##### 



InterOil Corporation
 Annual Information Form
 For the Year Ended December 31, 2005
 March 31, 2006
 Corporate Structure
    
    
    2General Development of Our Business
    
    
    3Description of Our Business
    
    
    5Overview
    
    
    5Exploration and Production
    
    
    5Refining and Marketing
    
    
    9Wholesale and Retail Distribution
    
    
    14Environmental Regulations
    
    
    16Social and Environmental Policy
    
    
    16Risk Factors
    
    
    18Dividends
    
    
    26Description of Our Capital Structure
    
    
    26Market for Our Securities
    
    
    27Directors and Officers
    
    
    28Board Committees
    
    
    31Interests of Management and Others in Material Transaction
    
    
    31Legal Proceedings
    
    
    32Material Contracts
    
    
    32Transfer Agent and Registrar
    
    
    35Forward-looking Statements
    
    
    35Additional Information
    
    
    37
  Our registered office in Canada is located at:
    
    Our corporate office in Australia is located at:Brunswick House
    
    Suite 2, Level 210th Floor, 44 Chipman Hill
    
    Orchid Plaza, 79-88 Abbott StreetSaint John, NB E2L 4S6
    
    Cairns, QLD 4870
 InterOil Corporation
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Annual Information Form
March 31, 2006
 Corporate Structure
    
    (INTEROIL LOGO)
 Business Corporations Act
 Exploration and Production
  Refining and Marketing
   InterOil Corporation
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Wholesale and Retail Distribution
   General Development of Our Business
     InterOil Corporation
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
    
    In August 2005, we entered into a $150 million secured revolving crude import facility
with BNP Paribas, Singapore Branch. As of December 31, 2005, the credit limit under this
facility, which is subject to change at the discretion of BNP Paribas, was $150 million.
The facility provides for the issuance of up to $120 million in letters of credit with a
maximum term of 30 days and short terms loans relating to previously issued letters of
credit with a maximum term of 60 days. The short term loans bear interest at LIBOR plus
2.5%. In addition, the facility provides for up to $40 million in borrowings that are
secured by our receivables or cash deposits. All borrowings under this facility are
secured by our crude and refined product inventories, receivables and specified cash
deposits. As of December 31, 2005, $44.0 million remained available for future borrowings
under this facility.
    
    In February 2005, we entered into an agreement with institutional accredited investors
in which the investors paid us $125 million and we agreed to drill eight exploration wells
in Papua New Guinea. Between June 15, 2006 and the later of 90 days after the drilling of
the eighth exploration well and December 15, 2006, each investor may elect to convert its
interest under the agreement into our common shares. An investors interest, or any
portion thereof, may be converted into a number of common shares equal to the amount paid
by the investor for its interest divided by $37.50. If all of the investors converted
their entire indirect participation interest into common shares, we would be obligated to
issue 3,333,334 common shares.
    
    In January 2005, we entered into a $20 million 5% term loan facility. In July 2005, we
increased the availability under this loan facility to $25 million. Borrowings under this
facility are due 15 months after disbursement. The initial $20 million in borrowings will
become due in April and May of 2006. As of December 31, 2005, $3.5 million remained
available for future borrowings under this facility.
    
    In the third quarter of 2004, we issued $45.0 million in 8.875% senior convertible
debentures due 2009 that were subsequently converted into 2.4 million of our common shares.
We also issued warrants to acquire 359,415 common shares at a price of $21.91. The
warrants have a five year term. As of December 31, 2005, warrants to purchase 340,247
common shares remained outstanding.
    
    During 2004, we raised $12.2 million from PNG Drilling Ventures Limited for our second
indirect interest participation agreement program. As of December 31, 2005, PNG Drilling
Ventures Limited had converted $2.5 million of their investment into 141,545 of our common shares. If our exploration program does not discover at least five million barrels of oil
and gas, the $9.7 million balance of the investment is convertible into 237,356 of our
common shares plus $5.5 million payable, at our discretion, in cash or our common shares
based on the average price of our shares in the month preceding such payment.
    
    During 2003, we raised approximately $61 million in net proceeds through the issuance of
an aggregate of 3.8 million common shares in three private placements.
    
    During 2003, we raised $7.6 million from PNG Energy Investors pursuant to an indirect
participation interest agreement. In May 2004, PNG Energy Investors converted its
investment into 683,140 of our common shares.
 InterOil Corporation
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Description of Our Business
 Overview
  
    
    Exploration and Production. Our upstream business segment explores for oil and natural
gas in Papua New Guinea.
    
    Refining and Marketing. Our midstream business segment operates our refinery in Papua
New Guinea and markets the refined products it produces both domestically in Papua New
Guinea and for export.
    
    Wholesales and Retail Distribution. Our downstream business segment is engaged in the
wholesale and retail distribution of refined products in Papua New Guinea.
  Exploration and Production
 The statement of reserves data and other oil and gas information provided below was prepared as of
the date of this Annual Information Form and is provided as of December 31, 2005, unless a later
date is specified. The following information was prepared in accordance with Canadian National
Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. Form 51-101F3 Report of
Management and Directors on Oil and Gas Disclosure, is attached to this Annual Information Form as
Schedule A. We have no reserves as defined in Canadian National Instrument 51-101 and,
accordingly, do not have any oil or gas production or related future net revenue. All information
contained herein regarding resources are references to undiscovered resources as defined in
Canadian National Instrument 51-101.
  2005 Exploration Activities
  InterOil Corporation
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Oil and Gas Wells
  Working Interest in Non-Producing Gas Wells
 Location
    
    Gross
    
    
    NetPapua New Guinea
    
    
    4
    
    
    
    1.6
 Properties with No Attributed Reserves
  Undeveloped Acres
 Location
    
    Gross
    
    
    NetPapua New Guinea
    
    
    8,981,232
    
    
    
    8,187,787Total
    
    
    8,981,232
    
    
    
    8,187,787
  InterOil Corporation
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Costs Incurred
  Capital Expenditures
 Expenditure
    
    Amount (In Millions)Property Acquisition Costs
    
    
    Proved Properties
    
    
    Undeveloped Properties
    
    
    Exploration Costs
    
    $
    44.4Development Costs
    
    
    Total
    
    $
    44.4
 Tax Horizon
  Exploration and Development Activities
  Undeveloped Wells
 Type
    
    Gross
    
    
    NetOil
    
    
    
    
    
    
    Gas
    
    
    
    
    
    
    Service
    
    
    
    
    
    
    Dry
    
    
    2
    
    
    
    2Total
    
    
    2
    
    
    
    2
 Petroleum License Details
   InterOil Corporation
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Petroleum Prospecting License 236
  Petroleum Prospecting License 237
  Petroleum Prospecting License 238
  Petroleum Prospecting License 244
  Petroleum Retention License 4
  InterOil Corporation
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Petroleum Retention License 5
  Indirect Participation Agreement
  Refining and Marketing
   InterOil Corporation
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
    
    propane;
    
    butane;
    
    light, medium and heavy naphtha;
    
    jet fuel (kerosene);
    
    diesel; and
    
    low sulfur waxy residue.
    Optimization Efforts
  InterOil Corporation
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Facilities and Major Subcontractors
    Crude Supply and Throughput
   InterOil Corporation
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Marketing
    InterOil Corporation
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Competition
   Trading and Risk Management
    InterOil Corporation
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Wholesale and Retail Distribution
  Supply of Products
    Retail Distribution
  InterOil Corporation
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Wholesale Distribution
  Recent Developments
  
    
    In August 2005, we completed the installation of a one million liter bulk storage tank.
The construction of a two million liter bulk storage tank is expected to be completed by
the third quarter of 2006. These storage tanks will allow us to meet growing demand for
refined products.
    
    In the fourth quarter of 2005, we acquired a barge facility that we intend to use to
provide refueling services for small to medium sized vessels. We expect to complete the
installation of this facility in the second quarter of 2006. The installation of a new
facility will lead to improved efficiencies in our refueling services.
    
    Four new dealer-owned retail stations that we will supply are expected to become
operational during 2006 and will extend our marketing reach.
 Competition
  Customers
  InterOil Corporation
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Environmental Regulations
  
    
    emissions of substances into, and pollution and contamination of, the atmosphere, waters
and land;
    
    production, use, handling, storage, transportation and disposal of waste, hazardous
substances and dangerous goods;
    
    conservation of natural resources;
    
    the protection of threatened and endangered flora and fauna; and
    
    the health and safety of people.
    Social and Environmental Policy
   InterOil Corporation
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
    
    Maintaining procedures designed to ensure that our operations are conducted in
compliance with all applicable laws, regulations and standards, and where laws do
not exist, adopting and applying standards that reflect our commitment to socially
and environmentally responsible behaviors.
    
    Providing a safe and healthy working environment for all employees and contractors, and
establishing emergency response procedures that allow personnel to respond promptly and
effectively.
    
    Establishing community development assistance programs to enhance and improve the
standard of health and education.
    
    Pursuing socially responsible community relations initiatives that reflect the
communitys needs, enhance our reputation and recognize the importance of the culture,
heritage and traditional rights of the communities in which we operate.
    
    Understanding the traditional and contemporary culture, beliefs and social
dynamics of locals in all project areas with particular reference to land matters,
in order to better manage socio-economic changes in oil and gas exploration and in
our refinery operations in Papua New Guinea.
 InterOil Corporation
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
    
    Ensuring community affairs issues are a major focus in the planning, management
and delivery of our activities, while ensuring that our health, safety and
environment operating procedures are adhered to in every task performed;
    
    Communicating with employees, contractors, partners, government and the local
project impacted communities in a transparent, open and proactive manner;
    
    Providing cultural awareness information and training to our employees and
contractors at all levels;
    
    Ensuring compliance with all applicable industrial relations legislation and
procedures in all employment arrangements with our contractors and sub-contractors;
and
    
    Providing business development advise and support to appropriate, representative
and sustainable community owned enterprises where they have the capability to
provide cost effective and competent services.
 Risk Factors
  We have a limited operating history which makes it difficult to determine our potential.
  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.
  InterOil Corporation
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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 refinery operations may not be profitable.
  We may not be successful in our exploration for oil and gas.
  InterOil Corporation
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Our investments in Papua New Guinea are subject to political, legal and economic risks that could
materially adversely affect their value.
    If we are not able to obtain crude feedstocks for our refinery, our financial condition and results
of operations will be materially adversely affected.
   InterOil Corporation
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We may be required to temporarily or permanently shut down our operations in Papua New Guinea if we
are not be able to obtain all of the licenses necessary to operate our business.
  Our refining operations expose us to risks, not all of which are insured.
  The exploration and production, the refining and the distribution businesses are competitive.
   
    
    our access to the capital necessary to drill wells and acquire properties;
    
    our ability to acquire and analyze seismic, geological and other information relating to
a property;
    
    our ability to retain the personnel necessary to properly evaluate seismic and other
information relating to a property;
 InterOil Corporation
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
    
    the development of, and our ability to access, transportation systems to bring future
production to the market, and the costs of such transportation systems;
    
    the standards we establish for the minimum projected return on an investment of our
capital; and
    
    the availability of alternate fuel sources.
   The volatility of oil prices could adversely affect our results of operations.
  
    
    our revenues, cash flows and earnings;
    
    our ability to attract capital to finance our operations, and the cost of such capital;
    
    the value of our oil properties;
    
    the profit or loss we incur in refining petroleum products; and
    
    the profit or loss we incur in exploring for and developing reserves.
 InterOil Corporation
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Compliance with and changes in environmental laws could adversely affect our performance.
  Weather and unforeseen operating hazards may adversely impact our operating activities.
  You may be unable to enforce your legal rights against us.
  We may not be able to generate cash flows if we are unable to raise capital.
  InterOil Corporation
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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.
   We may not be successful in acquiring and developing oil and gas properties.
  Our significant debt levels and our debt covenants may limit our future flexibility in obtaining
additional financing and in pursuing business opportunities.
  
    
    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;
    
    our OPIC loan agreement and BNP credit facility contain financial tests which we
must satisfy in order to avoid a default under such credit facilities; and
    
    our ability to obtain additional financing for capital expenditures and other
purposes may be limited.
 InterOil Corporation
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Our hedging activities may result in losses.
  
    
    if the amount of refined products produced is less than expected or is not produced or
sold during the planned time period;
    
    if the other party to the hedging contract defaults on its contract obligations; or
    
    if there is a change in the expected differential between the underlying price in the
hedging agreement and actual prices received.
  If we are unable to recruit and retain qualified personnel, it could have a material adverse effect
on our operating results and stock price.
  Petroleum Independent and Exploration Corporation can affect our raising of capital through the
issuance of common shares or securities convertible into common shares.
  Changing regulations regarding corporate governance and public disclosure could cause additional
expenses and failure to comply may adversely affect our reputation and the value of our securities.
  InterOil Corporation
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If we fail to comply with Section 404 of the Sarbanes-Oxley Act of 2002, our reputation and the
value of our securities may be adversely affected.
   Dividends
  Description of Our Capital Structure
   Business Corporations Act
 InterOil Corporation
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Market for Our Securities
   Toronto Stock Exchange (TSX:IOL) in Canadian Dollars
 Month
    
    High
    
    
    Low
    
    
    VolumeJanuary
    
    
    47.91
    
    
    
    40.70
    
    
    
    1,144,144February
    
    
    53.66
    
    
    
    41.88
    
    
    
    669,622March
    
    
    53.90
    
    
    
    38.84
    
    
    
    543,855April
    
    
    43.30
    
    
    
    30.35
    
    
    
    483,160May
    
    
    38.88
    
    
    
    30.93
    
    
    
    298,549June
    
    
    35.35
    
    
    
    28.17
    
    
    
    492,852July
    
    
    37.10
    
    
    
    27.25
    
    
    
    389,324August
    
    
    30.80
    
    
    
    25.94
    
    
    
    298,000September
    
    
    29.78
    
    
    
    25.37
    
    
    
    1,371,182October
    
    
    27.49
    
    
    
    20.84
    
    
    
    403,641November
    
    
    25.55
    
    
    
    21.00
    
    
    
    215,175December
    
    
    33.50
    
    
    
    21.38
    
    
    
    602,852Total
    
    
    
    
    
    
    
    
    
    
    6,912,356
 American Stock Exchange (AMEX:IOC) in United States Dollars
 Month
    
    High
    
    
    Low
    
    
    VolumeJanuary
    
    
    39.16
    
    
    
    33.06
    
    
    
    7,544,500February
    
    
    43.65
    
    
    
    33.23
    
    
    
    6,295,500March
    
    
    43.40
    
    
    
    31.76
    
    
    
    8,426,700April
    
    
    35.85
    
    
    
    24.29
    
    
    
    8,396,600May
    
    
    30.88
    
    
    
    24.50
    
    
    
    5,960,700June
    
    
    28.90
    
    
    
    20.07
    
    
    
    8,821,200July
    
    
    32.07
    
    
    
    22.80
    
    
    
    6,541,200August
    
    
    25.60
    
    
    
    21.27
    
    
    
    3,829,100September
    
    
    24.95
    
    
    
    21.70
    
    
    
    5,170,600October
    
    
    23.61
    
    
    
    17.50
    
    
    
    4,835,000November
    
    
    21.29
    
    
    
    17.69
    
    
    
    3,832,700December
    
    
    28.81
    
    
    
    18.50
    
    
    
    9,348,400Total
    
    
    
    
    
    
    
    
    
    
    79,002,200
 InterOil Corporation
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Prior Sales
     Directors and Officers
  Directors & Officers
 Name
    
    Address
    
    Position
    
    Date of AppointmentPhil E. Mulacek
    
    The Woodlands, TX, USA
    
    Chairman, CEO, & Director
    
    May 29, 1997Christian M. Vinson
    
    Cairns, QLD, Australia
    
    Vice President, COO & Director
    
    May 29, 1997Gaylen J. Byker
    
    Grand Rapids, MI, USA
    
    Director
    
    May 29, 1997G. Michael Folie
    
    Brighton, VIC, Australia
    
    Deputy Chairman & Director
    
    January 1, 2001Roger N. Grundy
    
    Matlock Derbyshire, UK
    
    Director
    
    May 29, 1997Edward N. Speal
    
    Toronto, ON, Canada
    
    Director
    
    June 25, 2003Anesti Dermedgoglou
    
    Cairns, QLD, Australia
    
    Vice President of Investor Relations
    
    June 3, 2002Peter Diezman
    
    Lae, Papua New Guinea
    
    General Manager  Wholesale and
Retail Distribution
    
    March 1, 2005Thomas Donovan
    
    Lufkin, TX, USA
    
    Chief Financial Officer
    
    December 1, 2002Gerry Gilbert
    
    Houston, TX, USA
    
    General Manager  Exploration and
Production
    
    July 1, 2005Daniel Lloyd
    
    Houston, TX, USA
    
    General Counsel & Corporate Secretary
    
    September 19, 2005Anthony Poon
    
    Sydney, NSW, Australia
    
    General Manager  Supply and Trading
    
    October 1, 2005
 InterOil Corporation
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InterOil Corporation
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InterOil Corporation
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.
   Board Committees
  Interests of Management and Others in Material Transaction
   InterOil Corporation
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Legal Proceedings
  Material Contracts
  Date
    
    Description
    
    SEDAR Filing DateJanuary 4, 2006
    
    Purchase and Sale Agreement
between InterOil Products Limited
and Shell Overseas Holdings
Limited
    
    March 30, 2006August 12, 2005
    
    $150 Million Secured Revolving
Crude Import Facility between EP
InterOil, Ltd. and BNP Paribas,
Singapore Branch
    
    March 30, 2006February 25, 2005
    
    Amended and Restated Indirect
Participation Interest Agreement
between InterOil Corporation and
the Investors signatory thereto
    
    March 30, 2006May 12, 2004
    
    Amended Indirect Participation
Interest Agreement between
InterOil Corporation and PNG
Energy Investors, LLC
    
    March 30, 2006July 21, 2003
    
    Drilling Participation Agreement
between InterOil Corporation and
PNG Drilling Ventures Limited
    
    March 30, 2006
 InterOil Corporation
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Date
    
    Description
    
    SEDAR Filing DateMarch 26, 2002
    
    Engineering, Procurement and
Construction Contract for
InterOil Refinery between
InterOil Limited and Clough
Niugini Limited
    
    November 11, 2004June 12, 2001
    
    Loan Agreement between EP
InterOil, Ltd. and Overseas
Private Investment Corporation,
as amended
    
    March 30, 2006December 21, 2001
    
    Crude Supply Agency and Sales
Agreement between EP InterOil,
Ltd. and BP Singapore Pte Limited
    
    November 11, 2004March 23, 2001
    
    Export Marketing and Shipping
Agreement between EP InterOil,
Ltd. and Shell International
Eastern Trading Company
    
    November 11, 2004February 6, 2001
    
    Agreement for the Sale and
Purchase of Naphtha between EP
InterOil, Ltd. and Shell
International Eastern Trading
Company
    
    November 11, 2004May 29, 1997
    
    Refinery State Project Agreement
between InterOil Limited, EP
InterOil, Ltd. and The
Independent State of Papua New
Guinea
    
    November 11, 2004
 Purchase and Sale Agreement dated January 4, 2006
  $150 Million Secured Revolving Crude Import Facility dated August 12, 2005
  Amended and Restated Indirect Participation Interest Agreement dated February 25, 2005
  Amended Indirect Participation Interest Agreement dated May 12, 2004
  InterOil Corporation
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Drilling Participation Agreement dated July 21, 2003
  Engineering Procurement and Construction Contract dated March 26, 2002
  OPIC Loan Agreement dated June 12, 2001
  Crude Supply Agency and Sales Agreement
  Export Marketing and Shipping Agreement dated March 23, 2001
  InterOil Corporation
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Agreement for the Sale and Purchase of Naphtha dated February 6, 2001
  Refinery State Project Agreement
    Transfer Agent and Registrar
  Forward-looking Statements
  InterOil Corporation
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
    
    our lack of a substantial operating history;
    
    the ability of our refinery to operate at full capacity and to operate profitability;
    
    our ability to market refinery output;
    
    uncertainty involving the geology of oil and gas deposits and reserve estimates;
    
    the results of our exploration program and our ability to transport crude oil and
natural gas to markets;
    
    delays and changes in plans with respect to exploration or development projects or
capital expenditures;
    
    political, legal and economic risks related to Papua New Guinea;
    
    our dependence on exclusive relationships with our suppliers and customers;
    
    our ability to obtain necessary licenses, permits and other approvals;
    
    the impact of competition;
    
    the enforceability of your legal rights;
    
    the volatility of prices for crude oil and refined products, and the volatility of the
difference between our purchase price for oil feedstocks and the sales price of our refined
products;
    
    adverse weather, explosions, fires, natural disasters and other operating risks and
hazards, some of which may not be insured;
    
    the uncertainty of our ability to attract capital;
    
    covenants in our financing and other agreements that may limit our ability to engage in
business activities, raise additional financing or respond to changes in markets or
competition; and
    
    the risks described under the heading Risk Factors.
  InterOil Corporation
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Additional Information
 www.sedar.com www.interoil.com
  InterOil Corporation
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Schedule A
 FORM 51-101F3
 REPORT OF MANAGEMENT AND
DIRECTORS ON OIL AND GAS DISCLOSURE
 Company
 (a)
    
    (i)
    
    proved and proved plus probable oil and gas reserves
estimated as at December 31, 2005 using forecast prices and
costs; and(ii)
    
    the related estimated future net revenue; and(b)
    
    (i)
    
    proved oil and gas reserves estimated as at December 31,
2005 using constant prices and costs; and(ii)
    
    the related estimated future net revenue.
 The Company does not have any reserves as defined under National Instrument 51-101.
  (a)
    
    the content and filing with securities regulatory authorities of the other oil and gas
information;(b)
    
    the content and filing of this report.
  /s/ Phil E. Mulacek
    
    /s/ Gaylen J. BykerPhil E. Mulacek, Chairman and
    
    Gaylen J. Byker, DirectorChief Executive Officer/s/ Christian M. Vinson
    
    /s/ Roger N. GrundyChristian M. Vinson, Chief Operating
    
    Roger N. Grundy, DirectorOfficer and DirectorDated: March 31, 2006