting records. He shall
sign such contracts, documents or instruments in writing as require his
signature and shall have such other powers and duties as may from time to time
be assigned to him by resolution of the directors or as are incident to his
office. He may be required to give such bond for the faithful performance of his
duties as the directors
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in their uncontrolled discretion may require, but no director shall be liable
for failure to require any such bond or for the insufficiency of any such bond
or for any loss by reason of the failure of the Corporation to receive any
indemnity thereby provided.

31. Assistant Secretary and Assistant Treasurer. The assistant secretary or, if
more than one, the assistant secretaries in order of seniority, and the
assistant treasurer or, if more than one, the assistant treasurers in order of
seniority (if any), shall respectively perform all the duties of the secretary
and treasurer, respectively, in the absence or inability to act of the secretary
or treasurer as the case may be. The assistant secretary or assistant
secretaries, if more than one, and the assistant treasurer or assistant
treasurers, if more than one, shall sign such contracts, documents or
instruments in writing as require his or their signatures respectively and shall
have such other powers and duties as may from time to time be assigned to them
by resolution of the directors.

32. Managing Director. The directors may from time to time appoint from their
number a managing director and may delegate to him any of the powers of the
directors except as provided in subsection 73(2) of the Act. The managing
director shall conform to all lawful orders given to him by the directors and
shall at all reasonable times give to the directors or any of them all
information they may require regarding the affairs of the Corporation. Any agent
or employee appointed by the managing director shall be subject to discharge by
the directors.

33. Vacancies. If the office of chairman of the board, president,
vice-president, secretary, assistant secretary, treasurer, assistant treasurer,
or any other office created by the directors pursuant to paragraph 23 hereof,
shall be or become vacant by reason of death, resignation, removal or in any
other manner whatsoever, the directors may, subject to paragraph 23 hereof,
appoint another person to fill such vacancy.

                             COMMITTEES OF DIRECTORS

34. The directors may from time to time appoint from their number one or more
committees of directors consisting of one or more individuals and delegate to
such committee or committees any of the powers of the directors except as
provided in subsection 73(2) of the Act. Unless otherwise ordered by the
directors, a committee of directors shall have power to fix its quorum, elect
its chairman and regulate its proceedings. All such committees shall report to
the directors as required by them. The powers of a committee appointed by the
directors may be exercised at a meeting at which a quorum is present or by
resolution in writing signed by all members of the committee entitled to vote on
that resolution at a meeting of the committee. Meetings of a committee may be
held at any place in or outside New Brunswick.

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                                      -11-


35. Audit Committee. The directors shall appoint from among their number an
audit committee composed of not fewer than three directors, a majority of whom
are not officers or employees of the Corporation or any affiliate of the
Corporation. The audit committee shall review the financial statements of the
Corporation and shall report thereon to the directors of the Corporation before
such financial statements are approved by the directors. The auditor of the
Corporation is entitled to receive notice of every meeting of the audit
committee and, at the expense of the Corporation, to attend and be heard thereat
and, if so requested by a member of the audit committee, shall attend every
meeting of the committee held during the term of office of the auditor. The
auditor of the Corporation or any member of the audit committee may call a
meeting of the committee.

                              SHAREHOLDERS' MEETING

36. Annual Meeting. Subject to compliance with section 85 of the Act, the annual
meeting of the shareholders shall be convened on such day in each year and at
such time as the directors may by resolution determine.

37. Special Meetings. (1) Special meetings of the shareholders may be convened
by order of the chairman of the board, the president or by the directors, to be
held at such time and place as may be specified in such order.

     (2) Shareholders holding between them not less than ten percent (10%) of
the issued shares of the Corporation that carry the right to vote at a meeting
sought to be held may requisition the directors to call a meeting of
shareholders. Such requisition shall state the business to be transacted at the
meeting and shall be sent to each director and the registered office of the
Corporation.

     (3) Except as otherwise provided in subsection 96(3) of the Act, it shall
be the duty of the directors on receipt of such requisition, to cause such
meeting to be called by the secretary of the Corporation.

     (4) If the directors do not, within twenty-one (21) days after receiving
such requisition call such meeting, any shareholder who signed the requisition
may call the meeting.

38. Place of Meetings. Meetings of shareholders of the Corporation shall be held
at the registered office of the Corporation or at such other place within New
Brunswick as the directors by resolution may determine. Notwithstanding the
foregoing, a meeting of shareholders of the Corporation may be held outside New
Brunswick if all the shareholders entitled to vote at that meeting so agree, and
a shareholder who attends a meeting of shareholders held outside New Brunswick
is deemed to have so agreed except when he attends the meeting for the express
purpose of objecting to the transaction of any business
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                                      -12-


on the grounds that the meeting is not lawfully held. Notwithstanding either of
the foregoing sentences, meetings of shareholders may be held outside New
Brunswick at one or more places specified in the articles.

39. Notice. (1) Subject to the articles or a unanimous shareholder agreement, a
printed, written or typewritten notice stating the day, hour, place of meeting,
the general nature of the business to be transacted and, if special business is
to be transacted thereat, stating

     (a)  the nature of that business in sufficient detail to permit the
          shareholder to form a reasoned judgment thereon; and

     (b)  the text of any special resolution to be submitted to the meeting,

shall be sent to each person who is entitled to notice of such meeting and who
on the record date for notice appears on the records of the Corporation or its
transfer agent as a shareholder and to each director of the Corporation and the
auditor of the Corporation, if any, personally, by sending such notice by
prepaid mail or in such other manner as provided by by-law for the giving of
notice, not less than twenty-one (21) days nor more than fifty (50) days before
the meeting. If such notice is sent by mail it shall be addressed to the latest
address of each such person as shown in the records of the Corporation or its
transfer agent, or if no address is shown therein, then to the last address of
each such person known to the secretary.

     (2) The auditor of the Corporation, if any, is entitled to attend any
meeting of shareholders of the Corporation and to receive all notices and other
communications relating to any such meeting that a shareholder is entitled to
receive.

40. Waiver of Notice. A meeting of shareholders may be held for any purpose at
any time and, subject to section 84 of the Act, at any place without notice if
all the shareholders entitled to notice of such meeting are present in person or
represented by proxy at the meeting (except where the shareholder attends the
meeting for the express purpose of objecting to the transaction of any business
on the grounds that the meeting is not lawfully called) or if all the
shareholders entitled to notice of such meeting and not present in person nor
represented by proxy thereat waive notice of the meeting. Notice of any meeting
of shareholders or any irregularity in any such meeting or in the notice thereof
may be waived by any shareholder, the duly appointed proxy of any shareholder,
any directors or the auditor of the Corporation in writing, by telegram, cable,
telex or facsimile addressed to the Corporation or by any other manner, and any
such waiver may be validly given either before or after the meeting to which
such waiver relates.
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                                      -13-


41. Omission of Notice. The accidental omission to give notice of any meeting to
or the non-receipt of any notice by any person shall not invalidate any
resolution passed or any proceeding taken at any meeting of shareholders.

42. Record Date. (1) The directors may by resolution fix in advance a date as
the record date for the determination of shareholders

     (a)  entitled to receive payment of a dividend;

     (b)  entitled to participate in a liquidation distribution; or

     (c)  for any other purpose except the right to receive notice of or to vote
          at a meeting of shareholders,

but such record date shall not precede by more than fifty (50) days the
particular action to be taken.

     (2) The directors may by resolution also fix in advance the date as the
record date for the determination of shareholders entitled to receive notice of
a meeting of shareholders, but such record date shall not precede by more than
fifty (50) days or by less than twenty-one (21) days the date on which the
meeting is to be held.

     (3) If no record date is fixed,

     (a)  the record date for the determination of share- holders entitled to
          receive notice of a meeting of shareholders shall be

          (i)  at the close of business on the day immediately preceding the day
               on which the notice is given; or

          (ii) if no notice is given, the day on which the meeting is held; and

     (b)  the record date for the determination of shareholders for any purpose,
          other than that specified in subparagraph (a) above or to vote, shall
          be at the close of business on the day on which the directors pass the
          resolution relating thereto.

43. Voting. (1) Votes at meetings of the shareholders may be given either
personally or by proxy. At every meeting at which he is entitled to vote, every
shareholder present in person and every proxyholder shall have one (1) vote on a
show of hands. Upon a poll at which he is entitled to vote, every shareholder
present in person or by proxy shall
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                                      -14-


(subject to the provisions, if any, of the articles) have one (1) vote for every
share registered in his name.

     (2) Voting at a meeting of shareholders shall be by show of hands except
where a ballot is demanded by a shareholder or proxyholder entitled to vote at
the meeting or where required by the chairman of the meeting. A shareholder or
proxyholder may demand a ballot either before or after any vote by show of
hands. In case of an equality of votes the chairman of the meeting shall not
have a second or casting vote in addition to the vote or votes to which he may
be entitled as a shareholder or proxyholder.

     (3) At any meeting, unless a ballot is demanded, a declaration by the
chairman of the meeting that a resolution has been carried or carried
unanimously or by a particular majority or lost or not carried by a particular
majority shall be conclusive evidence of the fact without proof of the number or
proportion of votes recorded in favour of or against the motion.

     (4) In the absence of the chairman of the board, the president and every
vice-president, the shareholders present entitled to vote shall choose another
director as chairman of the meeting and if no director is present or if all the
directors present decline to take the chair then the shareholders or
proxyholders present shall choose one of their number to be chairman.

     (5) If at any meeting a ballot is demanded on the election of a chairman or
on the question of adjournment or termination it shall be taken forthwith
without adjournment. If a ballot is demanded on any other question or as to the
election of directors it shall be taken in such manner and either at once or
later at the meeting or at an adjourned meeting as the chairman of the meeting
directs. The result of a ballot shall be deemed to be the resolution of the
meeting at which the ballot was demanded. A demand for a ballot may be
withdrawn.

     (6) Where a person holds shares as a personal representative, such person
or his proxy is the person entitled to vote at all meetings of shareholders in
respect of the shares so held by him.

     (7) Where a person mortgages or hypothecates his shares, such person or his
proxy is the person entitled to vote at all meetings of shareholders in respect
of such shares unless, to the instrument creating the mortgage or hypothec, he
has expressly empowered the person holding the mortgage or hypothec to vote in
respect of such shares, in which case, and subject to the articles, such holder
or his proxy is the person entitled to vote in respect of the shares.
<PAGE>
                                      -15-


     (8) Where two or more persons hold the same share or shares jointly, any
one of such persons present at a meeting of shareholders has the right, in the
absence of the other or others, to vote in respect of such share or shares, but
if more than one of such persons are present or represented by proxy and vote,
they shall vote together as one on the share or shares jointly held by them.

44. Proxies. (1) A shareholder, including a shareholder that is a body
corporate, entitled to vote at a meeting of shareholders may by means of a proxy
appoint a proxyholder or one or more alternate proxyholders, none of whom are
required to be a shareholder of the Corporation, which proxyholders shall have
all the rights of the shareholder to attend and act at the meeting in the place
and stead of the shareholder except to the extent limited by the proxy.

     (2) An instrument appointing a proxy shall be in writing and shall be
executed by the shareholder or by his attorney authorized in writing or, if the
shareholder is a body corporate, either under its seal or by an officer or
attorney thereof, duly authorized. A proxy is valid only at the meeting in
respect of which it is given or any adjournment thereof.

     (3) Unless the Act requires another form, an instrument appointing a
proxyholder may be in the following form:

     "The undersigned shareholder of ___________________ hereby appoints
     ___________________ of ___________________ or failing him,
     ___________________ of ___________________ as the proxy of the undersigned
     to attend and act for and on behalf of the undersigned at the
     ___________________ meeting of the shareholders of the said corporation to
     be held on the ___________________ day of ___________________, 19__, and at
     any adjournment thereof to the same extent and with the same power and
     authority as if the undersigned were personally present at the said meeting
     or such adjournment thereof.

          Dated the ____ day of ____________, 19__.


                                                        ------------------------
                                                        Signature of Shareholder

     NOTE:

     This form of proxy must be signed by a shareholder or his attorney
     authorized in writing or, if the shareholder is a body corporate, either
     under its seal or by an officer or attorney thereof duly authorized."
<PAGE>
                                      -16-


45. Adjournment. (1) The chairman of the meeting may with the consent of the
meeting adjourn any meeting of shareholders from time to time to a fixed time
and place. If a meeting of shareholders is adjourned for less than sixty (60)
days, it is not necessary to give notice of the adjourned meeting other than by
announcement at the earlier meeting that is adjourned. If a meeting of
shareholders is adjourned by one or more adjournments for an aggregate of sixty
(60) days or more, notice of the adjourned meeting shall be given as for an
original meeting.

     (2) Any adjourned meeting shall be duly constituted if held in accordance
with the terms of the adjournment and a quorum is present at the opening
thereat. The persons who formed a quorum at the original meeting are not
required to form the quorum at the adjourned meeting. If there is no quorum
present at the opening of the adjourned meeting, the original meeting shall be
deemed to have terminated forthwith after its adjournment. Any business may be
brought before or dealt with at any adjourned meeting which might have been
brought before or dealt with at the original meeting in accordance with the
notice calling the same.

46. Quorum. (1) Except as hereinafter provided, a quorum for any meeting of
shareholders shall be two (2) or more persons present in person and each being
entitled to vote thereat.

     (2) If a quorum is present at the opening of a meeting of shareholders, the
shareholders present in person or represented by proxy may proceed with the
business of the meeting notwithstanding that a quorum is not present throughout
the meeting.

     (3) If a quorum is not present at the opening of a meeting of shareholders,
the shareholders present in person or represented by proxy may adjourn the
meeting to a fixed time and place but not transact any other business.

     (4) Where the Corporation has only one shareholder or only one holder of
any class or series of shares, the shareholder present in person or by proxy
constitutes a meeting.

47. Resolution in Lieu of meeting. A resolution in writing signed by all the
shareholders or signed counterparts of such resolution by all the shareholders
entitled to vote on that resolution at a meeting of shareholders is as valid as
if it had been passed at a meeting of the shareholders duly called, constituted
and held. A copy of every such resolution or counterpart thereof shall be kept
with the minutes of the meetings of shareholders.
<PAGE>
                                      -17-


48. Telephone Participation. A shareholder may participate in a meeting of
shareholders or of a committee of shareholders by means of such telephone or
other communication, facilities that permit all persons participating in the
meeting to hear each other, and a shareholder participating in such a meeting by
such means shall be deemed to be present at that meeting.

                              SHARES AND TRANSFERS

49. Issuance. Subject to the articles, any unanimous shareholder agreement and
to section 27 of the Act, shares in the Corporation may be issued at such times
and to such persons or classes of persons and, subject to sections 23 and 24 of
the Act, for such consideration as the directors may determine.

50. Certificates. Subject to the provisions of the Act and to the requirements
of any stock exchange on which shares of the Corporation may be listed, share
certificates shall be in such form or forms as the directors shall from time to
time approve. Unless otherwise determined by the directors, share certificates
shall be signed by the chairman of the board, the president, or a vice-president
or a director and by the secretary or an assistant secretary and need not be
under the corporate seal and certificates for shares in respect of which a
transfer agent and/or registrar has been appointed shall not be valid unless
countersigned on behalf of such transfer agent and/or registrar. Such
certificates shall be signed manually by at least one director or officer of the
Corporation or by or on behalf of a registrar, transfer agent or branch transfer
agent of the Corporation, and any additional signatures required on a share
certificate may be printed or otherwise mechanically reproduced thereon, If a
share certificate contains a printed or mechanically reproduced signature of a
person, the Corporation may issue the share certificate notwithstanding that the
person has ceased to be a director or as officer of the Corporation, and the
share certificate is as valid as if he were a director or an officer at the date
of its issue.

51. Registrar and Transfer Agent. The directors may from time to time by
resolution appoint or remove one or more registrars and/or branch registrars
(which may but need not be the same person) to keep the share register and/or
one or more transfer agents and/or branch transfer agents (which may but need
not be the same person) to keep the register of transfers, and (subject to
section 48 of the Act) may provide for the registration of issues and the
registration of transfers of the shares of the Corporation in one or more places
and such registrars and/or branch registrars and/or transfer agents and/or
branch transfer agents shall keep all necessary books and registers of the
Corporation for the registration of the issuance and the registration of
transfers of the shares of the Corporation for which they are so appointed. All
certificates issued after any such appointment representing shares issued by the
Corporation shall be countersigned by or on behalf of one
<PAGE>
                                      -18-


of the said registrars and/or branch registrars and/or transfer agents and/or
branch transfer agents, as the case may be.

52. Surrender of Share Certificates. No transfer of a share issued by the
Corporation shall be recorded or registered unless or until the certificate
representing the share to be transferred has been surrendered and cancelled or,
if no certificate has been issued by the Corporation in respect of such share,
unless at until a duly executed share transfer power in respect thereof has been
presented for registration.

53. Defaced. Destroyed. Stolen or Lost Certificates, If the defacement,
destruction or apparent destruction, theft, or other wrongful taking or loss of
a share certificate is reported by the owner thereof to the Corporation or to a
registrar, branch registrar, transfer Agent or branch transfer agent of the
Corporation (hereinafter, in this paragraph, called the "Corporation's transfer
agent") and such owner gives to the Corporation or the Corporation's transfer
agent a written statement verified by oath or statutory declaration as to the
defacement, destruction or apparent destruction, theft, or other wrongful taking
or loss and the circumstances concerning the same, a request for the issuance of
a new certificate to replace the one so defaced, destroyed, wrongfully taken or
lost and a bond of a surety company (or other security approved by the
directors) in such form as is approved by the directors or by the chairman of
the board, the president, a vice-president, the secretary or the treasurer of
the Corporation, indemnifying the Corporation (and the Corporation's transfer
agent, if any), against all loss, damage or expense, which the Corporation
and/or the Corporation's transfer agent may suffer or be liable for by reason of
the issuance of a new certificate to such shareholder, a new certificate may be
issued in replacement of the one defaced, destroyed or apparently destroyed,
stolen or otherwise wrongfully taken or lost, if such issuance is ordered and
authorized by any one of the chairman of the board, the president, a
vice-president, the secretary or the treasurer of the Corporation or by
resolution of the directors.

                                    DIVIDENDS

54. Declaration and Payment of Dividends. (1) Subject to the following
subparagraph (2), the directors may from time to time by resolution declare and
the Corporation may pay dividends on its issued shares, subject to the
provisions (if any) of the articles,

     (2) The directors shall not declare and the Corporation shall not pay a
dividend if there are reasonable grounds for believing that;

     (a)  the Corporation is, or would after the payment be, unable to pay its
          liabilities as they become due; or
<PAGE>
                                      -19-


     (b)  the realizable value of the Corporation's assets would thereby be less
          than the aggregate of its liabilities and stated capital of all
          classes.

     (3) Subject to section 41 of the Act, the Corporation may pay a dividend in
money or property or by issuing fully paid shares of the Corporation.

55. Receipt of Dividends by Joint Holders. In case two or more persons are
registered as the joint holders of any securities of the Corporation, any one of
such persons may give effectual receipts for all dividends and payments on
account of dividends, principal, interest and/or redemption payments on
redemption of securities (if any) subject to redemption in respect of such
securities.

56. Unclaimed Dividends. Any dividend unclaimed after a period of six years from
the date on which the same has been declared to be payable shall be forfeited
and shall revert to the Corporation.

                   VOTING SECURITIES IN OTHER BODIES CORPORATE

57. All securities of any other body corporate carrying voting rights held from
time to time by the Corporation may be voted at all meetings of shareholders,
bondholders, debenture holders or holders of such securities, as the case may
be, of such other body corporate in such manner and by such person or persons as
the directors of the Corporation shall from time to time determine and authorize
by resolution. The duly authorized signing officers of the Corporation may also
from time to time execute and deliver for and on behalf of the Corporation
proxies and/or arrange for the issuance of voting certificates and/or other
evidence of the right to vote in such names as they may determine without the
necessity of a resolution or other action by the directors.

                                     NOTICE

58. Service. (1) Any notice or other document required to be given or sent by
the Corporation to any shareholder, director or auditor of the Corporation shall
be delivered personally or sent by prepaid mail or by telegram, telex, cablegram
or facsimile addressed to:

     (a)  the shareholder at his latest address as shown on the records of the
          Corporation or its transfer agent; and

     (b)  the director at his latest address as shown in the records of the
          Corporation or in the last notice filed under section 64 or 71 of the
          Act.
<PAGE>
                                      -20-


With respect to every notice or other document sent by prepaid mail it shall be
sufficient to prove that the envelope or wrapper containing the notice or other
document was properly addressed and put into a post office letter box.

     (2) If the Corporation sends a notice or document to a shareholder in
accordance with the provisions of the foregoing subparagraph (2) and the notice
or document is returned on three (3) consecutive occasions because the
shareholder cannot be found, the Corporation is not required to send any further
notices or documents to the shareholder until he informs the Corporation in
writing of his new address.

59. Shares registered in more than one name. All notices or other documents
required to be sent to a shareholder by the Act, the regulations under the Act,
the articles or the by-laws of the Corporation shall, with respect to any shares
in the capital of the Corporation registered in more than one name, be given to
whichever of such persons is named first in the records of the Corporation and
any notice or other document so given shall be sufficient notice or delivery of
such document to all the holders of such shares.

60. Persons becoming entitled by operation of law. Every person who by
operation of law, transfer or by any other means whatsoever shall become
entitled to any shares in the capital of the Corporation shall be bound by every
notice or other document in respect of such shares which prior to his name and
address being entered on the records of the Corporation shall have been duly
given to the person or persons from whom he derives his title to such shares.

61. Deceased Shareholder. Any notice or other document delivered or sent by
post or left at the address of any shareholder as the same appears in the
records of the Corporation shall, notwithstanding that such shareholder be then
deceased and whether or not the Corporation has notice of his decease, be deemed
to have been duly served in respect of the shares held by such shareholder
(whether held solely or with other persons) until some other person be entered
in his stead in the records of the Corporation as the holder or one of the
holders thereof and such service shall for all purposes be deemed a sufficient
service of such notice or other document on his heirs, executors or
administrators and all persons (if any) interested with him in such shares.

62. Signatures to Notices. The signature of any director or officer of the
Corporation to any notice may be written, stamped, typewritten or printed or
partly written, stamped, typewritten or printed.

63. Computation of Time. Where a given number of days' notice or notice
extending over any period is required to be given under any provisions of the
articles or by-laws of the Corporation, the day of service or posting of the
notice shall, unless it is
<PAGE>
                                      -21-


otherwise provided, be counted in such number of days or other period and such
notice shall be deemed to have been given or sent on the day of service or
posting.

64. Proof of Service. A certificate of any officer of the Corporation in office
at the time of the making of the certificate or of a transfer officer of any
transfer agent or branch transfer agent of shares of any class of the
Corporation as to facts in relation to the mailing or delivery or service of any
notice or other documents to any shareholder, director, officer or auditor or
publication of any notice or other document shall be conclusive evidence thereof
and shall be binding on every shareholder, director, officer or auditor of the
Corporation, as the case may be.

                          CHEQUES, DRAFTS, NOTES, ETC.

65. All cheques, drafts or orders for the payment of money and all notes,
acceptances and bills of exchange shall be signed by such officer or officers or
other person or persons, whether or not officers of the Corporation, and in such
manner as the directors may from time to time designate by resolution.

                             CUSTODY OF SECURITIES

66. (1) All securities (including warrants) owned by the Corporation shall be
lodged (in the name of the Corporation) with a chartered bank or a trust company
or in & safety deposit box with such other depositaries or in such other manner
as may be determined from time to time by the President of the Corporation.

     (2) All securities (including warrants) belonging to the Corporation may be
issued and held in the name of a nominee or nominees of the Corporation (and if
issued or held in the names of more than one nominee shall be held in the names
of the nominees jointly with right of survivorship) and shall be endorsed in
blank with endorsement guaranteed in order to enable transfer thereof to be
completed and registration thereof to be effected.

                          EXECUTION OF CONTRACTS, ETC.

67. (1) Contracts, documents or instruments in writing requiring the signature
of the Corporation may be signed by any one of the directors and officers. All
contracts, documents or instruments in writing so signed shall be binding upon
the Corporation without any further authorization or formality. The directors
are authorized from time to time by resolution to appoint any officer or
officers or any other person or persons on behalf of the Corporation either to
sign contracts, documents or instruments in writing generally or to sign
specific contracts, documents or instruments in writing. Where the
<PAGE>
                                      -22-


Corporation has only one director and officer, being the same person, that
person may sign all such contracts, documents or other written instruments.

     (2) The corporate seal (if any) may, when required, be affixed to
contracts, documents or instruments in writing signed as aforesaid by an officer
or officers, person or persons appointed as aforesaid by resolution of the
directors.

     (3) The term "contracts, documents or instruments in writing" as used in
this by-law shall include deeds, mortgages, hypothecs, charges, conveyances,
transfers and assignments of property, real or personal, immoveable or
moveable, agreements, releases, receipts and discharges for the payment of money
or other obligations, conveyances, transfers and assignments of shares,
warrants, bonds, debentures or other securities and all paper writings.

     (4) In particular, without limiting the generality of the foregoing, any
one of the directors or officers of the Corporation are hereby authorized to
sell, assign, transfer, exchange, convert or convey all shares, bonds,
debentures, rights, warrants or other securities owned by or registered in the
name of the Corporation and to sign and execute (under the seal of the
Corporation or otherwise) all assignments, transfers, conveyances, powers of
attorney and other instruments that may be necessary for the purpose of selling,
assigning, transferring, exchanging, converting or conveying or enforcing or
exercising any voting rights in respect of any such shares, bonds, debentures,
rights, warrants or other securities. Where the Corporation has only one
director and officer, being the same person, that person may perform the
functions and exercise the powers herein contemplated.

                                     AUDITOR

68. At each annual meeting of the shareholders of the Corporation an auditor may
be appointed for the purpose of auditing and verifying the accounts of the
Corporation for the then current year and his report shall be submitted at the
next annual meeting of the shareholders. The auditor shall not be a director or
an officer of the Corporation. Unless fixed by the meeting of shareholders at
which he is appointed, the remuneration of the auditor shall be determined from
time to time by the directors.

                                   FISCAL YEAR

69. The fiscal period of the Corporation shall terminate on such day in each
year as the directors may from time to time by resolution determine.

                                    BORROWING

70. General Borrowing. The directors may from time to time:
<PAGE>
                                      -23-


     (a)  borrow money upon the credit of the Corporation;

     (b)  issue, reissue, sell or pledge debt obligations of the Corporation;

     (c)  give a guarantee on behalf of the Corporation to secure performance of
          an obligation of any person; and

     (d)  mortgage, hypothecate, pledge or otherwise create a security interest
          in all or any property of the Corporation, owned or subsequently
          acquired, to secure any obligation of the Corporation.

The directors may from time to time authorize any director or directors, or
officer or officers, of the Corporation, to make arrangements with reference to
the money borrowed or to be borrowed as aforesaid, and as to the terms and
conditions of the loan thereof, and as to the securities to be given therefor,
with power to vary or modify such arrangements, terms and conditions and to give
such additional securities for any moneys borrowed or remaining due by the
Corporation as the directors of the Corporation may authorize, and generally
to manage, transact and settle the borrowing of money by the Corporation.

                              ********************

     ENACTED by the sole director of the Corporation on the ____ day of May,
1997.

     WITNESS the corporate seal of the Corporation


                                        /s/ Paul A. Martin
                                        ----------------------------------------
                                        President

     Approved, ratified and confirmed by the sole shareholder of the Corporation
on the _____ day of May, 1997.

     WITNESS the corporate seal of the Corporation.


                                        /s/ Paul A. Martin
                                        ----------------------------------------
                                        President
<PAGE>
                                   SCHEDULE A

                              INTEROIL CORPORATION

                             SHAREHOLDERS RESOLUTION

BE IT RESOLVED THAT

1.   The following amendments to By-Law Number 1 of the Corporation are hereby
     amended as follows:

     The following paragraph is hereby added to By-Law Number 1 of the
     Corporation immediately following paragraph 49:

     49A. Restriction on Issuance. Notwithstanding paragraph 49 of this by-law,
          if the Corporation proposes to issue common shares, and at the time of
          such issuance those shares together with any common shares issued by
          the Corporation in the previous twelve months (other than issuances
          previously approved by shareholders pursuant to this paragraph 49A)
          exceeds 15% of the number of common shares outstanding at the
          commencement of that period and any issuances approved by the
          shareholders pursuant to this paragraph 49A during that period, and
          such common shares are not offered pro rata to all common shareholders
          of the Corporation, the Corporation shall not issue such shares,
          unless the issuance thereof has been approved by ordinary resolution
          of the shareholders of the Corporation; provided, however, that the
          obligation to obtain such shareholder approval shall (a) only apply if
          the Corporation's common shares are listed on the Port Moresby Stock
          Exchange at the time of the proposed share issuance and such exchange
          requires such approval to be obtained and (b) not apply to any
          issuance of common shares issued pursuant to options or rights granted
          by the Corporation prior to November 6, 1999.

     The following paragraph is hereby added to By-Law Number 1 of the
     Corporation immediately following paragraph 52:

     52A. Registration of Transfers. Upon presentation of a share certificate
          representing shares to be transferred and a duly executed share
          transfer power in respect thereof and such other documentation as the
          Corporation may reasonably require and upon compliance with all other
          legal requirements relating to such transfer, the Corporation shall
          register the transfer and no fee shall be charged for such
          registration.

2.   The proper officers of the Corporation are hereby authorized to take such
     other steps as may be necessary or desirable to implement the foregoing.