InterOil Corporation
TSX : IOL
AMEX : IOC

InterOil Corporation

May 31, 2006 19:18 ET

InterOil Announces Filing of Revised Financial Statements and Related MD&A

TORONTO, ONTARIO--(CCNMatthews - May 31, 2006) - InterOil Corporation (TSX:IOL) (IOC:AMEX) (IOC: POMSoX), a Canadian company with operations in Papua New Guinea, announced that it has filed revised unaudited financial statements and accompanying notes for the three month period ended March 31, 2006, and a revised management's discussion and analysis covering such period with the relevant Canadian securities regulatory authorities.

The adjustments to InterOil's unaudited financial statements for the three month period ended March 31, 2006 are related to the failure to accrue $5.6 million in costs of sales and operating expenses for InterOil's midstream business segment that were incurred during the first quarter of 2006. The failure to accrue these amounts was due to the misreporting of a cargo delivery that resulted from a malfunction of a computer system during the recent move of InterOil's corporate offices. Management has initiated steps to ensure that this event does not occur again. The adjustments resulted in InterOil's consolidated net loss for the three month period ending March 31, 2006 increasing from the previously reported loss of $9.4 million to a consolidated net loss of $14.4 million, and the net loss of InterOil's midstream business segment for the three month period ending March 31, 2006 increasing from the previously reported loss of $4.7 million to a loss of $10.3 million.

Copies of InterOil's filed documents may be obtained through SEDAR at www.sedar.com or on InterOil's website at www.interoil.com.

InterOil is developing a vertically integrated energy company whose primary focus is Papua New Guinea and the surrounding region. Its assets consist of an oil refinery, upstream petroleum exploration licenses, and retail and commercial distribution assets. The majority of the refined products from InterOil's refinery are secured by off-take contracts with Shell and InterOil's wholly-owned subsidiary, InterOil Products Limited. BP Singapore is InterOil's agent for crude oil supplied to the refinery. InterOil is also undertaking an extensive petroleum exploration program within its eight million acre license area located in Papua New Guinea.

InterOil's common shares trade on the Toronto Stock Exchange under the symbol IOL in Canadian dollars and on the American Stock Exchange under the symbol IOC in US dollars.

Cautionary Statements

This press release contains forward-looking statements as defined in U.S. federal and Canadian securities laws. All statements, other than statements of historical facts, included in this release are forward-looking statements. Forward-looking statements include, without limitation, statements regarding our drilling plans, plans for expanding our business segments, business strategy, plans and objectives for future operations, future capital and other expenditures, and those statements preceded by, followed by or that otherwise include the words "may," "plans'" "believe," "expects," "anticipates," "intends," "estimates" or similar expressions or variations on such expressions. Each forward-looking statement reflects our current view of future events and is subject to risks, uncertainties and other factors that could cause our actual results to differ materially from any results expressed or implied by our forward-looking statements. These risks and uncertainties include, but are not limited to, the ability of our refinery to operate at full capacity and to operate profitability; uncertainty involving the geology of oil and gas deposits and reserve estimates; 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; the impact of competition; the volatility of prices for crude oil and the volatility of the difference between our purchase price of crude oil feedstocks and the sales price of our refined products; the uncertainty of our ability to attract capital; and the risks described under the heading "Risk Factors" in our 2005 Annual Information Form dated March 31, 2006.

Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could be inaccurate, and, therefore, we cannot assure you that the forward-looking statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in our forward-looking statements, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Except as may be required by applicable law, we undertake no obligation to publicly update or advise of any change in any forward-looking statement, whether as a result of new information, future events or otherwise. Our forwardlooking statements are expressly qualified in their entirety by this cautionary statement.

We currently have no reserves as defined in Canadian National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities. All information contained herein regarding resources are references to undiscovered resources under Canadian National Instrument 51-101, whether stated or not.

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