##### 



InterOil Corporation
    
    (INTEROIL LOGO)Annual Information FormFor the Year Ended December 31, 2007
March 28, 2008
  
 TABLE OF CONTENTS
 TABLE OF CONTENTS
    
    
    1PRELIMINARY NOTES
    
    
    2GENERAL
    
    
    2NON-GAAP MEASURES
    
    
    2LEGAL NOTICE  FORWARD-LOOKING STATEMENTS
    
    
    3REFERENCES TO RESOURCES AND RESERVES
    
    
    4ABBREVIATIONS AND EQUIVALENCIES
    
    
    5GLOSSARY OF TERMS
    
    
    6CORPORATE STRUCTURE
    
    
    8GENERAL DEVELOPMENT OF THE BUSINESS
    
    
    10BUSINESS STRATEGY
    
    
    14DESCRIPTION OF OUR BUSINESS
    
    
    15UPSTREAM  EXPLORATION AND PRODUCTION
    
    
    16MIDSTREAM  REFINING
    
    
    23MIDSTREAM  LIQUEFACTION
    
    
    27DOWNSTREAM  WHOLESALE AND RETAIL DISTRIBUTION
    
    
    28THE ENVIRONMENT AND COMMUNITY RELATIONS
    
    
    29RISK FACTORS
    
    
    31DIVIDENDS
    
    
    39DESCRIPTION OF CAPITAL STRUCTURE
    
    
    40MARKET FOR SECURITIES
    
    
    45DIRECTORS AND EXECUTIVE OFFICERS
    
    
    46AUDIT COMMITTEE
    
    
    49INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
    
    
    50LEGAL PROCEEDINGS AND REGULATORY ACTIONS
    
    
    50MATERIAL CONTRACTS
    
    
    52TRANSFER AGENT AND REGISTRAR
    
    
    54INTERESTS OF EXPERTS
    
    
    54ADDITIONAL INFORMATION
    
    
    55Schedule A  Report of Management and Directors on Oil and Gas Disclosure
    
    
    56Schedule B  Audit Committee Charter
    
    
    57
  Annual Information Form INTEROIL CORPORATION 1




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##### Table of Contents



PRELIMINARY NOTES
 
 GENERAL
      
 NON-GAAP MEASURES AND RECONCILIATION
  Annual Information Form INTEROIL CORPORATION 2




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##### Table of Contents



The following table reconciles net income/(loss), to EBITDA, for each of the last eight quarters.
 Quarters ended
    
    2007
    
    2006($ thousands)
    
    Dec 31
    
    Sep 30
    
    Jun 30
    
    Mar 31
    
    Dec 31
    
    Sep 30
    
    Jun 30
    
    Mar 31Upstream
    
    
    (3.128
    )
    
    
    (5,015
    )
    
    
    (5,492
    )
    
    
    (4,009
    )
    
    
    (719
    )
    
    
    (1,107
    )
    
    
    (1,922
    )
    
    
    (5,136
    )Midstream  Refining
    
    
    9,589
    
    
    
    (1,332
    )
    
    
    3,775
    
    
    
    6,335
    
    
    
    9,144
    
    
    
    1,674
    
    
    
    (8,188
    )
    
    
    (5,229
    )Midstream  Liquefaction
    
    
    (797
    )
    
    
    (4,104
    )
    
    
    (444
    )
    
    
    (322
    )
    
    
    (396
    )
    
    
    (298
    )
    
    
    
    
    
    
    Downstream
    
    
    3,627
    
    
    
    3,301
    
    
    
    2,760
    
    
    
    3,028
    
    
    
    1,143
    
    
    
    1,954
    
    
    
    3,559
    
    
    
    (326
    )Corporate & Consolidated
    
    
    (2,394
    )
    
    
    (3,105
    )
    
    
    4,959
    
    
    
    (1,930
    )
    
    
    (2,299
    )
    
    
    (853
    )
    
    
    (3,770
    )
    
    
    (1,321
    )Earnings before interest,
taxes, depreciation and
amortization
    
    
    6,897
    
    
    
    (10,255
    )
    
    
    5,557
    
    
    
    3,102
    
    
    
    6,873
    
    
    
    1,370
    
    
    
    (10,323
    )
    
    
    (12,014
    )Subtract:Upstream
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    1
    
    
    
    1
    
    
    
    1Midstream  Refining
    
    
    4,397
    
    
    
    8,155
    
    
    
    2,156
    
    
    
    2,091
    
    
    
    2,479
    
    
    
    3,329
    
    
    
    2,731
    
    
    
    2,343Midstream  Liquefaction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Downstream
    
    
    1,145
    
    
    
    3,320
    
    
    
    (67
    )
    
    
    40
    
    
    
    37
    
    
    
    38
    
    
    
    39
    
    
    
    38Corporate & Consolidated
    
    
    (99
    )
    
    
    (6,252
    )
    
    
    2,768
    
    
    
    2,351
    
    
    
    3,131
    
    
    
    1,981
    
    
    
    838
    
    
    
    285Interest expense
    
    
    5,443
    
    
    
    5,223
    
    
    
    4,857
    
    
    
    4,482
    
    
    
    5,649
    
    
    
    5,349
    
    
    
    3,609
    
    
    
    2,667Upstream
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Midstream  Refining
    
    
    43
    
    
    
    (69
    )
    
    
    (12
    )
    
    
    17
    
    
    
    42
    
    
    
    (46
    )
    
    
    (137
    )
    
    
    (118
    )Midstream  Liquefaction
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Downstream
    
    
    1,112
    
    
    
    (261
    )
    
    
    32
    
    
    
    483
    
    
    
    996
    
    
    
    416
    
    
    
    1,005
    
    
    
    (144
    )Corporate & Consolidated
    
    
    12
    
    
    
    (214
    )
    
    
    15
    
    
    
    14
    
    
    
    11
    
    
    
    (126
    )
    
    
    163
    
    
    
    17Income taxes &
non-controlling interest
    
    
    1,180
    
    
    
    (544
    )
    
    
    35
    
    
    
    514
    
    
    
    1,049
    
    
    
    244
    
    
    
    1,031
    
    
    
    (245
    )Upstream
    
    
    134
    
    
    
    (299
    )
    
    
    338
    
    
    
    309
    
    
    
    233
    
    
    
    202
    
    
    
    173
    
    
    
    198Midstream  Refining
    
    
    2,159
    
    
    
    2,781
    
    
    
    2,749
    
    
    
    2,717
    
    
    
    2,805
    
    
    
    2,700
    
    
    
    2,626
    
    
    
    2,598Midstream  Liquefaction
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Downstream
    
    
    700
    
    
    
    497
    
    
    
    552
    
    
    
    455
    
    
    
    537
    
    
    
    222
    
    
    
    89
    
    
    
    62Corporate & Consolidated
    
    
    (21
    )
    
    
    (20
    )
    
    
    (20
    )
    
    
    (21
    )
    
    
    (21
    )
    
    
    (24
    )
    
    
    (26
    )
    
    
    (20
    )Depreciation & amortization
    
    
    2,987
    
    
    
    2,959
    
    
    
    3,619
    
    
    
    3,460
    
    
    
    3,554
    
    
    
    3,100
    
    
    
    2,862
    
    
    
    2,838Upstream
    
    
    (3,262
    )
    
    
    (4,716
    )
    
    
    (5,831
    )
    
    
    (4,318
    )
    
    
    (954
    )
    
    
    (1,310
    )
    
    
    (2,098
    )
    
    
    (5,335
    )Midstream  Refining
    
    
    2,990
    
    
    
    (12,199
    )
    
    
    (1,117
    )
    
    
    1,511
    
    
    
    3,818
    
    
    
    (4,309
    )
    
    
    (13,408
    )
    
    
    (10,052
    )Midstream  Liquefaction
    
    
    (825
    )
    
    
    (4,104
    )
    
    
    (444
    )
    
    
    (322
    )
    
    
    (396
    )
    
    
    (298
    )
    
    
    
    
    
    
    Downstream
    
    
    670
    
    
    
    (255
    )
    
    
    2,242
    
    
    
    2,050
    
    
    
    (427
    )
    
    
    1,278
    
    
    
    2,426
    
    
    
    (282
    )Corporate & Consolidated
    
    
    (2,286
    )
    
    
    3,382
    
    
    
    2,196
    
    
    
    (4,275
    )
    
    
    (5,420
    )
    
    
    (2,684
    )
    
    
    (4,745
    )
    
    
    (1,603
    )Net income (loss) per segment
    
    
    (2,713
    )
    
    
    (17,892
    )
    
    
    (2,954
    )
    
    
    (5,354
    )
    
    
    (3,379
    )
    
    
    (7,323
    )
    
    
    (17,825
    )
    
    
    (17,272
    )
 
 LEGAL NOTICE  FORWARD-LOOKING STATEMENTS
  Annual Information Form INTEROIL CORPORATION 3




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
    
    the inherent uncertainty of oil and gas exploration activities;
    
    the uncertain outcome of our negotiations with the Papua New Guinea government to
determine the price at which our refined products may be sold;
    
    the availability of crude feedstock at economic rates;
    
    uncertainty in our ability to attract capital;
    
    refinancing risk;
    
    interest rate risk;
    
    general economic conditions and illiquidity in the credit markets;
    
    the recruitment and retention of qualified personnel;
    
    the availability and cost of drilling rigs, oilfield equipment, and other oilfield
exploration services;
    
    our ability to finance the development of our LNG facility;
    
    our ability to timely construct and commission our LNG facility;
    
    political, legal and economic risks in Papua New Guinea;
    
    our ability to renew our petroleum licenses;
    
    landowner claims;
    
    the uncertainty in being successful in pending lawsuits and other proceedings;
    
    compliance with and changes in foreign governmental laws and regulations, including
environmental laws;
    
    the inability of our refinery to operate at full capacity;
    
    difficulties in marketing our refinerys output;
    
    exposure to certain uninsured risks stemming from our refining operations;
    
    weather conditions and unforeseen operating hazards;
    
    losses from our hedging activities;
    
    the impact of competition;
    
    the impact of legislation regulating emissions of greenhouse gases on current and
potential markets for our products; and
    
    fluctuations in currency exchange rates.
    
 REFERENCES TO RESOURCES AND RESERVES
  Annual Information Form INTEROIL CORPORATION 4




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ABBREVIATIONS AND EQUIVALENCIES
 Abbreviations
  Crude Oil and Natural Gas Liquidsbbl
    
    one barrel equaling 34.972 Imperial gallons or 42 U.S. gallonsbblpd
    
    barrels per dayboe1
    
    barrels of oil equivalentdwt
    
    deep water tonnageNGL or NGLs
    
    natural gas liquids, consisting of any one or more of
propane, butane and condensatemtpa
    
    million tonnes per annummcf
    
    million cubic feet
 
 1
    
    All calculations converting natural gas to crude oil
equivalent have been made using a ratio of six mcf of natural gas to one barrel
of crude equivalent. Boes may be misleading, particularly if used in
isolation. A boe conversion ratio of six mcf of natural gas to one barrel of
crude oil equivalent is based on an energy equivalency conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead. Conversion
  To Convert From
    
    To
    
    Multiply Bymscf
    
    cubic meters
    
    28.317cubic meters
    
    cubic feet
    
    35.315bbls
    
    cubic meters
    
    0.159cubic meters
    
    Bbls
    
    6.289feet
    
    meters
    
    0.305meters
    
    feet
    
    3.281miles
    
    kilometers
    
    1.609kilometers
    
    miles
    
    0.621acres
    
    hectares
    
    0.405hectares
    
    acres
    
    2.471
 Annual Information Form INTEROIL CORPORATION 5




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GLOSSARY OF TERMS
 Barrel, Bbl (petroleum)
 BP
 Condensate
 Crack spread
 Crude Oil
 EBITDA Non-GAAP Measures and
Reconciliation
 Farm out
 FEED
 Feedstock
 FID
 GAAP
 Gas
 ICCC
 IPF
 IPP
 IPWI
 LNG
 LPG
 Annual Information Form INTEROIL CORPORATION 6




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LSWR
 Mark-to-market
 Naphtha
 Natural gas
 PGK
 PDL
 PPL
 PRL
 Sweet/sour crude
 Working interest
 Annual Information Form INTEROIL CORPORATION 7




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CORPORATE STRUCTURE
 Name, Address and Incorporation
  Our registered office
in Canada is located at:
    
    Our corporate office
in Australia is located at:
    
    Our corporate office
in Papua New Guinea
is located at:Suite 300,204 Black Street
Whitehouse, Yukon
Y1A 2M9
    
    Level 1, 60-92 Cook Street
Portsmith, Queensland 4870
    
    Level 6 Defens Haus
Cnr Champion Parade
and Hunter Street,
Port Moresby
  Description of Capital Structure  Series A Preferred Shares
  Inter-corporate Relationships
  
 Annual Information Form INTEROIL CORPORATION 8




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Upstream  Exploration and Production
  Midstream  Refining
   Midstream  Liquefaction
   Downstream  Wholesale and Retail Distribution
    Annual Information Form INTEROIL CORPORATION 9




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##### Table of Contents



GENERAL DEVELOPMENT OF THE BUSINESS
 Three Year History
  Upstream  Exploration and Production
 Description of Our
Business  Upstream Exploration and Production  Indirect Participation Interest Agreements We do not have any resources or reserves, as such
terms are defined under NI 51-101 or under definitions established by the SEC.
 Rig #2.
      Annual Information Form INTEROIL CORPORATION 10




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
    
    The Elk structure extends further to the south than previously projected.
    
    A major fault separates the southern portion of the Elk structure into a different
structure that we have named Antelope.
    
    A reef structure exists on the Antelope structure.
      Midstream  Refining segment
     Annual Information Form INTEROIL CORPORATION 11




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Risk Factors
 Midstream  Liquefaction segment
   Downstream  Wholesale and Retail Distribution
      Corporate
  Annual Information Form INTEROIL CORPORATION 12




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##### Table of Contents



Financing
  ü
    
    In January 2005, we entered into a $20.0 million unsecured term loan facility. The interest
rate on this loan was 5%. In July 2005, we increased the availability under this loan
facility to $25.0 million. Borrowings under this facility were due 15 months after all funds
are disbursed. As of December 31, 2005, $3.5 million remained available for future
borrowings under this facility. See May, 2006 below for information regarding repayment of
this loan.ü
    
    In February 2005, we entered into an amended and restated indirect participation agreement
with institutional accredited investors in which the investors paid us a total of $125.0
million and we agreed to drill eight exploration wells in Papua New Guinea. See Description
of Our Business  Upstream Exploration and Production  Indirect Participation Interest
Agreementsfor further information.ü
    
    In August 2005, the secured revolving crude import facility with BNP Paribas, initially
entered into in March 2004, was increased to $150.0 million. At December 31, 2005, $44.0
million remained available for use.ü
    
    As of December 31, 2005, PNG Drilling Ventures Limited had converted $2.5 million of their
investment into 141,545 of our common shares pursuant to an indirect participation interest
agreement. See Description of Our Business  Upstream Exploration and Production  Indirect
Participation Agreementsfor further information.
  ü
    
    In May 2006, InterOil entered into a secured credit agreement for $130.0 million. The loan
is divided into two tranches. Tranche 1, for $100.0 million, was available for drawdown from
the time the agreement was signed. Tranche 2 drawdown was dependent upon milestones being
reached relating to the prospective building of a LNG processing facility in Papua New
Guinea. The full balance of the loan is repayable in May 2008. The interest rate payable on
the loan was 4% from May 2006 through March 2007. Between March 2007 and the repayment date
of the facility, the interest rate was to be 10% unless a definitive Project Agreement was
executed by InterOil and the lenders on or before March 2007. If the Project Agreement was
delivered on or before March 2007, the interest rate was to continue to be 4% for the full
life of the loan. The loan was fully drawn down as of December 31, 2006. In addition to the
applicable interest rate, a 3.5% commitment fee was paid on drawdown of the facility.ü
    
    In May 2006, we repaid $25.0 million in unsecured borrowings.ü
    
    In May 2006, we entered into an agreement to amend the terms of the original PNG Drilling
Ventures Limited agreement whereby PNG Drilling Ventures Limited converted their interest
under the agreement into 575,575 InterOil common shares and also retained a 6.75% interest in
the next four wells (the first of which is Elk-1) to be drilled by InterOil. PNG Drilling
Ventures also has the right to participate in the 16 wells that follow the first four
mentioned above up to an interest of 5.75% by contributing their share of costs.ü
    
    In August 2006, the credit limit under the BNP facility entered into in 2004 was increased to
$170.0 million. The credit limit was comprised of a $130.0 million facility to provide
letters of credit and short term loans to finance the purchase of crude cargoes and bank
guarantees to facilitate hedging and a $40.0 million facility that allowed us to discount
eligible U.S. dollar receivables and fully cash back loans under the first facility.ü
    
    In December 2006, we renegotiated the terms of the secured loan with Overseas Private
Investment Corporation (OPIC) (see Material Contracts  OPIC Loan Agreement) where the half
yearly principal payment due in December 2006 and June 2007 of $4.5 million each, were
deferred until December 31, 2007 and interest previously due on December 31, 2006 and June
30, 2007 was deferred until September 30, 2007. The normal repayment of interest and
principal was to recommence on September 30, 2007 and December 31, 2007, respectively.
  ü
    
    In July 2007 we reached a definitive LNG project shareholders agreement thus confirming that
the interest rate on the $130.0 million facility, signed in 2006, remained at 4% for the life
of the loan.ü
    
    In August 2007, the $170.0 million BNP Paribas working capital facility was renewed until
August 31, 2008.ü
    
    In November 2007, we authorized the issuance of 1,035,554 series A preferred shares at an
issue price of $28.97 to an investor amounting to a total of $30 million. 517,777 of the
authorized series A preferred
 Annual Information Form INTEROIL CORPORATION 13




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##### Table of Contents



shares were issued to an investor in November 2007 for $15 million. We received $14.3 million net of transaction costs related to the
placement.ü
    
    In November/December 2007, we made a private placement of 1,078,514 common shares with
institutional investors and received $23.5 million net of transaction costs relating to the
placement.ü
    
    In December 2007, we amended our agreement with OPIC, in order to defer two installments of $4.5
million each due on December 31, 2007 until January 31, 2008 and February 29, 2008. This was
further amended in February 2008, and these two installments due on January 31, 2008 and February
29, 2008 have been deferred to the end of the OPIC loan period and are now to be repaid by June
30, 2015 and December 31, 2015, respectively.
 Management Team
  ü
    
    Effective July 1, 2006, Dr Jack Hamilton was appointed as President of InterOil.ü
    
    On August 3, 2006, InterOil announced that Tom S. Donovan, Chief Financial Officer of InterOil had
completed his employment agreement on July 31, 2006.ü
    
    On August 30, 2006, InterOil announced that William J. Jasper III was appointed as President and
Chief Operating Officer of InterOil. At this time, it was agreed that Christian Vinson, the
former Chief Operating Officer, would focus on corporate development and government relations in
Papua New Guinea and Dr. Jack Hamilton, the former President, was nominated by InterOil to serve
as Chief Executive Officer of the recently formed PNG LNG Inc., which is the vehicle being used to
develop the proposed LNG facility adjacent to the InterOil refinery in Papua New Guinea.ü
    
    On October 1, 2006, Dr. Michael Folie retired as a director of InterOil.ü
    
    On October 26, 2006, Collin F. Visaggio was appointed as Chief Financial Officer of InterOil.ü
    
    On December 29, 2006, Don R. Hansen was appointed as an independent director of InterOil and also
agreed to serve as a member of both the Audit and Compensation committees.ü
    
    During June 2007, Mark Laurie was appointed as General Counsel and Corporate Secretary of InterOil.
 
 BUSINESS STRATEGY
  Capitalize and Expand Existing Business Assets
    Annual Information Form INTEROIL CORPORATION 14




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Target Acquisitions and Growth Opportunities in Papua New Guinea and the Surrounding Area
   Position InterOil for Long-Term Oil and Gas Business Success
    
 DESCRIPTION OF OUR BUSINESS
 Overview
  Segments
    
    OperationsUpstream
    
    Exploration and Production  Explores and appraises potential
oil and natural gas structures in Papua New Guinea with a view
to commercializing significant discoveries.Midstream
    
    Refining  Produces refined petroleum products at Napa Napa in
Port Moresby Papua New Guinea for domestic market and for spot
export.Liquefaction  Developing an onshore liquefied natural gas
processing facility in Papua New Guinea.Downstream
    
    Wholesale and Retail Distribution  Markets and distributes
refined products domestically in Papua New Guinea on a
wholesale and retail basis.Corporate
    
    Corporate  Provides support to the other business segments by
engaging in business development and improvement activities and
providing general and administrative services and management,
financing and treasury, government and investor relations.
General and administrative and integrated costs are recovered
from business segments on an equitable basis. Our corporate
segment results also include consolidation adjustments.
  Annual Information Form INTEROIL CORPORATION 15




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##### Table of Contents



UPSTREAM  EXPLORATION AND PRODUCTION
 We do not have any reserves or resources and did not have any oil or gas production or related
sales during 2007. All of our oil and gas exploration activities and interest in properties are
located Papua New Guinea.
 Summary of Oil & Gas Licenses
  
  InterOilWorking
    
    
    Acreage
    
    
    Acreage
    
    
    Discovery
    
    DateLicense
    
    Location
    
    Operator
    
    Interest
    
    
    Gross
    
    
    Net
    
    
    Wells
    
    Drilled
    
    
    ResultPPL 236
    
    Onshore
    
    InterOil
    
    
    100.00
    %
    
    
    2,244,449
    
    
    
    2,244,449
    
    
    NonePPL 237
    
    Onshore
    
    InterOil
    
    
    100.00
    %
    
    
    1,618,534
    
    
    
    1,618,534
    
    
    Bwata-1
    
    
    1959
    
    
    Gas/CondensatePuri-1
    
    
    1959
    
    
    OilPPL 238
    
    Onshore
    
    InterOil
    
    
    100.00
    %
    
    
    4,168,651
    
    
    
    4,168,651
    
    
    Elk-1
    
    
    2006
    
    
    Gas/CondensatePPL 244
    
    Offshore
    
    Talisman
    
    
    15.00
    %
    
    
    675,400
    
    
    
    101,310
    
    
    NonePRL 4
    
    Onshore
    
    Austral
    
    
    43.13
    %
    
    
    84,411
    
    
    
    36,406
    
    
    Stanley-1
    
    
    1999
    
    
    Gas/CondensatePRL 5
    
    Onshore
    
    Santos
    
    
    28.56
    %
    
    
    189,850
    
    
    
    54,221
    
    
    Elevala-1
    
    
    1990
    
    
    Gas/CondensateKetu-1
    
    
    1991
    
    
    Gas/CondensateTotal
    
    
    8,981,295
    
    
    
    8,223,571
 Annual Information Form INTEROIL CORPORATION       16




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##### Table of Contents



Petroleum License Details
 Net Working Interests in Discoveries on PPL236, PPL237 & PPL238 (the Operated Exploration Licenses)
  If PNGWorking interests in
    
    GovernmentParticipant
    
    a discovery *
    
    participatesInterOil Corporation
    
    
    68.45
    %
    
    
    53.05
    %IPWI Investors
    
    
    24.80
    %
    
    
    19.22
    %PNG Drilling Ventures
    
    
    6.75
    %
    
    
    5.23
    %Government of Papua New Guinea
    
    
    0.00
    %
    
    
    22.50
    %Total
    
    
    100.00
    %
    
    
    100.00
    %
 
 *
    
    These interests assume all partners elect to participate and novation can only occur after a
Petroleum Development License is granted (see description of PDL below).  Petroleum Prospecting License 236
  Petroleum Prospecting License 237
  Petroleum Prospecting License 238
  Annual Information Form INTEROIL CORPORATION 17




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##### Table of Contents



Petroleum Prospecting License 244
  Petroleum Retention License 4
  Petroleum Retention License 5
 
  Operated License Commitments, Terms, Expiry and Re-Application
   LicenseLicense
    
    Commitment
    
    Issued
    
    Initial Term
    
    License ExpiryPPL 236
    
    $
    4.0
    
    
    March 23, 2003
    
    6 years
    
    March 23, 2009PPL 237
    
    $
    6.0
    
    
    March 23, 2003
    
    6 years
    
    March 23, 2009PPL 238
    
    $
    10.0
    
    
    March 7, 2003
    
    6 years
    
    March 7, 2009
 Annual Information Form INTEROIL CORPORATION       18




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##### Table of Contents



Second TermLicense
    
    Current Acreage
    
    Acreage (50%)
    
    Second Term
    
    License ExpiryPPL 236
    
    
    2,244,449
    
    
    
    1,122,224
    
    
    6 years
    
    March 23, 2015PPL 237
    
    
    1,618,534
    
    
    
    809,267
    
    
    6 years
    
    March 23, 2015PPL 238
    
    
    4,168,651
    
    
    
    2,084,325
    
    
    6 years
    
    March 7, 2015Total
    
    
    8,031,634
    
    
    
    4,015,816
 Petroleum Retention License (PRL)
  Petroleum Development License (PDL)
    Annual Information Form INTEROIL CORPORATION       19




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##### Table of Contents



2007 Exploration Activities
  
 Elk-1 Well
  Elk-2 Drilling and Testing
   Elk Appraisal Seismic
     
    
    The Elk structure extends further to the south than previously projected.
    
    A major fault separates the southern portion of the Elk structure into a different
structure that we have named Antelope.
    
    A reef structure exists on the Antelope structure.
 Elk-4 Drilling
  Annual Information Form INTEROIL CORPORATION       20




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##### Table of Contents



Antelope-1 Well
   PRL 4  Operated By Austral Pacific Energy Limited
 
    
    During fourth quarter of 2007, we participated in a non-operated, 26 mile (43 km) 2D
seismic program over the Stanley gas/condensate discovery in the PRL 4 license.
    
    The joint venture has engaged in negotiations to provide gas to an electrical power
generation company. However, to complete this transaction, suitable gas composition and
well deliverability are required. The PRL 4 partners are planning a re-entry and
production test of the Stanley-1 discovery well, to validate the resource.
    
    In February 2008, Austral Pacific resigned as operator of PRL 4 and InterOil was elected
the new operator, effective as of March 3, 2008.
 PRL 5  Operated By Santos Niugini Exploration Pty Limited
  PPL 244  Operated By Talisman
  Oil and Gas Wells
  Working Interest in Non Producing Gas WellsLocation
    
    Gross
    
    
    NetPapua New Guinea
    
    
    5
    
    
    
    3
 Properties with No Attributed Reserves
  Undeveloped AcresLocation
    
    Gross
    
    
    NetPapua New Guinea
    
    
    8,981,295
    
    
    
    8,223,571
 Annual Information Form INTEROIL CORPORATION      21




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##### Table of Contents

\

Abandonment and Reclamation
  Costs Incurred
  Tax Horizon
  Exploration and Development Activities
  Undeveloped WellsType
    
    Gross
    
    NetOil
    
    
    
    
    
    
    Gas
    
    
    1
    
    
    
    0.68Service
    
    
    
    
    
    
    Dry
    
    
    
    
    
    
    Total
    
    
    1
    
    
    
    0.68
 Indirect Participation Agreements
   Annual Information Form INTEROIL CORPORATION 22




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##### Table of Contents



Strategic Priorities
  StrategicPriorities
    
    2007 Progress
    
    2008 InitiativesTarget Acquisitions
and Growth
Opportunities in
Papua New Guinea
and the Surrounding
Area
    
    ü    InterOil
acquired
approximately 144
miles (230
kilometers) of
appraisal seismic
over Elk, Antelope
and Bighorn
prospects using
CGGVeritas as the
contractor.ü   
Austral
Pacific acquired
approximately 28
miles (43
kilometers) of
appraisal seismic
over the Stanley
prospect on PRL 4.
where InterOils
share is 43.13%
    
    ü    Evaluate productive potential of the
Stanley-1 gas discovery in PRL 4.ü    Drill Elevala-2 appraisal well in PRL
5.ü    Complete evaluation of prospectivity
of PPL 244.ü    Participate in the Papua New Guinea
offshore bid round.Position InterOil
for Long-Term Oil
and Gas Business
Success
    
    ü    Obtained
further information
about Elk and
Antelope structure
by drilling Elk-2
appraisal wellü    Commenced
drilling of Elk-4
appraisal wellü    Prepared
Antelope-1 rig site
for drilling in
2008
    
    ü    Continue to drill development wells in
the Elk/Antelope prospect which will underpin
the LNG Project.
 
 MIDSTREAM  REFINING
 Marketing
 Refinery Optimization
  Annual Information Form INTEROIL CORPORATION       23




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##### Table of Contents



Crude Supply and Throughput
 Facilities and Major Subcontractors
    Crude Supply and Throughput
   Marketing
  Annual Information Form INTEROIL CORPORATION       24




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Competition
  Marketing
 Trading and Risk Management
    Annual Information Form INTEROIL CORPORATION       25




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##### Table of Contents



Strategic Priorities
  StrategicPriorities
    
    2007 Progress
    
    2008 GoalsCapitalize and
Expand on the
Existing Business
Assets
    
    ü    Completed
refinery
optimization
project to improve
product slate,
improve reliability
and reduce fuel
costs.ü   Completed
InterOil Power Fuel
testing project at
Moitaka power
station. (The
downstream business
won a tender to
provide IPF to
Moitaka supplied
out of the
refinery).ü   Continued
with crude
optimization
initiatives.ü   Entered
into discussions
with a significant
potential customer
for InterOil Power
Fuel.ü   Secured new
bunkering business
with a view to
establishing a
significant ongoing
relationship.ü   Reduction
in refinery fixed
costs. 2007 cost
of production was
$2.53, which is a
reduction of $0.93
a barrel over 2006
(based on similar
throughput).
    
    ü   Evaluate feasibility of
improvements, modifications and additional
equipment to improve profitability of the
refinery.ü   Continue to seek out potential
markets for InterOil Power Fuel.ü    Seek profitable distillate export
opportunities.ü   Continue to target reductions in
our operating costs.Target Acquisitions
and Growth
Opportunities in
Papua New Guinea
    
    ü   
Consultation with
key stakeholders to
discuss ways to
stimulate local
demand from the
refinery.
    
    ü   Achieve growth in local demand for
products from the refinery.Position InterOil
for Long-Term Oil
and Gas Business
Success
    
    ü   Improved
refinery EBITDA to
approximately $18.4
million for 2007
(from negative
EBITDA of $2.6
million in 2006).ü   Worked with
the government of
Papua New Guinea to
review the Import
Parity Pricing
formula in place in
Papua New Guinea.
An interim
agreement was
reached and put in
place while a
continuing review
is being
undertaken.
    
    ü   Continue to improve refinery
EBITDA.ü   Conclude review and finalize a
revised import parity price formula for
sales of refined products from our
midstream business, better reflecting
regional crude price movements.
 Annual Information Form INTEROIL CORPORATION       26




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##### Table of Contents



MIDSTREAM  LIQUEFACTION
      (i)
    
    conclusion of FEED for certain (phase 1) facilities;(ii)
    
    execution of the major project contracts;(iii)
    
    approval of the construction plan and budget;(iv)
    
    approval of the financing plan; and(v)
    
    receipt of each material governmental approval required for the project.
 Strategic Priorities
  StrategicPriorities
    
    2007 Progress
    
    2008 GoalsTarget Acquisitions
and Growth
Opportunities in
Papua New Guinea
    
    ü   Progressed
discussions for LNG
opportunity in Papua
New Guinea with
government and other
potential partners.ü   Signed
Shareholders
Agreement relating to
the proposed LNG
plant.
    
    ü   Complete
basis of design and
commence front end
engineering design.ü   Execute the
project agreement
relating to the
proposed LNG plant
with the Papua New
Guinea government.
 Annual Information Form INTEROIL CORPORATION       27




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##### Table of Contents



DOWNSTREAM  WHOLESALE AND RETAIL DISTRIBUTION
   Supply of Products
    Retail Distribution
  Wholesale Distribution
  Annual Information Form INTEROIL CORPORATION       28




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##### Table of Contents



Competition
  Customers
  Strategic Priorities
  StrategicPriorities
    
    2007 Progress
    
    2008 InitiativesCapitalize on and
Expand on the
Existing Business
Assets
    
    ü   Restructured
our downstream
operations to
integrate the
historical assets and
Shell assets acquired
during fourth quarter
of 2006. Operations
were integrated under
one fuel distribution
system.ü   Continued to
secure new contracts
for the supply of
InterOil Power Fuel
in the local market.
    
    ü   Evaluate
possible benefits
eliminating duplicate
distribution of
assets.ü   Continue to
target reductions in
our operating costs.Target Acquisitions
and Growth
Opportunities in
Papua New Guinea and
the Surrounding Area
    
    ü   Acquired 3
additional aviation
fuelling depots from
our competitor in 3
provinces.ü   Examined
other potential
downstream growth
opportunities.
    
    ü    Continue to
pursue opportunities
to purchase a
business or assets in
the business of
distributing fuel to
the aviation sector.
 
 THE ENVIRONMENT AND COMMUNITY RELATIONS
 Environmental Protection
  Annual Information Form INTEROIL CORPORATION 29




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OPIC
  Environmental and Social Policies
    Annual Information Form INTEROIL CORPORATION       30




---



##### Table of Contents



RISK FACTORS
  We may not be successful in our exploration for oil and gas.
   We may not be successful in our negotiations with the government of Papua New Guinea with respect
to revising the price for which we sell refined product in Papua New Guinea, which, if not revised,
may reduce our profit and cause us to cease operating the refinery.
   Our refinerys financial condition may be materially adversely affected if we are unable to obtain
crude feedstocks at economic rates for our refinery.
  Annual Information Form INTEROIL CORPORATION     31




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##### Table of Contents



Our inability to generate sufficient cash flow to pay off or refinance our indebtedness with
near-term maturities could have a material adverse effect on our financial condition.
  Our significant debt levels and our debt covenants may limit our future flexibility in obtaining
additional financing.
  ü
    
    A portion of our cash flow will be used to pay interest and
principal on our debt and will not be available for other
purposes;ü
    
    Our OPIC loan agreement, secured loan agreement and BNP credit
facility contain financial tests which we must satisfy in order to
avoid a default under such credit facilities; andü
    
    Our ability to obtain additional financing for capital
expenditures and other purposes may be limited.
  Illiquidity in the U.S. credit markets may impact our ability to raise capital to fund our
operations and project development.
  Annual Information Form INTEROIL CORPORATION     32




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##### Table of Contents



Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service
obligations to increase significantly.
  The exploration and production, the refining and the distribution businesses are competitive.
   ü
    
    Our access to the capital necessary to drill wells and acquire properties;ü
    
    Our ability to acquire and analyze seismic, geological and other information relating to a property;ü
    
    Our ability to retain the personnel necessary to properly evaluate seismic and other information relating to a property;ü
    
    The development of, and our ability to access, transportation systems to bring future production to the market, and the
costs of such transportation systems;ü
    
    The standards we establish for the minimum projected return on an investment of our capital; andü
    
    The availability of alternate fuel sources.
   Our hedging activities may result in losses.
  Annual Information Form INTEROIL CORPORATION     33




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##### Table of Contents



ü
    
    If the amount of refined products produced is less than expected or is not produced or sold during the planned time
period;ü
    
    If the other party to the hedging contract defaults on its contract obligations; orü
    
    If there is a change in the expected differential between the underlying price in the hedging agreement and actual
prices received.
  There are inherent limitations in all control systems, and misstatements due to error that could
seriously harm our business may occur and not be detected.
    Material weakness in our internal control over financial reporting could result in the inability of
investors to rely on our financial statements, which could result in a material adverse affect on
our business, financial condition, results of operations and prospects.
  Our results of operations and financial condition may be adversely affected by changes in currency
exchange rates.
  Annual Information Form INTEROIL CORPORATION     34




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##### Table of Contents



Our ability to recruit and retain qualified personnel may have a material adverse effect on our
operating results and stock price.
  Shortages or unavailability of drilling rigs, oilfield equipment, and other oilfield exploration
services could have a material adverse affect on our results of operations.
  Our ability to develop our planned LNG facility is contingent on our ability to obtain significant
funding.
   Even if we obtain sufficient funding for our LNG terminal, we may not be able to timely construct
and commission our LNG terminal.
  ü
    
    failure by contractors to fulfill their obligations under construction contracts, or disagreements with them over
contractual obligations;ü
    
    our failure to enter into satisfactory agreements with contractors for the construction of the LNG terminal;ü
    
    shortages of materials or delays in delivery of materials;
 Annual Information Form INTEROIL CORPORATION     35




---



##### Table of Contents



ü
    
    cost overruns and difficulty in obtaining sufficient financing to pay for such additional costs;ü
    
    difficulties or delays in obtaining gas for commissioning activities necessary to achieve commercial operability of the
LNG terminal;ü
    
    failure to obtain all required governmental and third-party permits, licenses and approvals for the construction and
operation of the LNG facility;ü
    
    weather conditions and other catastrophes;ü
    
    difficulties in obtaining a proper workforce for construction purposes, increased labor costs and potential labor
disputes;ü
    
    resistance in the local and global community to the development of an LNG facility due to safety, environmental or
security concerns; andü
    
    local economic and infrastructure conditions.
  If our refining margins do not meet our expectations, we may be required to write down the value of
our refinery.
   ü
    
    Our revenues, cash flows and earnings;ü
    
    Our ability to attract capital to finance our operations, and the cost of such capital;ü
    
    The value of our oil properties;ü
    
    The profit or loss we incur in refining petroleum products; andü
    
    The profit or loss we incur in exploring for and developing reserves.
 Our refinery has not operated at full capacity for an extended period of time and our profitability
may be materially negatively affected if it is not able to do so.
  Annual Information Form INTEROIL CORPORATION     36




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##### Table of Contents



If we are not able to market all of our refinerys output, we will not be able to operate our
refinery at its full capacity and our financial condition and results of operations may be
materially adversely affected.
   Our refining operations expose us to risks, not all of which are insured.
  Weather and unforeseen operating hazards may adversely impact our operating activities.
  If we are unable to renew our petroleum licenses with the Papua New Guinea government, we may be
required to discontinue our exploration activities in Papua New Guinea.
  Annual Information Form INTEROIL CORPORATION     37




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##### Table of Contents



Our investments in Papua New Guinea are subject to political, legal and economic risks that could
materially adversely affect their value.
    The implementation of new Papua New Guinean laws may have a material adverse effect on our
operations and financial condition.
  Title to certain of our properties may be defective or challenged by third party landowner claims.
  Compliance with and changes in environmental laws could adversely affect our performance.
  Annual Information Form INTEROIL CORPORATION     38




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##### Table of Contents



We are a party to lawsuits and other proceedings in which we may not be successful.
  You may be unable to enforce your legal rights against us.
  The enactment of legislation responsive to the Kyoto Protocol or similar global governmental
initiatives to regulate emissions of greenhouse gases could result in a reduction in demand for
fossil fuels that may reduce demand for our products in the global markets and thus negatively
impact our financial condition.
  
 DIVIDENDS
  Description of Our Capital
Structure  Series A Preferred Shares  Dividends
 Annual Information Form INTEROIL CORPORATION     39




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##### Table of Contents



DESCRIPTION OF CAPITAL STRUCTURE
  Common Shares
   Shareholder Rights Plan
   Preferred Shares
  Series A Preferred Shares
   Annual Information Form INTEROIL CORPORATION     40




---



##### Table of Contents



Conversion into Common Shares
    Annual Information Form INTEROIL CORPORATION     41




---



##### Table of Contents



Redemption by the Holders of Series A Preferred Shares
  Annual Information Form INTEROIL CORPORATION     42




---



##### Table of Contents



Rights upon Dissolution or Winding Up
  The Aggregate Number of Common Shares Issued and Issuable by InterOil
  Additional Series of Preferred Shares
  Annual Information Form INTEROIL CORPORATION     43




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##### Table of Contents



Remedies Available to Holders of Series A Preferred Shares
  Options
  Warrants
  Other instruments Convertible into or Exchangeable for Common Shares
   Annual Information Form INTEROIL CORPORATION     44




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##### Table of Contents



MARKET FOR SECURITIES
  Toronto Stock Exchange (TSX:IOL) in Canadian Dollars
 Month
    
    High
    
    Low
    
    VolumeJanuary
    
    $
    36.99
    
    
    $
    27.32
    
    
    
    427,500February
    
    $
    31.50
    
    
    $
    25.69
    
    
    
    489,400March
    
    $
    32.99
    
    
    $
    25.20
    
    
    
    664,800April
    
    $
    36.30
    
    
    $
    30.21
    
    
    
    566,600May
    
    $
    40.63
    
    
    $
    30.31
    
    
    
    926,800June
    
    $
    47.81
    
    
    $
    19.04
    
    
    
    2,341,100July
    
    $
    30.65
    
    
    $
    19.37
    
    
    
    2,525,800August
    
    $
    44.10
    
    
    $
    22.88
    
    
    
    3,613,400September
    
    $
    38.36
    
    
    $
    31.00
    
    
    
    1,567,000October
    
    $
    31.23
    
    
    $
    20.72
    
    
    
    3,223,100November
    
    $
    24.42
    
    
    $
    19.23
    
    
    
    2,399,900December
    
    $
    26.14
    
    
    $
    18.71
    
    
    
    1,826,700Total
    
    
    
    
    
    
    
    
    
    
    20,572,100
 American Stock Exchange (AMEX:IOC) in United States Dollars
 Month
    
    High
    
    Low
    
    VolumeJanuary
    
    $
    30.01
    
    
    $
    23.05
    
    
    
    10,750,400February
    
    $
    27.14
    
    
    $
    22.01
    
    
    
    7,267,300March
    
    $
    28.21
    
    
    $
    21.41
    
    
    
    7,754,900April
    
    $
    32.20
    
    
    $
    26.05
    
    
    
    8,791,000May
    
    $
    38.25
    
    
    $
    27.60
    
    
    
    13,410,600June
    
    $
    44.25
    
    
    $
    17.84
    
    
    
    38,019,400July
    
    $
    27.70
    
    
    $
    18.37
    
    
    
    26,949,300August
    
    $
    42.00
    
    
    $
    21.57
    
    
    
    30,886,000September
    
    $
    37.81
    
    
    $
    30.95
    
    
    
    12,286,300October
    
    $
    31.45
    
    
    $
    20.78
    
    
    
    20,475,600November
    
    $
    24.50
    
    
    $
    19.01
    
    
    
    11,611,500December
    
    $
    25.76
    
    
    $
    19.00
    
    
    
    13,629,900Total
    
    
    
    
    
    
    
    
    
    
    201,832,200
 Prior sales
  Annual Information Form INTEROIL CORPORATION     45




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##### Table of Contents



DIRECTORS AND EXECUTIVE OFFICERS
  Directors and Executive Officers
 Name, Address
    
    Position with InterOil
    
    Date of AppointmentPhil E. Mulacek
Texas, USA
    
    Chairman and Chief Executive Officer
    
    May 29, 1997Christian Vinson
Texas,USA
    
    Vice President of Corporate
Development and Government Affairs,
Director
    
    May 29, 1997Gaylen Byker
Michigan, USA
    
    Director(1)
    
    May 29, 1997Roger Grundy
Derbyshire, UK
    
    Director
    
    May 29, 1997Donald Hansen
Alberta, Canada
    
    Director(2)
    
    December 29, 2006Edward N. Speal
Ontario, Canada
    
    Director(2)
    
    June 25, 2003William Jasper III
Texas, USA
    
    President and Chief Operating Officer
    
    September 18,
2006(3)Anthony Poon
New South Wales,  Australia
    
    General Manager  Supply Trading and
Risk Management
    
    October 1, 2005Collin Visaggio
Western Australia,  Australia
    
    Chief Financial Officer
    
    July 17, 2006(4)Mark Laurie
South Australia,  Australia
    
    General Counsel and Corporate Secretary
    
    June 12, 2007
 
 (1)
    
    Gaylen Byker acts as Chairman of the Audit Committee, the Nominating and Corporate Governance
Committee and Compensation Committee and has held such positions throughout 2007.(2)
    
    Donald Hansen and Edward Speal are members of the Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee and have held such positions throughout the
reporting year.(3)
    
    Mr. Jaspers contract of employment and appointment for three years expires on September 18,
2009.(4)
    
    Mr. Visaggios contract of employment provides that his appointment is to end on November 26,
2008.     Phil E. Mulacek
 Annual Information Form INTEROIL CORPORATION 46




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##### Table of Contents



Christian M. Vinson
 Gaylen J. Byker
 Roger N. Grundy
 Donald R. Hansen
 Edward N. Speal
 Annual Information Form INTEROIL CORPORATION 47




---



##### Table of Contents



William J Jasper III
 Anthony Poon
 Collin F. Visaggio
 Mark Laurie
 Conflicts of Interest
  Annual Information Form INTEROIL CORPORATION 48




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##### Table of Contents




    
    P.I.E. Group, LLC, which entity is controlled by Mr. Mulacek and in which entities
controlled by Dr. Byker also have an ownership interest, holds small ownership interests
(0.01%) in SPI Exploration & Production Corporation and S.P.I. Distribution Limited which
are subsidiaries of the Company. In addition, Petroleum Independent and Exploration
Corporation, which company is controlled and partly owned by Mr. Mulacek, owns an interest
in SP InterOil, LDC, another subsidiary of the Company. See under the heading Corporate
Structure  Inter-corporate Relationships.
    
    Mr. Speal occupies a senior position with BNP Paribas Bank in Canada. This bank
provides, through its Singapore office, certain credit facilities to finance the purchase
of cargoes of crude oil and other petroleum products for InterOils refining activities,
and to support it hedging positions.
    
    Mr. Grundy is a principal of Breckland Limited which entity provides technical and
advisory services to InterOil on customary commercial terms. See also under the heading
Interests of Management and Others in Material Transactions.
 
 AUDIT COMMITTEE
 Charter of the Audit Committee
 
 Composition of the Audit Committee
   Relevant Education and Experience
 Directors and Executive Officers
  Pre-Approval Policies and Procedures
  External Auditor Service Fees
  Annual Information Form INTEROIL CORPORATION 49




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PricewaterhouseCoopers
 2007
    
    2006Audit Fees(1)
    
    $
    968,316
    
    
    $
    618,669Audit-Related Fees(2)
    
    $
    14,887
    
    
    $
    84,383Tax Fees(3)
    
    $
    167,491
    
    
    $
    nilAll Other Fees(4)
    
    $
    266,870
    
    
    $
    124,364Total
    
    $
    1,417,565
    
    
    $
    827,416
 Notes:
 (1)
    
    Audit Fees means the aggregate fees billed by the issuers external auditor in each of the
last two fiscal years for audit fees.(2)
    
    Audit-Related Fees means the aggregate fees billed in each of the last two fiscal years for
assurance and related services by the issuers external auditor that are reasonably related to
the performance of the audit or review of the issuers financial statements and are not
reported under clause (a) above.(3)
    
    Tax Fees means the aggregate fees billed in each of the last two fiscal years for
professional services rendered by the issuers external auditor for tax compliance, tax
advice, and tax planning.(4)
    
    All Other Fees means the aggregate fees billed in each of the last two fiscal years for
products and services provided by the issuers external auditor, other than the services
reported under clauses Audit-Related Fees, Tax Fees and All Other Fees above and principally
relate to assistance responding to the SEC queries on our Form 40-F of December 31, 2005 and
also the quarterly review of financial statements
 
 INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
    Directors and
Executive Officers  Conflicts of Interest
 
 LEGAL PROCEEDINGS AND REGULATORY ACTIONS
 Todd Peters, et al v. Phil Mulacek, et al th Paul A. Martin, et al v. Philippe Mulacek et al Peters Martin
 Annual Information Form INTEROIL CORPORATION 50




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Regulatory Actions
  (a)
    
    penalties or sanctions imposed against the Company by a court relating to securities
legislation or by a securities regulatory authority during the financial year ended
December 31, 2007;(b)
    
    any other penalties or sanctions imposed against the Company by a court relating to
securities legislation or by a securities regulatory authority that would likely be
considered important to a reasonable investor making an investment division; or(c)
    
    settlement agreements entered into by the Company with a court relating to securities
legislation or with a securities regulatory authority during the financial year ended
December 31, 2007.
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MATERIAL CONTRACTS
  Date
    
    DescriptionJuly 30, 2007
    
    Shareholders Agreement between InterOil LNG Holdings,
Inc, Pacific LNG Operations Ltd, Merrill Lynch PNG LNG
Corporation. and PNG LNG Inc.May 4, 2006
    
    Credit Agreement between InterOil Corporation and
Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Clarion Finanz AG as amended.August 31, 2007
    
    Secured Revolving Crude Import Facility between EP
InterOil, Ltd. and BNP Paribas, Singapore Branch as
renewed.February 25, 2005
    
    Amended and Restated Indirect Participation Interest
Agreement between InterOil Corporation and the Investors
signatory thereto as amended.May 12, 2004
    
    Amended Indirect Participation Interest Agreement
between InterOil Corporation and PNG Energy Investors,
LLC.July 21, 2003
    
    Drilling Participation Agreement between InterOil
Corporation and PNG Drilling Ventures Limited as
amended.June 12, 2001
    
    Loan Agreement between EP InterOil, Ltd. and Overseas
Private Investment Corporation, as amended.May 29, 1997
    
    Refinery State Project Agreement between InterOil
Limited, EP InterOil, Ltd. and The Independent State of
Papua New Guinea.
 LNG Project Shareholders Agreement dated July 30, 2007
 Description of the Business Midstream -Liquefaction
 Credit Agreement dated May 4, 2006
  Secured Revolving Crude Import Facility renewed on August 31, 2007 and originally dated August 12,
2005
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Amended and Restated Indirect Participation Interest Agreement dated February 25, 2005
 Description of Our BusinessUpstream-Exploration and ProductionIndirect Participation
Agreements
 Amended Indirect Participation Interest Agreement dated May 12, 2004
  Drilling Participation Agreement dated July 21, 2003
  OPIC Loan Agreement dated June 12, 2001
 Description of the Business  Midstream-Refining Liquefaction
 Refinery State Project Agreement
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TRANSFER AGENT AND REGISTRAR
  Transfer Agent and Registrar
 Main Agent
 th
 Co-Transfer Agent (USA)
 
  
 INTERESTS OF EXPERTS
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ADDITIONAL INFORMATION
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Schedule A  Report of Management and Directors on Oil and Gas Disclosure
 FORM 51-101F3
REPORT OF MANAGEMENT AND
DIRECTORS ON OIL AND GAS DISCLOSURE
  The Corporation does not have any reserves or resource as defined under National Instrument 51-101
 Standards of Disclosure for Oil and Gas Activities,
  (a)
    
    the content and filing with securities regulatory authorities of Form 51-101F1
containing reserves data and other oil and gas information; and(b)
    
    the content and filing of this report.
  Phil E. Mulacek
    
    Gaylen J. BykerPhil E. Mulacek
    
    Gaylen J. BykerChairman and Chief Executive Officer
    
    DirectorChristian M. Vinson
    
    Donald R. HansenChristian M. Vinson
    
    Donald R. HansenOfficer and Director
    
    Director
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Schedule B  Audit Committee Charter
 INTEROIL CORPORATION
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
  Charter  Committee  Board  Company 
 1.
    
    Purpose. The purpose of the Committee is to assist the Board in fulfilling its oversight
responsibilities relating to the Companys corporate accounting and financial reporting
processes and the audits of the Companys financial statements. In fulfilling this function,
the Committees primary duties and responsibilities are to:
 
    
    Serve as an independent and objective party to oversee the integrity of the
Companys financial statements and to monitor the Companys financial reporting process
and systems of internal controls regarding financial, accounting, and legal compliance.
    
    Monitor the qualifications, independence and performance of the Companys
independent auditors and the performance of the Companys internal auditing function.
    
    Provide an avenue of communication between the Board and the independent auditors,
management and the internal auditor.
    
    Report actions of the Committee to the Board with such recommendations as the
Committee may deem appropriate.
 The Committee shall be empowered to conduct or cause to be conducted any investigation
appropriate to fulfilling its responsibilities, and shall have direct access to the independent
auditors, the internal auditor and Company employees as necessary. The Committee shall be
empowered to retain, at the Companys expense, independent legal, accounting, or other
consultants or experts as the Committee deems necessary in the performance of its duties. The
Committee shall have sole authority to approve related fees and retention terms.2.
    
    Committee Membership.
 2.1.
    
    Composition and Appointment. The Committee shall consist of three or more members of
the Board. The Board shall designate members of the Committee. Membership on the
Committee shall rotate at the Boards discretion. The Board shall fill vacancies on the
Committee and may remove a Committee member from the membership of the Committee at any
time without cause. Members shall serve until their successors are appointed by the Board
and as otherwise required by applicable law or the rules of the American Stock Exchange
(AMEX).2.2.
    
    Independence and Financial Literacy. Each member of the Committee must meet the
independence, or an applicable exception, financial literacy, and experience requirements
of the AMEX rules and applicable Canadian and U.S. federal securities laws, including the
rules and regulations of the U.S. Securities and Exchange Commission (SEC). In addition,
at least one member of the Committee must be financially sophisticated, as determined by
the Board, for purposes of applicable AMEX rules.2.3.
    
    Service on Multiple Audit Committees. If a member of the Committee serves on the audit
committee (or, in the absence of an audit committee, the board committee performing
equivalent functions, or in the absence of such committee, the board of directors) of more
than two other public companies, the Board must affirmatively determine that such
simultaneous service on multiple audit committees will not impair the ability of such
member to serve on the Committee.2.4.
    
    Subcommittees. The Committee may form and delegate authority to subcommittees
consisting of one or more members, including the authority to grant pre-approvals of audits
and permitted non-audit services, provided that decisions of said subcommittee to grant
pre-approvals shall be presented to the full Committee at its next scheduled meeting.
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3.
    
    Meetings.
 3.1.
    
    Frequency of Meetings. The Committee shall meet at least quarterly, or more frequently
as circumstances dictate. The schedule for regular meetings of the Committee shall be
established by the Committee. The Chairperson of the Committee may call a special meeting
at any time he or she deems advisable. Meetings may be by written consent. When
necessary, the Committee will meet in executive session outside the presence of any senior
executive officer of the Company. The Committee and any other independent members of the
Board that are not members of the Committee will meet in executive session, without the
presence of non-independent directors and management at least once annually.3.2.
    
    Minutes. Minutes of each meeting of the Committee shall be kept to document the
discharge by the Committee of its responsibilities.3.3.
    
    Quorum. A quorum shall consist of at least one-half of the Committees members, but no
fewer than two persons. The act of a majority of the Committee members present at a
meeting at which a quorum is present shall be the act of the Committee.3.4.
    
    Agenda. The Chairperson of the Committee shall prepare an agenda for each meeting of
the Committee, in consultation with Committee members and any appropriate member of the
Companys management or staff, as necessary. As requested by the Chairperson, members of
the Companys management and staff shall assist the Chairperson with the preparation of any
background materials necessary for any Committee meeting.3.5.
    
    Presiding Officer. The Chairperson of the Committee shall preside at all Committee
meetings. If the Chairperson is absent at a meeting, a majority of the Committee members
present at a meeting shall appoint a different presiding officer for that meeting.3.6.
    
    Private Meetings. The Committee may meet privately with management, the chief executive
officer (CEO"), the general counsel, the internal auditor, the independent auditors, and
as a Committee to discuss any matters that the Committee or each of these groups believe
should be discussed privately.
 4.
    
    General Review Procedures.
 4.1.
    
    Annual Report Review. The Committee shall review with management, the independent
auditors, and the internal auditors, the Companys year-end financial results prior to the
release of earnings and the Companys year-end financial statements prior to filing or
distribution. Such review shall also include the Companys disclosures that are to be
included in the Companys Annual Information Form, Annual Report, Managements Discussion
and Analysis for the year and Annual Report on Form 40-F. The Committee shall also discuss
with management, the independent auditors and the internal auditors any significant issues
or findings or any changes to the Companys accounting principles, any items required to be
communicated by the independent auditors in accordance with Statement on Auditing Standards
No. 61, as amended, and various topics and events that may have a significant impact on the
Company or that are the subject of discussions between management and the independent
auditors. The Committee shall approve the audited financial statements and recommend to
the Board whether or not the audited financial statements should be filed on SEDAR and
included in the Companys Annual Report on Form 40-F for the last fiscal year.4.2.
    
    Quarterly Report Review. The Committee shall review with management, the internal
auditors, and the independent auditors (if the independent auditors were involved in a
review of such financial statements), (i) the Companys interim financial results prior to
the release of earnings, the Companys interim financial statements prior to filing or
distribution and the disclosures that are to be included in the Companys Managements
Discussion and Analysis for each quarter and Form 6-K and (ii) the operation of the
Companys internal controls and any special steps adopted in light of material control
deficiencies. The Committee shall discuss with management, the internal auditors and the
independent auditors (if required by GAAP, AMEX rules, or applicable Canadian and U.S.
federal securities laws), any significant findings or any changes to the Companys
accounting principles and any items required to be communicated by the independent auditors
in accordance with Statement on Auditing Standards No. 61 as amended.
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4.3.
    
    Canadian and SEC Filings Review. The Committee shall review with financial management
and the independent auditor (if the independent auditors were involved in a review of such
financial statements) filings with Canadian securities regulators and the SEC which contain
or incorporate by reference the Companys financial statements or Managements Discussion
and Analysis and consider whether the information in these documents is consistent with
information contained in the financial statements.4.4.
    
    Reporting System Review. In consultation with management, the independent auditors,
and the internal auditors, the Committee shall consider the integrity of the Companys
financial reporting processes and controls, including computerized information system
controls and security. The Committee shall review and discuss with management the
Companys significant financial risk exposures and the steps management has taken to
monitor, control, and report such exposures. The Committee shall review significant
findings prepared by the independent auditors and the internal auditors together with
managements responses, including the status of previous recommendations.4.5.
    
    Non-GAAP Financial Data Review. The Committee shall review and discuss with management
earnings including the use of pro forma, adjusted or other non-GAAP information,
financial guidance and other press releases of a material financial nature, as well as
financial information and earnings guidance provided to analysts and rating agencies. Such
discussion may be done generally consisting of discussing the types of information to be
disclosed and the types of presentations to be made.4.6.
    
    Off-Balance Sheet Review. The Committee shall discuss with management and the
independent auditor the effect of regulatory and accounting initiatives as well as
off-balance sheet structures on the Companys financial statements.4.7.
    
    Risk Assessment. Although it is the job of the CEO and senior management to assess and
manage the Companys exposure to risks, the Committee shall discuss guidelines and policies
to govern the process by which risk assessment and risk management is addressed.4.8.
    
    Audit Difficulties. The Committee shall review with the independent auditor any audit
problems or difficulties encountered in the course of the audit work and managements
response, any restrictions on the scope of activities or access to requested information;
and any significant disagreements between auditors and management. The Committee shall
work to resolve disagreements that may have occurred between auditors and management
related to the Companys financial statements or disclosures.4.9.
    
    Hiring Approval. The Committee shall approve the hiring of any employee or former
employee of the independent auditor.4.10.
    
    Financial Officer Code of Ethics Review. The Committee shall review and periodically
recommend modifications to the Companys Code of Ethics for the Chief Executive Officer and
Senior Financial Officers.4.11.
    
    Certification Review. The Committee shall review disclosures made to the Committee by
the Companys CEO and CFO during the certification process for the audited annual financial
statements, interim financial statements, related Managements Discussion and Analysis and
Form 40-F concerning significant deficiencies or material weaknesses in internal controls
and any fraud.4.12.
    
    Legal Counsel Review. On at least an annual basis, the Committee shall review with
the Companys legal counsel any legal matters that could have a significant impact on the
Companys financial statements or the Companys compliance with applicable laws and
regulations, and inquiries received from regulators or governmental agencies.
 5.
    
    Independent Auditors.
 Auditor Performance Review. The Committee shall confirm with the independent auditors
their ultimate accountability to the Committee. The independent auditors will report
directly to the Committee. The Committee will ensure that the independent auditors are
aware that the Chairperson of the Committee is to be contacted directly by the
independent auditor (i) to review items of a sensitive nature that can impact the
accuracy of financial reporting or (ii) to discuss
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significant issues relative to the overall Board responsibility that have been
communicated to management but, in their judgment, may warrant follow-up by the
Committee. The Committee shall review and evaluate the performance of the auditors and
the lead partner on the independent auditor team.Approval of Independent Auditor and Pre-Approval of Services. The Committee shall be
directly responsible for the appointment, compensation, retention, termination, and
oversight of the work of the independent auditors engaged (including resolution of
disagreements between management and the auditor regarding financial reporting) for the
purpose of preparing or issuing an audit report or performing other audit, review or
attest services for the Company. The Committee shall pre-approve all auditing services,
including the compensation and terms of the audit engagement, and all other non-audit
services to be performed by the independent auditors, subject to the de-minimus
exceptions for non-audit services described in Section 10A(i)(1)(B) of the Securities
Exchange Act of 1934 which are approved by the Audit Committee prior to the completion
of the audit. The Committee shall periodically discuss current year non-audit services
performed by the independent auditors and review and pre-approve all permitted non-audit
service engagements.Auditor Independence. The Committee shall oversee the independence of the independent
auditors by, among other things, (i) on an annual basis, receiving from the independent
auditors a formal written statement delineating all relationships between the
independent auditors and the Company, consistent with Independence Standards Board
Standard No. 1, that could impair the auditors independence; (ii) actively engaging in
a dialogue with the independent auditors with respect to any disclosed relationships or
services that may impact the objectivity and independence of the independent auditors;
and (iii) taking, or recommending to the Board the appropriate action to be taken, in
response to the independent auditors report to satisfy itself of the independent
auditors independence.Auditor Report. The Committee shall annually obtain from the independent auditor and
review a written report describing (i) the independent auditors internal
quality-control procedures; and (ii) any material issues raised by (a) the independent
auditors most recent internal quality-control review, or peer review or (b) any inquiry
or investigation by governmental or accounting profession authorities, in each case,
within the preceding five years, respecting one or more independent audits carried out
by the independent auditor, and any steps taken to deal with any such issues.Audit Partner Rotation. The Committee shall ensure the rotation of the lead (or
coordinating) audit partner having primary responsibility for the audit and the audit
partner responsible for reviewing the audit as required by law. The Committee shall
obtain, annually, from the independent auditor a written statement confirming that
neither the lead (or coordinating) audit partner having primary responsibility for the
Companys audit nor the audit partner responsible for reviewing the Companys audit has
performed audit services for the Company in each of the Companys five previous fiscal
years.Internal Controls Report. Beginning in fiscal year 2006 or earlier if required by
applicable accounting rules or Canadian and U.S. federal securities laws, the Committee
shall annually obtain from the independent auditor a written report in which the
independent auditor attests to and reports on the assessment of the Companys internal
controls made by the Companys management. The Committee shall review and discuss with
management, the independent auditor, and the Companys independent auditor (i) the
adequacy and effectiveness of the Companys internal controls (including any significant
deficiencies and significant changes in internal controls reported to the Committee by
the independent auditor or management; (ii) the Companys internal audit procedures; and
(iii) the adequacy and effectiveness of the Companys disclosures controls and
procedures, and management reports thereon.National Office Consultation. The Committee shall discuss with the national office of
the independent auditor issues on which they were consulted by the Companys audit team
and matters of audit quality and consistency.Audit Planning. The Committee shall review and discuss with the independent auditors
their audit plan and engagement letter and discuss with the independent auditors and the
internal auditor the scope of the audit, staffing, locations, reliance upon management,
and internal audit and general audit approach.
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Accounting Principles. The Committee shall consider the independent auditors judgments
about the quality and appropriateness of the Companys accounting principles as applied
in its financial reporting, including critical accounting policies and practices used by
the Company, GAAP alternatives discussed with management (including the ramifications
and the auditors preferred treatment) and any other material written communications
between the independent auditor and management.Auditor Assurance. The Committee shall obtain from the independent auditor assurance that
Section 10A of the Securities Exchange Act of 1934, addressing the reporting of
illegal acts, has not been implicated.Additional Auditors. The Committee shall review the use of auditors other than the
independent auditor where management has requested a second opinion or another
auditor is proposed to be engaged for other reasons.6.
    
    Internal Audit Department and Legal Compliance.Budget and Plan. The Committee shall review the budget, plan, changes in plan,
activities, organizational structure, and qualifications of the internal auditor. The
internal auditor function shall be responsible to senior management, but shall have a
direct reporting responsibility to the Board through the Committee. The internal
auditor will be responsible for contacting the Chairperson of the Committee directly (i)
to review items of a sensitive nature that can impact the accuracy of financial
reporting or (ii) to discuss significant issues relative to the overall Board
responsibility that have been communicated to management but, in the internal auditors
judgment, may warrant follow-up by the Committee.Approval of Internal Auditor. The Committee shall review and approve the appointment,
performance, dismissal and replacement of the internal auditor or the entity retained to
provide internal audit services.Internal Audit Review. The Committee shall review a summary of findings from completed
internal audits and, where appropriate, review significant reports prepared by the
internal audit department together with managements response and follow-up to these
reports.7.
    
    General Audit Committee Responsibilities.Code of Ethics for the Chief Executive Officer and Senior Financial Officers. The
Committee shall inquire of management, the independent auditor and the internal auditor
as to their knowledge of (i) any violation of the Code of Ethics for the Chief Executive
Officer and Senior Financial Officers, (ii) any waiver of compliance with such code, and
(iii) any investigations undertaken with regard to compliance with such code. The
Committee may make recommendations to the Board regarding the waiver of any provision of
the Code of Ethics for the Chief Executive Officer and Senior Financial Officers,
however any waiver of such code may only be granted by the Board. All waivers granted
by the Board shall be promptly publicly disclosed as required by the rules and
regulations of the SEC and the AMEX.
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Complaints Procedure. The Committee shall establish procedures to (i) receive, process, retain
and treat complaints received by the Company regarding accounting, internal audit controls
or auditing matters and (ii) the confidential and anonymous submission by employees of
concerns regarding questionable accounting or audit practices.Related Party Transactions. The Committee shall approve all related party transactions
after a review of the transactions by the Committee for potential conflicts of interest
and transaction will be considered a related party transaction if the transaction
would be required to be disclosed in the Companys Managements Discussion and Analysis
or any other filings with Canadian Securities Administrators or the SEC.Use of Assets. The Committee shall review Company policies and procedures with respect
to executive officers expense accounts and prerequisites, including their use of
corporate assets, and consider the results of any review of these areas by the internal
auditors or the independent accountant.General Activities. The Committee shall perform any other activities consistent with
this Charter, the Companys bylaws, the Companys Code of Ethics and Business Conduct
and governing law, as the Committee or the Board deems necessary or appropriate,
including reviewing the Companys corporate compliance activities.
 8.
    
    Reports and Assessments.
 8.1.
    
    Board Reports. The Chairperson shall, periodically at his or her discretion, report to
the Board on Committee actions and on the fulfillment of the Committees responsibilities
under this Charter. Such reports shall include any issues that arise with respect to the
quality or integrity of the Companys financial statements, the Companys compliance with
legal or regulatory requirements, the performance and independence of the Companys
independent auditors and the performance of the Companys internal audit function.8.2.
    
    Charter Assessment. The Committee shall annually assess the adequacy of this Charter
and advise the Board of its assessment and of its recommendation for any changes to the
Charter. The Committee shall, if requested by management, assist management with the
preparation of a certification to be presented annually to the AMEX affirming that the
Committee reviewed and reassessed the adequacy of this Charter.8.3.
    
    Committee Self-Assessment. The Committee shall regularly make a self-assessment of its
performance, which shall include eliciting input from management, the Board and the General
Counsel on the performance of the Committee.8.4.
    
    Audit Committee Report. The Committee shall prepare any Audit Committee Reports
required by the rules of the Canadian Securities Administrators or the SEC to be included
in the Companys filings with such agencies.
   Annual Information Form INTEROIL CORPORATION 62