2011 Annual Statement of Reserves

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1 InterOil Exploration & Production ASA 2011 Annual Statement of Reserves Summary The reserves of InterOil Exploration & Production ASA ( InterOil ) are located in Peru and Colombia. As of 31 December, 2011, InterOil s proven reserves ( 1P ) are 6.2 million barrels of oil equivalent ( mmboe ), the 2P reserves are 7.2 mmboe and the 3P reserves are 7.8. This represents a decrease of 4.7 mmboe of the 1P, a decrease of 5.5 mmboe of the 2P reserves and a decrease of 5.7 mmboe of the 3P reserves compared to 31 December, The equity production in 2011 amounted to 2.4 mmboe as compared to 2.2 mmboe for 2010; nevertheless the proved developed reserves decreased by only 1.4 mmboe to 4.1 mmboe, due to development drilling in both Peru and Colombia. The decrease in total reserves was mainly caused by production and the transfer to post license contingent resources. The reserves have been estimated and classified according to the Petroleum Resources Management System, developed and approved in March 2007 jointly by the Society of Petroleum Engineers, World Petroleum Council, American Society of Petroleum Geologists and Society of Petroleum Evaluations Engineers, here after referred to as the SPE PRMS 1 and have been audited by the independent petroleum engineering firm of Gaffney, Cline & Associates Inc. The corresponding audit reports are attached. This annual statement of reserves has been prepared according to the guidelines issued by the Oslo Børs in Circular No. 9/2009 of 17 December For a full description of the SPE PRMS, please refer to the Society of Petroleum Engineers website:

2 InterOil Exploration & Production ASA 2011 Annual Statement of Reserves Quantitative Information A summary of the 1P, 2P and 3P reserves per country as per 31 December 2011 is given in Table 1. The reserves have been further subdivided into a Developed Producing, a Developed Non-Producing and a Non-Developed category, in line with the SPE PRMS definitions of these categories. Table 2 shows a reconciliation of the changes in reserves as these occurred during the year. Reported volumes are net equity. For Peru this equals to 100% of the gross reserves since Interoil is sole licensee holder of its interests and royalty is paid in cash. For Colombia, where royalty is taken in kind, the reserves figures are working interest net of royalty. Both royalty and working interest vary per field. Management s Discussion and Analysis Methodology InterOil s reserves are calculated by preparing production forecasts for all existing wells and for all identified future development activities such as drilling new wells, repairs, recompletions and stimulations. For each well/activity separate pessimistic (1P), best estimate (2P) and optimistic (3P) forecasts were generated. In case of a large number of wells, adding these results arithmetically will result in an overly pessimistic total 1P estimate and an overly optimistic 3P estimate, since not all wells will at the same time follow the pessimistic forecast, nor will they all follow the optimistic forecast. Therefore for those fields having twenty or more producing wells (Mana and - in Colombia and Block III and Block IV in Peru) probabilistic addition was applied for the determination of the developed reserves. Since this results in differences less than 2% between the resulting 1P, 2P and 3P values, for practical purposes the 1P, 2P and 3P developed reserves were taken equal to the sum of the best estimates per well. The production forecasts for wells still to be drilled are not considered completely independent. Therefore arithmetic addition was used in the determination of the undeveloped reserves. All reserve volumes represent the sum of the future production profiles extrapolated to the earlier of a) the end of each license contract or b) the economic limit evaluated for each field and each reserve category. The commerciality and economic tests for the reserve volumes assumed an oil price forecast that has been derived from the traded future WTI and Brent prices. The price used for both countries is a constant price of US$ per Bbls

3 InterOil Exploration & Production ASA 2011 Annual Statement of Reserves For gas the agreed contract prices have been used; these are: Colombia - - Colombia - Mana: US$ 0.80/MMBtu US$ 2.69/MMBtu The reserves estimates were prepared by InterOil s local engineering staff with support and quality control provided from our Technology Centre in Zurich. Thereafter the reserves were duly audited by Gaffney, Cline & Associates Inc. These audit examinations included such tests, procedures, and adjustments as were considered necessary by the auditor. All questions which arose during the course of the audit process were resolved. The corresponding audit reports are attached. Uncertainties are inherent to reserves calculations; hence the reserves included in this report are estimates only and should not be construed as exact quantities. All categories may be subject to revision as additional data becomes available. Peru InterOil operates and is sole interest owner of 2 blocks (no s III and IV) in northern Peru. According to the terms of the contracts, royalties are due to the Peruvian state in cash at rates which are dependent on the price of oil. The average royalty rate was determined to be 49.5% for Block III and 48.9% for Block IV. Royalties are treated as an operating expense and are not deducted from the reserves volumes. Both licenses expire in March Discussions with respect to extending these licenses are ongoing, but until such extensions have been obtained, only those volumes forecasted to be produced before license expiry can be booked as reserves. Volumes expected to be produced after March 2013 are classified as Contingent Resources. A significant part of these volumes will be reclassified as reserves as soon as license extension has been obtained. In Block III the San Luis area, which was discovered in August 2010, accounts for 1.3 mmbbl of 2P reserves. During the second half of wells were drilled in the San Luis Area wich added some 0.4 mmbbl to the reserves. This was offset by an annual production of 1.2 mmbbl which together with revisions of -0.3 mmbbl resulted in a net decrease of the developed producing reserves by 1.0 mmbbl. With the current license expiry date only one year away the undeveloped reserves are strongly dependent on the planned drilling activity level. Last year s reserves were based on the drilling of 43 wells during two years. The limited remaining time of the current licenses led to a reduction and change of program to an activity level of 10 wells for next year. In addition, within the drilling sequence priority has been given to wells in the newly discovered San Luis field, which are higher productive wells than wells elsewhere within our license areas. This resulted in the deferral of several previously planned wells to the post license period. The overall effect of this is a transfer of 2.0 mmbbl of 1P, 2.7 mmbbl of 2P and 2.9 mmbbl of 3P - 3 -

4 InterOil Exploration & Production ASA 2011 Annual Statement of Reserves undeveloped reserves to the contingent resources category. Similarly a reduced level of well workovers and repairs caused the transfer of 0.3 mmbbl of developed non-producing reserves to contingent resources. The combination of the above described effects is a reduction in the total 1P reserves of 4.0 mmbbl to 2.3 mmbbl, in the total 2P reserves of 4.7 mmbbl to 2.4 mmbbl and in the total 3P reserves of 5.0 mmbbl to 2.5 mmbbl. The main contributing factors being the annual production and the transfer to post license contingent resources. Colombia InterOil operates 5 oil fields in the Central Magdalena valley in Colombia: -, Puli-B, Ambrosia, Rio Opia and Mana. State oil company Ecopetrol is a partner in all of these fields, with a varying participation level per field. In addition, the royalty is also lifted in kind by Ecopetrol on behalf of the state. Reported equity reserves volumes are net working interest after royalty. In 2008 Interoil acquired the Altair license in the Llanos basin. A summary of the license conditions per field is as follows: Field Interest Royalty End of license - 50% 20% 1 March 2012 Puli B 38.6% 20% 1 March 2012 Ambrosia 59.9% 8% 28 December 2027 Rio Opia 70% 8% 9 October 2028 Mana 70% 8% (oil), 6.4% (gas) 12 November 2028 Altair 90% 8 % 2 January 2036 The associated gas produced from the two largest fields, Mana and -, is being sold under existing gas contracts. Since 2010 three wells were drilled in the Altair license, one of which, Altair-1, resulted in a discovery in April This well was closed in at the end of 2010 due to limited production, but was reopened in The well produced 93,000 bbl during 2011 and the 2P reserves are 34,000 bbl. Development activities, consisting of the drilling of 4 wells in the Mana field, added 0.5 mmbbl to the developed oil reserves. This was offset by a production of 0.6 mmbbl oil and some -0.1 mmbbl of revisions, resulting in a net decrease of 0.2 mmbbl in the developed oil reserves. The undeveloped oil reserves decreased by 0.4 mmbbl (1P and 2P) and decreased by 0.5 mmbbl (3P), due to the transfer of the reserves associated with the wells drilled in 2011 to the developed category and revisions in the estimates for the wells still to be drilled. The combined effect of the above is that the total 1P an 2P oil reserves decreased by 0.6 mmbbl to respectively 2.8 mmbbl and 3.6 mmbl and the 3P by 0.7 mmbbl to - 4 -

5 InterOil Exploration & Production ASA 2011 Annual Statement of Reserves 4.0 mmbbl. This decrease is of the same order of magnitude as the annual production of 0.6 mmbbl. For gas the net increase in total equity reserves was 0.1 BCF for 1P, 0.5 BCF for 2P and 0.4 BCF for 3P. Equity gas sales amounted to 1.7 BCF, an increase of 1.3 BCF since The bottleneck at the client side of the new Mana production facilities have been resolved, allowing all of the Mana gas to be exported. This resulted in the re-classification of 2.8 BCF of undeveloped gas reserves from undeveloped into developed producing and developed non-producing reserves. Oslo, 6 February, 2012 Tom Wolden Chief Executive Officer InterOil Exploration & Production ASA - 5 -

6 InterOil Exploration & Production ASA 2011 Annual Statement of Reserves Table 1 Oil Reserves by geographical region Developed Producing Reserves as of Interoil Exploration and Production ASA 1P 2P 3P Gross Interest Equity Gross Interest Equity Gross Interest Equity Oil Gas Oil Gas Oil Gas (mmbbl) (BCF) (mmboe) (%) (mmboe) (mmbbl) (BCF) (mmboe) (%) (mmboe) (mmbbl) (BCF) (mmboe) (%) (mmboe) Colombia % % % 2.9 Peru % % % 1.3 Total Developed Non-Producing Reserves as of P 2P 3P Gross Interest Equity Gross Interest Equity Gross Interest Equity Oil Gas Oil Gas Oil Gas (mmbbl) (BCF) (mmboe) (%) (mmboe) (mmbbl) (BCF) (mmboe) (%) (mmboe) (mmbbl) (BCF) (mmboe) (%) (mmboe) Colombia % % % 1.0 Peru % % % 0.3 Total Non-Developed Reserves as of P 2P 3P Gross Interest Equity Gross Interest Equity Gross Interest Equity Oil Gas Oil Gas Oil Gas (mmbbl) (BCF) (mmboe) (%) (mmboe) (mmbbl) (BCF) (mmboe) (%) (mmboe) (mmbbl) (BCF) (mmboe) (%) (mmboe) Colombia % % % 1.5 Peru % % % 0.9 Total Total Reserves as of P 2P 3P Gross Interest Equity Gross Interest Equity Gross Interest Equity Oil Gas Oil Gas Oil Gas (mmbbl) (BCF) (mmboe) (%) (mmboe) (mmbbl) (BCF) (mmboe) (%) (mmboe) (mmbbl) (BCF) (mmboe) (%) (mmboe) Colombia % % % 5.4 Peru % % % 2.5 Total Notes: mmboe = million stock tank barrels of oil equivalent Gross Reserves are Operated Reserves Equity Reserves : Colombia Net after Royalty is taken in kind Peru Net beforroyalty is paid in cash. Working Interest varies per concession; reported percentages are averages Gas converted to oil equivalent based on 5.30 Mscf equals 1 boe Numbers may not add upp due to rounding - 6 -

7 InterOil Exploration & Production ASA 2011 Annual Statement of Reserves Interoil Exploration and Production ASA Table 2 - Aggregate Reserves, Production, Developments and Adjustments (mmboe) Developed Producing Developed Non- Producing 1P 2P 3P Non- Developed Total Developed Producing Developed Non- Producing Non- Developed Total Developed Producing Developed Non- Producing Non- Developed Reserves at Production Acquisition / Disposals Extensions & Discoveries New Developments Transfer to/from Contingent Resources Revisions Total Changes Reserves at Total Notes: mmboe = million stock tank barrels of oil equivalent Numbers may not add upp due to rounding - 7 -

8 Hydrocarbon Reserve Certification Block III and Block IV Concessions Talara Basin Perú Effective December 31, 2011 Prepared for Interoil Perú S.A. January 2012

9 Gaffney, Cline & Associates, Inc Post Oak Blvd., Suite 1000 Houston, TX Telephone: RW/CG/C2066/LT2058 January 12, 2012 Mr. Carlos Niño Neira Ramos Interoil Perú S.A. Zona Industrial Mz A - Lote 56, Talara Alta Talara Perú Crude Oil Reserve Statement Block III and Block IV, Talara Basin, Republic of Perú As of December 31, 2011 Dear Mr. Niño: At the request of Interoil Exploration & Production ASA (IEP) for its subsidiary Interoil Perú S.A. (IPSA) Gaffney, Cline & Associates (GCA) has conducted an independent audit examination as of December 31, 2011, of the crude oil reserves of Block III and Block IV in the Talara Basin, northern Perú. On the basis of technical and other information made available to us concerning these property units, we hereby provide the summary reserve statement given in the table below. 1P 2P 3P Category Statement of Remaining Crude Oil Volumes Block III and Block IV Talara Basin, Perú As of December 31, 2011 Gross (100) Field Volumes Reserves Net to IEP Interest Block III Block IV Total Block III Block IV Total MBbl MBbl MBbl MBbl MBbl MBbl Developed Producing , ,295 Non Producing Undeveloped Total 1, ,307 1, ,307 Developed Producing , ,295 Non Producing Undeveloped Total 1, ,408 1, ,408 Developed Producing , ,295 Non Producing Undeveloped Total 2, ,471 2, ,471 Oil volumes are reported in thousands of stock tank barrels.

10 RW/CG/C2066/LT2058 Interoil Perú S.A. IPSA operates with a 100% working interest both Block III and Block IV from a single base in Talara city. Interests in both blocks were acquired through two 20 year exploitation contracts signed with Perupetro in March According to the terms of the contracts, royalties are due to the Peruvian state in cash at rates which are determined by the price of oil. They have been treated here as an operating expense and not deducted from the reserves volumes. Developed Producing oil reserves for both blocks have been estimated by decline curve analysis of the existing producing wells. Developed Non-Producing oil reserves result from programmed interventions to wells consisting of workover operations to perforate new layers or to remediate wellbore damage or to rehabilitate shut-in wells. A success ratio of 70% was applied to the proposed workover plan, according to the historical record. Undeveloped reserves have been assigned to a drilling program for Block III, assigning reserves to proposed locations according to offset well behavior. The estimates were categorized as Proved for in-fill or first step out locations. Remaining locations were not included in the Reserve class due to the proximity of the license contract expiration in March For the same reason, the drilling program in Block IV was downgraded out from the Reserves class. A range of volumes was estimated for each well or location within each reserves category. Normally, when using a deterministic incremental approach to reserve assessment (with wells assigned to different categories based on location), and a large number of individual estimates is involved, it is justifiable and appropriate to use only the best estimate results as the range of uncertainty upon aggregation is relatively minor (Central Limit Theorem) and overall uncertainty is addressed through the other categories. This is the approach that has been used for the developed sub-category. The uncertainty has been incorporated by aggregating the individual low, best and high estimates for the undeveloped locations that meet the Proved criteria as 1P, 2P and 3P undeveloped reserves. This audit examination was based on reserve estimates and other information provided by IPSA to GCA through January 9, 2012, and included such tests, procedures and adjustments as were considered necessary. All questions that arose during the course of the audit process were resolved to our satisfaction. The commerciality and economic tests for the December 31, 2011 Reserves volumes were based on a West Texas Intermediate (WTI) crude oil price scenario provided by ICEP, of US$100.00/Bbl without discounts and held constant without escalation as shown in the following table along with the royalty rates for the respective blocks, which are based on WTI: Page 2

11 RW/CG/C2066/LT2058 Interoil Perú S.A. WTI Crude Royalty Price Oil Price Block III Block IV US$/Bbl US$/Bbl (%) (%) % 48.90% These tests were performed for each block and for each reserve category and included capital expenditures for the workovers and new wells. No abandonment expenses have been included in the cashflow calculation. According to IPSA there are no contractual obligations for well or field abandonment at contract end. Operating expenses were derived from real expenditures incurred in It is GCA s opinion that the estimates of total remaining recoverable hydrocarbon liquid and gas volumes at December 31, 2011 are, in the aggregate, reasonable and have been prepared in accordance with the reserves definitions in the Petroleum Resources Management System (PRMS) approved by the Society of Petroleum Engineers, World Petroleum Council, American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers in March This assessment has been conducted within the context of GCA s understanding of IPSA s petroleum property rights as represented by IPSA management. GCA is not in a position to attest to property title, financial interest relationships or encumbrances thereon for any part of the appraised properties or interests. There are numerous uncertainties inherent in estimating reserves and resources, and in projecting future production, development expenditures, operating expenses and cash flows. Oil and gas reserve engineering and resource assessment must be recognized as a subjective process of estimating subsurface accumulations of oil and gas that cannot be measured in an exact way. Estimates of oil and gas reserves or resources prepared by other parties may differ, perhaps materially, from those contained within this report. The accuracy of any Reserve or Resource estimate is a function of the quality of the available data and of engineering and geological interpretation. Results of drilling, testing and production that post-date the preparation of the estimates may justify revisions, some or all of which may be material. Accordingly, Reserve and Resource estimates are often different from the quantities of oil and gas that are ultimately recovered, and the timing and cost of those volumes that are recovered may vary from that assumed. For this assignment, GCA served as independent Reserve auditors. The firm s officers and employees have no direct or indirect interest holdings in the property units evaluated. GCA s remuneration was not in any way contingent on reported reserve or resource estimates. Page 3

12 RW/CG/C2066/LT2058 Interoil Perú S.A. Finally, please note that GCA reserves the right to approve, in advance, the use and context of the use of any results, statements or opinions expressed in this report. Such approval shall include, but not be confined to, statements or references in documents of a public or semi-public nature such as loan agreements, prospectuses, reserve statements, press releases etc. Very truly yours, GAFFNEY, CLINE & ASSOCIATES, INC. César Guzzetti Southern Cone Regional Manager Page 4

13 HYDROCARBON RESERVE STATEMENT FOR PROPERTIES IN COLOMBIA AS OF DECEMBER 31, 2011 Prepared for INTEROIL COLOMBIA E&P January 2012

14 Gaffney, Cline & Associates, Inc Post Oak Blvd., Suite 1000 Houston, TX Telephone: RW/CG/C2065/LT2057 January 12, 2012 Mr. Mauricio De La Mora R. General Manager Interoil Colombia E & P Carrera 7 #113 Suite 1202 Edificio Torres Unidas Bogotá DC Colombia Hydrocarbon Reserve Statement Properties in Colombia as of December 31, 2011 Dear Mr. De La Mora: This reserve statement has been prepared by Gaffney, Cline & Associates (GCA) at the request of Interoil Exploration & Production ASA (IEP) for its subsidiary Interoil Colombia E & P (ICEP), operator of and variable interest participant in the Puli B and Puli C concessions of the Río Magdalena Basin and the Altair concession in Casanare, Colombia. GCA has conducted an independent audit examination as of December 31, 2011, of the crude oil and natural gas reserves of the mentioned concessions. On the basis of technical and other information made available to us concerning these property units, we hereby provide the summary reserve statement given in the table below. Statement of Remaining Hydrocarbon Volumes Altair, Puli B and Puli C Concessions, Colombia As of December 31, 2011 Gross (100%) Field Volumes Crude Oil (MMstb) Natural Gas (Bscf) Reserves Net to ICEP s Interest Crude Oil (MMstb) Natural Gas (Bscf) Proved Developed Undeveloped Total 1P Total 2P Total 3P Crude oil is reported in millions of stock tank barrels. Natural gas volumes represent expected gas sales, and are reported in billions (10 9 ) of cubic feet (at standard conditions of 14.7 psia and 60 degrees Fahrenheit). The volumes have been reduced for fuel usage in the field. Royalties payable to State have been deducted from reported reserves volumes. All volumes represent the sum of the future production profiles extrapolated to the earlier of a) the end of each concession contract or b) the economic limit evaluated for each field and each reserve category. Reserves estimates by field are shown in the tables in the Appendix.

15 RW/CG/C2165/LT2057 Interoil Colombia E & P ICEP operates the Field of Puli C block, the Puli B block and the Altair block. The - Field and the Puli B concession expire in March Within the Puli C concession, adjacent to the Field, ICEP also operates the Ambrosía, Río Opia and Maná fields. These contracts were signed in 2002/2003 for 25 years duration under the figure of adjacent areas to the existing exploitation areas and expire in 2027/2028. ICEP obtained the Declarations of Commerciality for portions of the Ambrosía and Río Opia fields in 2006 and for all the wells producing from the Monserrate formation in the Maná field in At the end of 2009 ICEP also obtained the Commerciality Declaration of the Doima reservoir in the Maná Field. ICEP holds a 50% participation in, 60% in Ambrosía and 70% in Maná and Río Opia. In the Puli B concession ICEP holds a 50% interest. Royalty is 20% for and Puli B and 8% in Ambrosía, Maná and Río Opia. For natural gas, the royalties are 20% in - and 6.4% in Maná. ICEP holds a 90% participation in the Altair block with only one producing well, Altair-1, which is expected to water out in Royalty in Altair is 8%. Developed Producing reserves were estimated by extrapolating the present production by decline curve analysis using different decline assumptions to estimate the volumes for the 1P, 2P, and 3P categories. Undeveloped reserves for each category were estimated by ICEP and reviewed by GCA for the proposed drilling campaigns (six wells in Maná Sur and ten wells in Río Opia). The estimates for each location were based on performance of similar existing wells in the area. Gas reserves were estimated for the free gas from the Maná-6, 11 and 15 wells and the solution gas from the and Maná Fields that is being sold through two contracts. These estimates were based on the producing gas-oil ratios for each field. The resulting volumes were reduced by 8.7% in Mana and 13.7% in for losses and consumption. A range of volumes was estimated for each well or location within each reserves category. Normally, when using a deterministic incremental approach to reserve assessment (with wells assigned to different categories based on location) and a large number of individual estimates is involved, it is justifiable and appropriate to use only the best estimate results as the range of uncertainty upon aggregation is relatively minor (Central Limit Theorem) and overall uncertainty is addressed through the other categories. This is the approach that has been used for the developed sub-category. However, since there are relatively few undeveloped locations ICEP requested that the uncertainty be incorporated by aggregating the individual low, best and high estimates as 1P, 2P and 3P for the undeveloped reserves. This audit examination was based on reserve estimates and other information provided by ICEP to GCA through January 9, 2012, and included such tests, procedures and adjustments as were considered necessary. All questions that arose during the course of the audit process were resolved to our satisfaction. The commerciality and economic tests for the December 31, 2011 reserve volumes were based on a West Texas Intermediate (WTI) crude oil price scenario provided by ICEP, of US$100.00/Bbl constant price without discounts. Page 2

16 RW/CG/C2165/LT2057 Interoil Colombia E & P The gas is sold through two different contracts. The Mana gas sales price for 2012 was estimated by ICEP at US$2.69/MMBtu equivalent to US$3.23/Mscf and indexed 1.0% since gas price for 2012 was estimated at US$0.80/MMBtu equivalent to US$0.96/Mscf and held constant throughout as advised by ICEP. Future capital costs were derived from development program forecasts prepared by ICEP for each field. Recent historical operating expense data were utilized as the basis for operating cost projections. These values were classified by ICEP in fixed and variable OPEX according to the following table. Transportation cost for all fields was US$20.75/bbl for the Magdalena Basin areas and US$10.33/Bbl for Altair. Operating expenses and transportation costs were escalated 1% per year after 2012 as advised by ICEP. Opex Drivers Puli B Altair Ambrosia Rio Opia Mana Fixed US$M/year 1, ,226 Variable US$/oil bbl Variable US$M/well/year Variable US$/water bbl 1.00 It is GCA s opinion that the estimates of total remaining recoverable hydrocarbon liquid and gas volumes at December 31, 2011 are, in the aggregate, reasonable and have been prepared in accordance with the reserves definitions in the Petroleum Resources Management System (PRMS) approved by the Society of Petroleum Engineers, World Petroleum Council, American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers in March 2007 This assessment has been conducted within the context of GCA s understanding of ICEP s petroleum property rights as represented by ICEP management. GCA is not in a position to attest to property title, financial interest relationships or encumbrances thereon for any part of the appraised properties or interests. There are numerous uncertainties inherent in estimating reserves and resources, and in projecting future production, development expenditures, operating expenses and cash flows. Oil and gas reserve engineering and resource assessment must be recognized as a subjective process of estimating subsurface accumulations of oil and gas that cannot be measured in an exact way. Estimates of oil and gas reserves or resources prepared by other parties may differ, perhaps materially, from those contained within this report. The accuracy of any Reserve or Resource estimate is a function of the quality of the available data and of engineering and geological interpretation. Results of drilling, testing and production that post-date the preparation of the estimates may justify revisions, some or all of which may be material. Accordingly, Reserve and Resource estimates are often different from the quantities of oil and gas that are ultimately recovered, and the timing and cost of those volumes that are recovered may vary from that assumed. For this assignment, GCA served as independent Reserve auditors. The firm s officers and employees have no direct or indirect interest holdings in the property units evaluated. GCA s remuneration was not in any way contingent on reported reserve or resource estimates. Finally, please note that GCA reserves the right to approve, in advance, the use and context of the use of any results, statements or opinions expressed in this report. Such Page 3

17 RW/CG/C2165/LT2057 Interoil Colombia E & P approval shall include, but not be confined to, statements or references in documents of a public or semi-public nature such as loan agreements, prospectuses, reserve statements, press releases etc. Very truly yours, GAFFNEY, CLINE & ASSOCIATES, INC. César Guzzetti Southern Cone Regional Manager Enclosures Appendix: Reserves Estimates by Field Page 4

18 APPENDIX Reserves Estimates by Field

19 Statement of Remaining Hydrocarbon Volumes Puli B and Puli C Concessions, Colombia As of December 31, P 2P 3P Category Gross (100%) Crude Oil Field Volumes Rio Puli B Altair Ambrosia Opia Mana Total MBbl Mstb Mstb Mstb Mstb Mstb Mstb Developed Producing ,024 3,222 Developed Non-Producing Undeveloped Total ,875 4,327 Developed Producing ,024 3,348 Developed Non-Producing Undeveloped 500 1,080 1,580 Total ,844 5,668 Developed Producing ,024 3,449 Developed Non-Producing Undeveloped 652 1,261 1,913 Total ,128 6,205 Crude oil in thousands of stock tank barrels 1P 2P 3P Category ICEP s Working Interest Crude Oil Volumes (Before Royalty) Rio Puli B Altair Ambrosia Opia Mana Total Mstb Mstb Mstb Mstb Mstb Mstb Mstb Developed Producing ,117 2,241 Developed Non-Producing Undeveloped Total ,713 3,015 Developed Producing ,117 2,325 Developed Non-Producing Undeveloped ,106 Total ,391 3,949 Developed Producing ,117 2,401 Developed Non-Producing Undeveloped ,339 Total ,590 4,330 Working Interest 50.00% variable 90.00% 60.00% 70.00% 70.00% Crude oil in thousands of stock tank barrels

20 Statement of Remaining Hydrocarbon Volumes Puli B and Puli C Concessions, Colombia As of December 31, P 2P 3P Category Crude Oil Reserves Net to ICEP s Interest (After Royalty) Rio Puli B Altair Ambrosia Opia Mana Total Mstb Mstb Mstb Mstb Mstb Mstb Mstb Developed Producing ,948 2,059 Developed Non-Producing Undeveloped Total ,496 2,771 Developed Producing ,948 2,137 Developed Non-Producing Undeveloped ,017 Total ,119 3,631 Developed Producing ,948 2,206 Developed Non-Producing Undeveloped ,232 Total ,303 3,981 Royalty (%) 20.00% 20.00% 8.00% 8.00% 8.00% 8.00% Crude oil in thousands of stock tank barrels 1P 2P 3P Category Natural Gas Volumes ICEP s Working Interest Gross (100%) Field Volumes Reserves Volumes (Before Royalty) Net to ICEP's Interest (After Royalty) Mana Total Mana Total Mana Total MMscf MMscf MMscf MMscf MMscf MMscf MMscf MMscf MMscf Developed Producing 75 5,868 5, ,107 4, ,845 3,875 Developed Non-Producing 2,948 2,948 2,063 2,063 1,931 1,931 Undeveloped Total 75 9,388 9, ,571 6, ,151 6,181 Developed Producing 75 5,868 5, ,107 4, ,845 3,875 Developed Non-Producing 3,425 3,425 2,397 2,397 2,244 2,244 Undeveloped 2,020 2,020 1,414 1,414 1,324 1,324 Total 75 11,313 11, ,918 7, ,413 7,443 Developed Producing 75 5,868 5, ,107 4, ,845 3,875 Developed Non-Producing 3,596 3,596 2,517 2,517 2,356 2,356 Undeveloped 2,332 2,332 1,632 1,632 1,528 1,528 Total 75 11,796 11, ,256 8, ,729 7,759 Natural gas in millions of standard cubic feet