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Exhibit 1




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TABLE OF CONTENTS
 PageARTICLE I. DEFINITIONS
    
    
    1Section 1.1 Definitions
    
    
    1Section 1.2 Accounting Procedures and Interpretation
    
    
    5ARTICLE II. SALE AND PURCHASE
    
    
    6Section 2.1 Initial Sale and Purchase
    
    
    6Section 2.2 Subsequent Placement of Preferred Shares
    
    
    6Section 2.3 Closings
    
    
    6Section 2.4 Respective Obligations
    
    
    7ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
    
    
    7Section 3.1 Existence
    
    
    7Section 3.2 Capitalization and Valid Issuance of the Purchased Preferred Shares
    
    
    8Section 3.3 Company SEC Documents
    
    
    9Section 3.4 No Material Adverse Change
    
    
    10Section 3.5 Litigation
    
    
    10Section 3.6 No Breach
    
    
    10Section 3.7 Authority
    
    
    11Section 3.8 Approvals
    
    
    11Section 3.9 Investment Company Status
    
    
    11Section 3.10 Offering
    
    
    11Section 3.11 Resale of Securities
    
    
    12Section 3.12 Certain Fees
    
    
    12Section 3.13 No Side Agreements
    
    
    12Section 3.14 Internal Accounting Controls
    
    
    12Section 3.15 Preemptive Rights or Registration Rights
    
    
    12Section 3.16 Insurance
    
    
    13Section 3.17 Acknowledgment Regarding Purchase of the Purchased Preferred Shares
    
    
    13Section 3.18 Anti-Takeover Laws
    
    
    13Section 3.19 Compliance with Laws
    
    
    13Section 3.20 Tax Matters
    
    
    14Section 3.21 Title to Assets
    
    
    14Section 3.22 Adverse Proceedings
    
    
    14ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
    
    
    14Section 4.1 Valid Existence
    
    
    15Section 4.2 No Breach
    
    
    15Section 4.3 Investment
    
    
    15Section 4.4 Nature of Purchaser
    
    
    16Section 4.5 Receipt of Information; Authorization
    
    
    16Section 4.6 Restricted Securities
    
    
    16Section 4.7 Certain Fees
    
    
    16Section 4.8 Legend
    
    
    16Section 4.9 No Side Agreements
    
    
    17ARTICLE V. COVENANTS
    
    
    17
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PageSection 5.1 Subsequent Offerings
    
    
    17Section 5.2 Purchaser Lock-Up
    
    
    18Section 5.3 Taking of Necessary Action
    
    
    18Section 5.4 Non-Disclosure; Interim Public Filings
    
    
    18Section 5.5 Use of Proceeds
    
    
    19Section 5.6 Reservation of Shares
    
    
    19Section 5.7 Reporting Issuer Status
    
    
    19Section 5.8 Stock Exchange Approval
    
    
    19Section 5.9 Fees
    
    
    19ARTICLE VI. CLOSING DELIVERIES
    
    
    20Section 6.1 Company Deliveries
    
    
    20Section 6.2 Purchaser Deliveries
    
    
    20ARTICLE VII. INDEMNIFICATION, COSTS AND EXPENSES
    
    
    21Section 7.1 Indemnification by the Company
    
    
    21Section 7.2 Indemnification by the Purchasers
    
    
    21Section 7.3 Indemnification Procedure
    
    
    21ARTICLE VIII. MISCELLANEOUS
    
    
    22Section 8.1 Interpretation
    
    
    22Section 8.2 Survival of Provisions
    
    
    22Section 8.3 No Waiver; Modifications in Writing
    
    
    23Section 8.4 Binding Effect; Assignment
    
    
    23Section 8.5 Aggregation of Purchased Preferred Shares
    
    
    24Section 8.6 Confidentiality and Non-Disclosure
    
    
    24Section 8.7 Communications
    
    
    24Section 8.8 Removal of Legend
    
    
    25Section 8.9 Entire Agreement
    
    
    25Section 8.10 Governing Law
    
    
    26Section 8.11 Jurisdiction
    
    
    26Section 8.12 Jury Trial
    
    
    26Section 8.13 Execution in Counterparts
    
    
    26Section 8.14 Expenses
    
    
    26Section 8.15 Recapitalization, Exchanges, Etc.
    
    
    26Section 8.16 Obligations Limited to Parties to Agreement
    
    
    26
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SECURITIES PURCHASE AGREEMENT
 Agreement Company Schedule 2.1 Initial Purchaser Purchasers Purchaser
 Preferred Shares Exhibit A Underlying Shares
 Schedule 2.1
   ARTICLE I.
DEFINITIONS
 Section 1.1 Definitions.
 6-K Filing Section 5.4.
 Action
 Affiliate
 Agreement
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Basic Documents
 Business Day
 Canadian Disclosure Documents Section 3.3.
 Canadian Securities Laws
 Canadian Securities Regulatory Authorities
 Closing Section 2.3.
 Closing Date Section 2.3.
 Code
 Commission
 Commitment Amount Schedule 2.1
 Common Shares
 Company
 Company Financial Statements Section 3.3.
 Company Material Adverse Effect
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Company Organizational Document
 Company Organizational Law
 Company SEC Documents Section 3.3.
 Equity Interests
 Exchange Act
 GAAP
 Governmental Authority
 Indemnified Party Section 7.1.
 Indemnifying Party Section 7.3.
 Initial Closing Section 2.3.
 Initial Closing Date Section 2.3.
 Initial Purchaser
 Law
 Lien
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Lock-Up Date
 Merrill Section 5.9.
 Party Parties
 Person
 Preferred Shares
 Preferred Share Price Section 2.1(b).
 Property
 Purchased Preferred Shares
 Purchase Price
 Purchaser
 Purchaser Material Adverse Effect
 Purchasers
 Registration Rights Agreement Exhibit B,
 Representatives
 Securities Act
 Shareholders
 4




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Stock Exchange
 Subsequent Closing Section 2.3.
 Subsequent Closing Date  Section 2.3.
  Subsequent Offer Period  Section 2.2.
  Subsequent Placement  Section 2.2.
 Subsequent Purchaser Section 2.2.
 Subsidiary
 Tax
 Tax Return
 Underlying Shares
 Section 1.2 Accounting Procedures and Interpretation.
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ARTICLE II.
SALE AND PURCHASE
 Section 2.1 Initial Sale and Purchase. Schedule 2.1 Schedule
2.1
 Preferred Shares. Schedule 2.1
 Consideration.  Preferred Share Price 
 Section 2.2 Subsequent Placement of Preferred Shares. th  Subsequent Offer Period   Subsequent Purchaser   Subsequent
Purchasers   Subsequent Placement  Schedule 2.1 Schedule 2.1 Schedule 2.1
 Section 2.3 Closings.
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Initial Closing Initial Closing Date  Subsequent Closing   Subsequent Closing Date   Closings  Closing.  Closing Date  Closing Date.
 Section 2.4 Respective Obligations.
 ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
  Section 3.1 Existence.
 7




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Section 3.2 Capitalization and Valid Issuance of the Purchased Preferred Shares.
   Schedule 3.2(c)
  8




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Exhibit A.
     Section 3.3 Company SEC Documents. Company SEC Documents Canadian Disclosure Documents Schedule
3.3 Company
Financial Statements
 9




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Section 3.4 No Material Adverse Change.
 Section 3.5 Litigation.
 Section 3.6 No Breach.
 10




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Section 3.6
 Section 3.7 Authority.
 Section 3.8 Approvals. Section 3.2 Section 3.2(f))
 Section 3.9 Investment Company Status.
 Section 3.10 Offering.
 11




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Section 3.11 Resale of Securities.
 Section 3.12 Certain Fees. Schedule 3.12
 Section 3.13 No Side Agreements.
 Section 3.14 Internal Accounting Controls.
 Section 3.15 Preemptive Rights or Registration Rights.
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Schedule 3.15
 Section 3.16 Insurance.
 Section 3.17 Acknowledgment Regarding Purchase of the Purchased Preferred Shares.
 Section 3.18 Anti-Takeover Laws.
 Section 3.19 Compliance with Laws.
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Section 3.20 Tax Matters.
 Section 3.21 Title to Assets.
 Section 3.22 Adverse Proceedings.
 ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
  14




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Section 4.1 Valid Existence.
 Section 4.2 No Breach. Section 4.2
 Section 4.3 Investment.
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Section 4.4 Nature of Purchaser.
 Section 4.5 Receipt of Information; Authorization.
 Section 4.6 Restricted Securities.
 Section 4.7 Certain Fees.
 Section 4.8 Legend.
   16




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TSX
  Section 4.9 No Side Agreements.
 ARTICLE V.
COVENANTS
 Section 5.1 Subsequent Offerings.
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EPNG
 Section 5.2 Purchaser Lock-Up. provided, however Section 5.2.
 Section 5.3 Taking of Necessary Action. .
 Section 5.4 Non-Disclosure; Interim Public Filings. 6-K Filing
 18




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Section 5.4
 Section 5.5 Use of Proceeds.
 Section 5.6 Reservation of Shares.
 Section 5.7 Reporting Issuer Status.
 Section 5.8 Stock Exchange Approval.
 Section 5.9 Fees. Merrill
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ARTICLE VI.
CLOSING DELIVERIES
 Section 6.1 Company Deliveries.
 Section 4.8
 Exhibit B
      Section 6.2 Purchaser Deliveries.
 Schedule 6.2(a)
 Exhibit B
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Schedule 2.1
 ARTICLE VII.
INDEMNIFICATION, COSTS AND EXPENSES
 Section 7.1 Indemnification by the Company.
 Section 7.2 Indemnification by the Purchasers.
 Section 7.3 Indemnification Procedure. Indemnified Party Indemnifying Party
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provided however
 ARTICLE VIII.
MISCELLANEOUS
 Section 8.1 Interpretation.
 Section 8.2 Survival of Provisions.
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Section 8.3 No Waiver; Modifications in Writing.
 Delay.
 Specific Waiver.
 Section 8.4 Binding Effect; Assignment.
 Binding Effect. Article VII
 Assignment of Purchased Preferred Shares. Section 5.2
 Assignment of Rights. Section 8.4(c)
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Section 8.5 Aggregation of Purchased Preferred Shares.
 Section 8.6 Confidentiality and Non-Disclosure.
 Section 8.7 Communications.
  phil.mulacek@interoil.com mark.laurie@interoil.com
  guy.young@haynesboone.com
  Jennifer_Kneale@ml.com
   24




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Steve_Jones1@ml.com
 kpeter@lockeliddell.com
  Section 8.8 Removal of Legend. Section
4.8(a) Section
4.8(a) Section 8.7
 Section 8.9 Entire Agreement.
 25




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Section 8.10 Governing Law.
 Section 8.11 Jurisdiction.
 Section 8.12 Jury Trial.
 Section 8.13 Execution in Counterparts.
 Section 8.14 Expenses.
 Section 8.15 Recapitalization, Exchanges, Etc.
 Section 8.16 Obligations Limited to Parties to Agreement.
 26




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27




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INTEROIL CORPORATIONBy:
    
    Phil E. MulacekName:
    
    Phil E. MulacekTitle:
    
    Chief Executive Officer




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MERRILL LYNCH COMMODITIES, INC.By:
    
    Barry GoldblattName:
    
    Barry GoldblattTitle:
    
    Managing Director




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Number of PreferredPurchaser
    
    Shares
    
    Commitment AmountMERRILL LYNCH
COMMODITIES, INC.
    
    517,777
    
    $14,999,999.69TOTAL
    
    517,777
    
    $14,999,999.69




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Exhibit A




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Exhibit B




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FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT
 First Amendment Company Purchaser
 RECITALS
 Agreement
 Section 8.3(b)
   AGREEMENT
   Subsequent Offer Period




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[Signature page follows]
 2




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INTEROIL CORPORATIONBy:
    
    Phil E. MulacekName:
    
    Phil E. MulacekTitle:
    
    Chief Executive Officer




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MERRILL LYNCH COMMODITIES, INC.By:
    
    Rob JonesName:
    
    Rob JonesTitle:
    
    President




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REGISTRATION RIGHTS AGREEMENT
 Agreement Company Purchaser Purchasers
 W I T N E S S E T H:
 Purchase Agreement Purchased Preferred Shares
 Underlying Shares Common Stock
    Certain Definitions
 Business Days
 Closing Closing Date
 Commission SEC
 Common Shares
 Holder Holders




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1934 Act
 Person
 Purchased Preferred Shares
 register, registered registration
 Registrable Securities
 Registration Expenses
 Registration Statement
 Registration Statement/Prospectus
 Regulation D
 Rule 144(k) 
 Securities Act Act
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Selling Expenses
 Selling Holder
 Registration Requirements
  Registration Statement Canadian Prospectus Registration Statement/Prospectus Effectiveness Deadline
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4




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Interfering Events
      Registration Default Liquidated Damages
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Delay Rights
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provided however Grace Suspension Period
 No Listing; Suspension of Class of Shares
 Approved Markets Listing Period Effectiveness Commencement Date
  Cumulative Remedies
 Maximum Liquidated Damages
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8




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9




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Advice
  Expenses of Registration.
 Registration
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Registration Period. Registration
Period
 Indemnification
 Company Indemnity
 Holder Indemnity
 11




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Procedure Indemnified
Party Indemnifying
Party
 Contribution
 12




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Survival
 Information by Holders.
 13




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Replacement Certificates
 Transfer or Assignment
 Reports Under The 1934 Act Rule 144
  14




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Miscellaneous
 Remedies
 Jurisdiction
 Notices
 15




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phil.mulacek@interoil.com mark.laurie@interoil.com
  guy.young@haynesboone.com
  Jennifer_Kneale@ml.com
  Steve_Jones1@ml.com
 kpeter@lockeliddell.com
 16




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Waivers
 Execution in Counterpart.
 Signatures
 Entire Agreement; Amendment
 Governing Law.
 Jury Trial.
 Titles
 17




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No Strict Construction
 [Signature Page Follows]
 18




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IN WITNESS WHEREOF
  Phil E. Mulacek




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Barry Goldblatt