NORSK TILLITSMANN ASA

www.truste.no

Denne melding til obligasjonseierne er kun utarbeidet på engelsk. For informasjon vennligst kontakt Norsk Tillitsmann ASA

To the bondholders in:

ISIN NO 001 032535.0 – 9.00 per cent Interoil Exploration & Production ASA Bond Issue with Warrants

ISIN NO 001 036280.9 – 12.5 per cent Interoil Exploration & Production ASA Senior Unsecured Callable Bond Issue 2007/2010

Oslo, 2 July 2010

RESTRUCTURING PROPOSAL – SUMMONS TO BONDHOLDERS’ MEETING

Norsk Tillitsmann ASA (“NTM”/ the “Loan Trustee”) acts as trustee for the holders of bonds (the “Bonds”) in the above-mentioned loans (the “Loans”) consisting of ISIN NO 001 032535.0 (the “Warrant Bond”), and ISIN NO 001 036280.9 (the “Unsecured Bond”), issued by Interoil Exploration & Production ASA (the “Borrower”).

All capitalized terms used herein shall, unless otherwise stated herein, have the meaning assigned to them in the loan agreements of the Loans dated 10 July 2006 and 27 March 2007 respectively, and any amendments made thereto as of this date (together, the “Loan Agreements”), or in this summons to Bondholders’ Meeting (including the Background of the Proposal enclosed to this summons as Exhibit 1).

The information in this summons regarding the legal, operational and financial status of the Borrower is provided by the Borrower. The Loan Trustee expressly disclaims any and all liability whatsoever related to such information given from the Borrower.

1 BACKGROUND

For information on the background of the refinancing proposal, please see the description provided by the Borrower (the “Background of the Proposal”) enclosed as Exhibit 1 to this summons.

In addition to this summons letter and the Background of the Proposal, the Borrower has provided a separate document which is intended to give an update of the Borrower’s financial and operational status (the “Company Update”) enclosed as Exhibit 2 to this

MAILING ADDRESS © P.O.BOX 1470 VIKA, N-0116 OSLO LOCATION © HAAKON VII GATE 1, OSLO, NORWAY

phone +47 22 87 94 00 fax +47 22 87 94 10 org.nr no 963 342 624 MVA e-mail [email protected]

NORSK TILLITSMANN ASA
WWW.TILLITSMANN.AGA

summons. The term sheet for the New Bond is attached as Exhibit 3. Bondholders are encouraged to read all documents carefully in their evaluation.

2 THE RESTRUCTURING PROPOSAL

2.1 The proposed restructuring of the Loans

The holders in the Warrant Bond and the Unsecured Bond are asked to accept a mandatory exchange of their Bonds into new bonds (the “New Bond”). The Warrant Bond will be exchanged into a USD tranche in the ratio of 1:1 of par principal value¹, while the Unsecured Bond will be exchanged into a NOK tranche in the ratio of 1:1 of par principal value¹. This way all Bondholders will keep their current currency position. Both the USD and NOK tranches of the New Bond will have the same terms and rank pari passu. All accrued and unpaid interest on the Warrant Bond and the Unsecured Bond, whether due and payable or not, will be settled in the form of bonds in the New Bond on a USD 1:1 and NOK 1:1 ratio respectively. The part of the New Bond to be received initially by the Interoil Principals currently holding a part in the Warrant Bond (approximate principal amount of USD 9 million) will be converted to equity in the Borrower immediately after issue of the New Bond.

The New Bond will have a tenor of 5 years and carry a coupon of 15.0% (payable quarterly). The Issuer may redeem part of the New Bond or all of the New Bond at any time at 100% of par value plus accrued interest. The New Bond will be repaid from cash received from its operating subsidiaries through a cash sweep mechanism, where any remaining principal amount outstanding will be repaid at maturity date at the latest. There will be a retention account, pledged in favor of the Bondholders where 3 months of interest shall be deposited at all times. As opposed to the current structures, the New Bond will have a partially secured claim in the Borrower, where the security package mainly consists of a first priority pledge on the cash sweep account, share pledges in relevant subsidiaries and on demand guarantees from subsidiaries other than InterOil Peru S.A. and InterOil Colombia Exploration and Production Inc. (which subsidiaries' shares will be pledged in favour of the senior secured facility lender and which subsidiaries' are currently prohibited from providing such guarantees). Without prior approval of the Bondholders, no dividends will be allowed to be distributed to the shareholders of the Borrower before the New Bond is repaid entirely.

The New Bond will be issued under Norwegian law with Norsk Tillitsmann as Trustee.

Please see the Term Sheet enclosed to this summons as Exhibit 3 for further information on the terms and conditions of the New Bond.

¹ For the avoidance of doubt, this implies that one Warrant Bond with a par principal value of USD 1,000 will be exchanged into thousand New Bonds with a par principal value of USD 1, and that one Unsecured Bond with a par principal value of NOK 500,000 will be exchanged into five hundred thousand New Bonds with a par principal value of NOK 1.

NORSK TILLITSMANN ASA
WWW.TILLITSC.AG

2.2 Tax Repayment

On 25 July 2008, the Borrower entered a settlement agreement with Exportconsult AS and Force Capital Partners AS with respect to the Borrower assuming responsibility for payment of a tax claim against said parties in the amount of NOK 57.15 million following transfer to the Issuer of shares in the Issuer’s Swiss subsidiary. The settlement agreement was amended on 11 March 2010, following which the timing of the payment obligation of the Borrower was clarified, as well as a specific confirmation that the Borrower’s payment obligation with respect to said tax claims would be subordinated to the existing secured bonds as well as the Warrant Bond and the Unsecured Bond.

The settlement agreement and the amendment were both resolved by the General Meeting of the Borrower.

Exportconsult AS and Force Capital Partners AS have initiated court proceedings against the Norwegian Tax Authorities to reverse the decision of the tax liability. If the appeal is successful, Exportconsult AS and Force Capital Partners AS have assigned to the Borrower any amount received by it from the Norwegian Tax Authorities or from any other applicable taxation authorities (the “Tax Repayment”), of which such Tax Repayment shall be paid to the Borrower.

The refinancing proposal presented by the Borrower in this summons and the attached Term Sheet (the "Proposal") includes a payment to the aforementioned shareholders in order to settle the relevant tax liabilities assumed by the Borrower (in 2008) at a time prior to settlement of the Bonds. This deviates from the current arrangement, however is a condition to achieving the total refinancing solution and is thus proposed for acceptance by the holders of the Warrant Bond and the Unsecured Bond.

2.3 Conditions and timetable

The proposed changes to the Unsecured Bond and the Warrant Bond will be subject to inter alia:

(i) All required approvals by the requisite majority of Bondholders of each of the Warrant Bond and the Unsecured Bond
(ii) Exchange and extinguishment of the Warrant Bond and the Unsecured Bond
(iii) Drawdown of the USD 60m term loan facility in Peru and USD 30m term loan facility in Columbia
(iv) West Face (Norway) AS and/or a related party of West Face (Norway) AS (“West Face”) to subscribe for USD 40m in the New Bond at equal terms
(v) The Voluntary Offer from West Face (Norway) AS dated 2 July 2010 has been completed, following satisfaction (or waiver) of all conditions related thereto.

The approval of the Bondholders will also be subject to all conditions precedent having been met on or before 30 August 2010.

NORSK TILLITSMANN ASA
www.tillitit.com

3 EVALUATION OF THE PROPOSED CHANGES

3.1 The Borrower’s evaluation

As part of the offer for the Borrower’s shares and full refinancing of the Borrower, the unsecured Bondholders are asked to exchange their bonds into the New Bond. The issuance of the New Bond secures the Borrower a long-term financing solution together with the new term loan facilities, new equity and the partial equity conversion of the Warrant Bond. Today’s unsecured Bondholders will move to a partially secured claim in the Borrower, where the clear intention is to repay the New Bond as soon as possible from the operating cash flow, any increased debt capacity under the bank facility given license extension in Peru, increased proved reserves in Colombia and any cash proceeds from potential West African asset sales or the reimbursement of the Tax Repayment amounts described above in the event of a successful tax appeal.

By accepting the Proposal, the Borrower will be capitalized with approx. USD 19 million of new equity in addition to longer-term bank financing – West Face will invest USD 10 million in equity and the Interoil Principals will convert debt to equity of USD 9 million. In addition, West Face will be investing USD 40 million in the New Bond at equal terms which is their largest exposure in the Borrower.

The Borrower has since May 2009 worked hard to find a satisfactory solution for its stakeholders. As of today, this offer is the only feasible alternative versus a potential bankruptcy proceeding or enforced sales process of the Borrower’s most valuable subsidiaries. The outcome of such a process is highly uncertain and will in the Borrower’s view most likely be both time consuming and value destructive, especially for the Borrower’s unsecured creditors and shareholders. The Borrower is convinced that West Face’s offer and the proposed refinancing is the only and most attractive solution for the Warrant Bond and the Unsecured Bond available at this stage.

3.2 NTM’s evaluation

Nothing herein shall constitute a recommendation to the Bondholders by the Loan Trustee.

The Bondholders should independently evaluate the effects of the described restructuring in light of the present distressed situation of the Borrower, hereunder the terms of the New Bond compared to the current Loan Agreements, such as the longer maturity, coupon and a new security package, as well as the effects of a new investor which will hold a major position both as shareholder and as an investor in the New Bond.

The request is put forward to the Bondholders without further evaluation or recommendations from the Bond Trustee. The Bondholders must independently evaluate whether the Proposal is acceptable.

NORSK TILLITSMANN ASA
www.tristee.no

It is recommended that the Bondholders seek counsel from their own financial, legal and tax advisers as to the possible consequences of the Proposal.

INFORMATION MEETING FOR BONDHOLDERS

The Borrower will hold an information meeting prior to the Bondholders’ Meeting to update Bondholders on the situation. The information meeting will be held at the premises of the Borrower at Lysaker on Thursday 8 July at 13:00 hours CET. Should you want to participate at the information meeting please notify Norsk Tillitsmann and provide evidence of holdings in relevant bonds to [email protected] within 7 July at 16.00 hours. For those who cannot attend in person, the Borrower will distribute dial in details in advance of the meeting.

BONDHOLDERS’ MEETING:

A joint Bondholders’ meeting will be held for all Loans. Voting procedures will be carried out separately for each Loan.

Bondholders are hereby summoned to a Bondholders’ meeting:

Time: 13 July 2010 at 13:00 hours (Oslo time),
Place: The premises of Norsk Tillitsmann ASA, Haakon VIIIs gt 1, 01061 Oslo - 5th floor

Agenda “Warrant Bond”:

Approval of the summons.
Approval of the agenda.
Election of two persons to co-sign the minutes together with the chairman.
Request for change of the Loan Agreement and provision of certain consents, waivers and/or postponements:

It is proposed that the Bondholders’ meeting resolve the following:

Proposed resolution:

The Bondholders consent to a mandatory exchange of the outstanding Warrant Bond into the New Bond at the ratio of USD 1:1 of par principal value, following which one Warrant Bond with a par principal value of USD 1,000 will be exchanged into 1,000 of New Bond with par principal value of USD 1.

NORSK TILLITSMANN ASA
www.tillits.com

The Bondholders consent to mandatory exchange of all accrued and unpaid interest on the Warrant Bond, whether due and payable or not, into the New Bond at the ratio of USD 1:1.
Interest originally due and payable 11 July 2010 (and overdue interest thereof) (the “July Interest”) will be exchanged into New Bond and allotted to the parties registered in VPS as the owners of the July Interest. Accrued interest of the Warrant Bond after 11 July 2010 until the exchange into the New Bond has been carried out will be exchanged and allotted to the bondholders registered in VPS as owner of the Warrant Bond.
The Bondholders consent to accept to terms under the New Bond, as per enclosed Term Sheet.
The Bondholders agree that the proposed restructuring of the Borrower’s financial debt shall not constitute an Event of Default under the Loan Agreements, and Norsk Tillitsmann ASA, as the Loan Trustee is authorized to make all necessary waivers and amendments to the Loan Agreement to implement the proposed restructurings of the Borrower’s financial debt to enter into all necessary documentation to give effect to the issue of the New Bond and the revised security package.
Until the restructuring has been completed, and subject to the Proposal being approved and the restructuring completed before 30 August 2010, the Bondholders hereby postpone any rights of enforcement they may have under the Loan Agreement to 30 August 2010 and during such period waive any Event of Default having occurred under the Loan Agreement prior to the date hereof. Notwithstanding the above, if prior to the earlier of (i) successful completion of West Face's offer for the shares of the Borrower and the refinancing transactions to be completed in connection therewith and (ii) 30 August 2010 (the "Restricted Period"), the Borrower accepts any new licenses which give rise to any new obligations from which claims may arise that are not separately funded, this shall be considered an Event of Default under the Loan Agreement, and the waiver and postponement of the right to enforce shall not be applicable in such circumstances.
The Bondholders accept and confirm the Borrower’s use of the refinancing proceeds including to pay the tax liability of Eksportconsult AS and Force Capital partners AS.

NORSK TILLITSMANN ASA
WWW.TILLIT.C.HU

The Bondholders irrevocably authorize the Loan Trustee to implement the resolution above. The resolution will be subject to the following conditions precedent being satisfied or waived by the Loan Trustee on or within 30 August 2010 or such later date as the Loan Trustee may agree in its sole discretion. Failure to do so will result in the Bondholder resolution being deemed null and void.

a. Bondholder Meetings in each of the bond issues with ISIN NO 001 032535.0, and ISIN NO 001 036280.9 approving the restructuring as set out in the Proposal.

b. A final form of the revised Loan Agreement agreed between the Borrower, the Trustee and West Face.

c. Exchange (into the New Bond) and extinguishment of ISIN NO 001 032535.0, and ISIN NO 001 036280.9, such exchange and extinguishment to occur simultaneously with the implementation of the New Bond.

d. Full repayment and extinguishment of the secured bonds with ISIN NO 001 036356.7, such repayment and extinguishment to occur simultaneously with the implementation of the New Bond.

e. Drawdown of the USD 60 million credit facility in Peru and USD 30 million credit facility in Columbia.

f. The voluntary offer from West Face (Norway) AS dated 2 July2010 has been accepted by shareholders holding a sufficient number of shares that, together with the shares held by the Interoil Principals and their holdings companies, comprise at least 90% of the shares of the Borrower on a fully diluted basis,

g. West Face subscription for USD 40 million in the New Bond is fully paid in simultaneously with the exchange of Warrant Bond into New Bond.

h. The Borrower has made all the necessary corporate resolutions required to implement the Proposal.

i. No new information is disclosed before the implementation of the restructuring, resulting in a material adverse change in the premises on which the restructuring plan is based.

j. Any legal opinions NTM reasonably may request related to the restructuring to be submitted by the Borrower.

NORSK TILLITSMANN ASA
www.11161cc.no

Agenda "Unsecured Bond":

Approval of the summons.
Approval of the agenda.
Election of two persons to co-sign the minutes together with the chairman.
Request for change of the Loan Agreement and provision of certain consents, waivers and/or postponements:

It is proposed that the Bondholders’ meeting resolve the following:

Proposed resolution:

The Bondholders consent to a mandatory exchange of the outstanding Unsecured Bond into the New Bond at the ratio of NOK 1:1 of par principal value, following which one Unsecured Bond with a par principal value of NOK 500,000 will be exchanged into 500,000 of New Bond with par principal value of NOK 1.
The Bondholders consent to mandatory exchange of all accrued and unpaid interest on the Unsecured Bond, whether due and payable or not, into the New Bond at the ratio of NOK 1:1.
The Bondholders consent to accept to terms under the New Bond, as per enclosed Term Sheet.
The Bondholders agree that the proposed restructuring of the Borrower’s financial debt shall not constitute an Event of Default under the Loan Agreements, and Norsk Tillitsmann ASA, as the Loan Trustee is authorized to make all necessary waivers and amendments to the Loan Agreement to implement the proposed restructurings of the Borrower’s financial debt to enter into all necessary documentation to give effect to the issue of the New Bond and the revised security package.

NORSK TILLITSMANN ASA
WWW.TILLITSMANN.AG

Until the restructuring has been completed, and subject to the Proposal being approved and the restructuring completed before 30 August 2010, the Bondholders hereby postpone any rights of enforcement they may have under the Loan Agreement to 30 August 2010 and during such period waive any Event of Default having occurred under the Loan Agreement prior to the date hereof. Notwithstanding the above, if during the Restricted Period the Borrower accepts any new licenses with new obligations from which claims may arise that are not separately funded, this shall be considered an Event of Default under the Loan Agreement, and the waiver and postponement of the right to enforce shall not be applicable in such circumstances.
The Bondholders accept and confirm the Borrower’s use of the refinancing proceeds including to pay the tax liability of Eksportconsult AS and Force Capital partners AS.

a. Bondholder Meetings in each of the bond issues with ISIN NO 001 032535.0, and ISIN NO 001 036280.9 approving the restructuring as set out in the Proposal.

b. A final form of the revised Loan Agreement agreed between the Borrower, the Trustee and West Face.

c. Exchange (into the New Bond) and extinguishment of ISIN NO 001 032535.0, and ISIN NO 001 036280.9, such exchange and extinguishment to occur simultaneously with the implementation of the New Bond.

d. Full repayment and extinguishment of the secured bonds with ISIN NO 001 036356.7, such repayment and extinguishment to occur simultaneously with the implementation of the New Bond.

e. Drawdown of the USD 60 million credit facility in Peru and USD 30 million credit facility in Columbia.

NORSK TILLITSMANN ASA
www.tillitsmann.com

f. The voluntary offer from West Face (Norway) AS dated 2 July 2010 has been accepted by shareholders holding a sufficient number of shares that, together with the shares held by the Interoil Principals and their holdings companies, comprise at least 90% of the shares of the Borrower on a fully diluted basis,

g. West Face subscription for USD 40 million in the New Bond is fully paid in simultaneously with the exchange of Unsecured Bond into New Bond.

h. The Borrower has made all the necessary corporate resolutions required to implement the Proposal.

i. No new information is disclosed before the implementation of the restructuring, resulting in a material adverse change in the premises on which the restructuring plan is based.

j. Any legal opinions NTM reasonably may request related to the restructuring to be submitted by the Borrower.

NORSK TILLITSMANN ASA
www.tillitsc.no

NOTICE TO US BONDHOLDERS

Under the rules of the Warrant Bond and the Unsecured Bond only “Qualified Institutional Buyers” (“QIB”) within the meaning of Rule 144A promulgated under the U.S. Securities Act of 1933, as amended (“Securities Act”), or “accredited investors” within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D of the Securities Act, may be United States investors in the Bonds.

Correspondingly, the Borrower may require any U.S. investor to execute and deliver a certification (in a form to be provided by the Borrower) containing confirmation with respect to the investor’s status, and customary representations, warranties and covenants designed to result in the issuance of the New Bond being exempt from the registrations requirements of the Securities Act.

As with respect to the Warrant Bond and the Unsecured Bond, holders of the New Bond will not be permitted to transfer the New Bond except in accordance with all applicable laws. Bondholders located in the United States will not be permitted to transfer the New Bond except (a) to the Borrower, (b) pursuant to an effective registration statement under the Securities Act, (c) to a person that the holder of the New Bond reasonably believes is a QIB that is purchasing for its own account, or the account of another QIB, to whom notice is given that the resale, pledge or other transfer may be made in reliance on Rule 144A, (d) outside the United States in accordance with Regulation S under the Securities Act (if applicable), or (e) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available).

NORSK TILLITSMANN ASA

www.11111111.com

To approve the resolution in the Loans, Bondholders representing at least 2/3 of the Warrant Bond and Unsecured Bond respectively represented in person or by proxy at the meeting must vote in favor of the resolution. In order to have a quorum, at least 2/10 of the voting rights of the Warrant Bond and at least 5/10 of the voting rights of the Unsecured Bond respectively must be represented at the meeting. If the Proposal is not adopted, the Loan Agreement will remain unchanged.

Please find attached as Exhibit 4 to this summons a Bondholder’s Form from the Securities Depository (VPS), indicating your bondholding at the printing date. The Bondholder’s Form will serve as proof of ownership of the Bonds and of the voting rights at the Bondholders’ meeting. (If the Bonds are held in custody - i.e. the owner is not registered directly in the VPS - the custodian must confirm; (i) the owner of the Bonds, (ii) the aggregate nominal amount of the Bonds and (iii) the account number in VPS on which the Bonds are registered.)

The individual bondholder may authorise Norsk Tillitsmann to vote on its behalf, in which case the Bondholder’s Form also serves as a proxy. A duly signed Bondholder’s Form, authorising Norsk Tillitsmann to vote, must then be returned to Norsk Tillitsmann in due time before the meeting is scheduled (by scanned e-mail, telefax or post – please see the first page of this letter for further details).

In the event that Bonds have been transferred to a new owner after the Bondholder’s Form was made, the new Bondholder must bring to the Bondholders’ meeting or enclose with the proxy, as the case may be, evidence which Norsk Tillitsmann accepts as sufficient proof of the ownership of the Bonds.

For practical purposes, we request those who intend to attend the Bondholders’ meeting, either in person or by proxy other than to Norsk Tillitsmann, to notify Norsk Tillitsmann by telephone or by e-mail (at set out at the first page of this letter) within 16:00 hours (4 pm) (Oslo time) the Business Day before the meeting takes place.

Yours sincerely

Norsk Tillitsmann ASA

Enclosed Exhibits:

Background of the Proposal
Company Update
Term Sheet for the New Bond
Bondholder’s Form

INTEROIL

INTEROIL E&P ASA
STRANDVEIEN 50
NO-1366 LYSAKER
WWW.INTEROIL.NO

T +47 6751 8650
F +47 6751 8660
[email protected]

EXHIBIT 1 TO BONDHOLDER SUMMONS - BACKGROUND FOR RESTRUCTURING

1 OFFER AND REFINANCING

Since May 2009 the Borrower has worked to solve the Borrower’s financing requirement after failing on its loan amortization. Until now, the Borrower has explored various refinancing alternatives without finding a satisfactory solution in the interest of all stakeholders.

As a result of the efforts to refinance, the Borrower has received signed term sheets for USD 90 million of secured bank financing for its assets in Peru and Colombia, through two term loan facilities with Citibank. The proceeds from these loans will be used for part of the refinancing for the USD 117 million of secured bonds (including accrued interest). Combined with other obligations, the total refinancing requirement is approximately USD 50 million on top of the committed bank financing.

On 7 June 2010 West Face (Norway) AS announced its intention to put forward a conditional voluntary offer for the outstanding shares of the Borrower at an offer price of NOK 12.5 per share. In conjunction with the successful completion of the Offer, West Face (Norway AS) and/or a related party of West Face (Norway) AS (“West Face”) will also contribute up to USD 40 million through subscription of bonds issued by the Borrower and up to USD 10 million in new equity. The new financing will be used to repay the Borrower’s secured bonds in full and the Bonds are proposed to be rolled into new bonds (the “New Bond”) on equal terms as West Face’s USD 40 million cash subscription for the same New Bond. West Face’s offer is conditional upon, among other things, getting acceptance from shareholders holding a sufficient number of shares that, together with the shares held by Mårten Rød, Gian Angelo Perrucci and Nils Trulsvik (“Interoil Principals”) and their holdings companies, comprise at least 90% of the shares of the Borrower on a fully diluted basis, and acceptance from the unsecured Bondholders to roll their bonds into the New Bond and receipt of the requisite consents, waivers and postponements from the unsecured Bondholders in connection therewith. The contemplated transactions represent a full refinancing of the Borrower subject to unsecured Bondholders’ consent to the proposal. Furthermore, the Interoil Principals through their holding companies’, Eksportconsult AS and Rakila Ltd, will convert their position in the Warrant Bond (an aggregate of USD 9 million plus accrued interest) to equity.

2 CITIBANK FINANCING

The Borrower has through its relevant subsidiaries agreed with Citibank in Peru and Colombia on term sheets for loan facilities in the amounts of USD 60 million and USD 30 million respectively (the “Bank Financing”). The purpose of the Bank Financing is to repay the Borrower’s senior secured bond debt.

The Bank Financing will be secured by i) the group’s assets in Peru and Colombia, ii) a first priority share pledge of the shares of InterOil Peru S.A. and InterOil Colombia Exploration and Production Inc., iii) a guarantee from the Borrower, iv) a collateral arrangement for the cash flows from existing sales contracts, v) a collateral trust arrangement/pledge over the accounts established in connection with the Bank Financing and vi) excess value of potential oil price hedges required in accordance with the terms

Organisasjonsnummer: 988 247 006
Page 1

INTEROIL

of the Bank Financing, as well as a certain amount of production being hedged in both Peru and Colombia.

The Bank Financing will carry an interest at LIBOR plus 5.5-6.5% payable on a monthly (Peru) and quarterly (Colombia) basis. A set of financial covenants are included together with limitations on further financial indebtedness and liens on the properties pledged in favour of the bank as well as restriction on sale of assets. Dividends or distributions to the Borrower may occur, given sufficient dividend capacity, provided there is a simultaneous 1:1 mandatory prepayment of the Bank Financing at par. Any prepayment will reduce future instalment amounts on a pro-rata basis for all future instalments.

If the license periods in Peru are extended or proven reserves in Colombia are increased, Citibank has indicated that it will consider increasing the loan facilities. A right to make full prepayment (or part payment of at least USD 5 million or USD 1 million increments in excess thereof) at 102% of par applies for the duration of the Bank Financing. The Borrower believes there is substantial un-tapped debt capacity in excess of the committed USD 90 million Bank Financing given extension in Peru, or an increase in proved reserves in Colombia which consequently may lead to early repayment of the proposed New Bond. In the event that no license extension is obtained in Peru by 31 December 2010, 70% of all free cash flow in Peru will go to mandatory prepayment of the Peru Bank Financing. In such event, the free cash flow available to repay the New Bond will be decreased by corresponding amount.

In addition to other customary conditions precedent, it is a condition precedent to disbursement under the Bank Financing that the Borrower shall (i) have reached an agreement with the holders of the Borrower’s USD 117 million secured bonds for the discharge in full of such indebtedness and release of all security therefore and (ii) have available sufficient funds for such repayment, taking into account the proceeds from the Bank Financing.

3 ENFORCEMENT PROCEDURES

Shortly after West Face’s offer was announced, the Borrower was notified by the court that the Borrower’s appealed court decision on enforcing share pledges on behalf of the secured bond was denied. Consequently the Enforcement Officer (“Namsmannen”) now has the right to enforce the share pledges on behalf of the secured bondholders in order to repay their outstanding amount of approximately USD 117m. Such a process is, however, in the opinion of the Borrower both time consuming and gives no guarantee that such a process will result in a better solution than the West Face offer as it will be challenging to find buyers willing to pay full price for the pledged assets in a forced sale process. The Borrower including all its independent Board members is of the clear opinion that West Face’s offer represents the fastest process and most favourable outcome for all stakeholders as no other acceptable refinancing alternatives currently exists. The Borrower is of the clear opinion that West Face’s offer represents a fair offer, also supported by a fairness opinion provided by SEB Enskilda to the Borrower’s Board of Directors.

4 FURTHER INFORMATION

For further details on the offer put forward by West Face, please see offer document filed with the Oslo Stock Exchange on 2 July 2010, as well as recent press releases.

Organisasjonsnummer: 988 247 006
Page 2

INTEROIL

5 THE RESTRUCTURING PROPOSAL - PLAN AND RATIONALE

The Borrower is proposing a restructuring of the Warrant Bond and the Unsecured Bond with a view to achieving the following objectives;

(i) Full repayment of Bondholders’ principal and continued payment of interest
(ii) Provide partial security for Bondholders’ remaining claims as opposed to their current unsecured positions
(iii) Better matching debt maturities with projected cash flow capacity through a cash sweep mechanism of excess cash, also with the aim to secure early repayment

The offer for the shares in the Borrower from West Face and the refinancing to the Borrower in relation thereto, together with the new term loan facilities from Citibank will provide the Borrower with a significantly improved foundation to monetize on its current operational activities in Latin America and thereby decrease leverage over time.

Organisasjonsnummer: 988 247 006
Page 3

InterOil Exploration & Production ASA – West Face Offer to Shareholders

INTEROIL

Overview of the West Face Offer

INTEROIL

☐ West Face has made an offer for the shares of InterOil at NOK 12.50 in cash, with the principal following conditions:

i. Shareholder Agreement with InterOil Principals (Rød, Perrucci and Trulsvik)
ii. Acceptance from at least 90% of the outstanding shares (when InterOil Principals’ shares included)
iii. Completion of term loan facilities with Citibank in Peru and Colombia (USD 90 million)
iv. Agreement with majority of holders of relevant unsecured bonds on the terms of the refinancing of InterOil
v. West Face’s satisfaction with results of confirmatory due diligence

☐ Offer values Latin American assets at USD 211 million net of transaction costs

i. Equity valued at USD 42 million and USD 169 million in estimated net debt as of end June (total debt + net working capital obligations – cash)
ii. Assumes West Africa liabilities not applicable for Parent Company

☐ Some key issues

i. Formal offer presented by West Face – 7 June
ii. Board of Directors unanimously recommends the offer as it is the best solution available today
iii. Fairness opinion provided by SEB
iv. Offer period to end 2 August 2010. Agreement with unsecured bondholders to be acquired on 13 July
v. Board able to recommend superior offer, subject to conditions in transaction agreement
vi. Enforcement court decided on 4 June to allow NT to enforce the security of the USD 125 million Secured Bonds

Background

INTEROIL

☐ The May 2009 USD 10 million secured bond installment was not paid
i. Business plan assumed payment to be covered through cash flow
ii. Contingency plan executed: Reduced capex and sale of Cabinda (LOI signed July 08)
iii. Weak cash flow 1H09 due to low oil price and non-payment for Cabinda
iv. Called for bondholder meeting to seek 1 month postponement of installment

☐ Bondholder Meeting for the Senior Secured Bond voted against proposal
i. Unexpected outcome
ii. Two bondholders had acquired controlling interest (67%)
iii. Bondholders not willing to discuss alternative solutions
iv. Default declaration resulted in the entire loan becoming due and increased interest costs

Background Continued

INTEROIL

☐ Stand-Still Agreement reached June 2009
i. Enforcement of security for the Senior Secured Bond suspended
ii. Company committed to work for full repayment of all outstanding debt
iii. Macquarie/Tristone engaged as advisor on Secured Bondholders’ request
iv. Mandate to come up with every available solution by year-end 2009

☐ Macquarie’s solutions were unsatisfactory
i. In the Company’s opinion, the process did not provide the best possible solution for all creditors and shareholders
ii. Obtained only one realistic but unsatisfactory offer for the acquisition of LATAM assets
iii. Obtained only one unsatisfactory offer to refinance the senior secured bonds

☐ Stand-Still Agreement terminated in December 2009
i. Senior Secured Bonds again in default
ii. Company initiated it’s own extensive sales and refinancing process
iii. Enforcement court decided on 4 June to allow NT to enforce the security on the USD 125 million Secured Bonds
iv. West Face represents the best available solution to date for all lenders and shareholders

Offer Will Secure Repayment of Secured Bonds

INTEROIL

☐ InterOil to raise USD 135 million in net cash
i. Repay Secured Bonds
ii. Secure continued operations
iii. Repay Tax Liability claim

☐ West Face to provide USD 50 million in cash
i. Up to USD 10 million in new equity injection
ii. USD 40 million in new Senior Secured Bond

☐ Citibank has approved a USD 90 million Term Loan Facility in Peru and Colombia

☐ InterOil Principals to convert USD 9.5 million in debt to equity and to receive USD 8.4 million for the Tax Liability claim
i. Principals to repay any debt that is secured through a pledge of their shares and secure release of all pledges

☐ USD 27 million in unsecured bonds to be rolled into new senior secured bond
i. NOK 100 million unsecured bond, equal to USD 16 million including interest
ii. USD 11 million of the USD 20 million unsecured bonds (i.e. the bonds not being converted to equity by InterOil Principals (USD 9 million)

Cash Proceeds	USDm
New Equity, West Face	10
New Senior Secured Bond, West Face	40
Term Loan Facilities, Citibank	90
Costs	(5)
Total Net Proceeds	135
Use of Proceeds	USDm
---	---
Repayment of Senior Secured Bond	117
Repayment of Tax Liabilities	8
Min New Cash Required	9
Total Use of Proceeds	135
Conversion to New Bonds and Equity	USDm
---	---
NOKm 100 Unsecured Bond	16
USDm 20 Unsecured Bond	21
- Principals' Bonds Converted to Equity	(10)
= Roll-Over to New Senior Secured Bond	27

Financial Structure Pre & Post Transaction

INTEROIL

☐ Total debt reduced from USD 167 million to USD 157 million

☐ Improved cash position as required to secure Citibank loan
i. Cash position pre-transaction not sufficient to cover outstanding working capital commitments
ii. USD 4 million in cash post-transaction; USD 9 million, including availability under Colombian credit facility

☐ New status for unsecured bondholders:
i. First lien reduced by USD 27 million (USD 90 million instead of USD 117 million)
ii. Provide partial security for bondholders’ claims, as compared to current unsecured positions
iii. Parri passu with total of USD 67 million in debt instead of USD 37 million
iv. Terms and structure of the new bond negotiated and secured by West Face, with 80% of West Face investment (USD 40 million) placed in the new bond

Net Debt	30/6 Pre Transaction	USDm
Senior Secured Bond		117
NOKm 100 Unsecured Bond		16
USDm 20 Unsecured Bond		21
Tax Liabilities		8
Credit Facility, Colombia		5
Total Debt		167
Cash & Net Working Capital		(2)
Debt & Cash	30/6 Post Transaction	USDm
---	---	---
Term Loan Facilities, Citibank		90
New Senior Secured Bond		67
Total Debt		157
Cash & Net Working Capital		4

Main Terms Senior Secured Term Loan Facilities (Citibank)

INTEROIL

☐ Arranger & Lender: Citibank N.A. acting through its International Banking Facility
☐ Lenders
i. USD 60 million InterOil Peru S.A.
ii. USD 30 million InterOil Colombia E&P Inc. (BVI)
☐ Tenor/Amortization: 2.5 and 3 years with quarterly amortization
☐ Use of proceeds: To repay secured bonds at the holding company level
☐ Main Security Package/Collateral
i. Assets of the Borrowers
ii. First priority security interest in the shares of Interoil Colombia E&P Inc. and InterOil Peru S.A.
iii. Guarantee from InterOil E&P ASA
iv. Pledge over sales contracts
v. Right of setoff between the loan and MTM of oil hedge

☐ Margin: 550-650 bps over Libor. Interest to be paid monthly
☐ Required hedging with Citi
i. 1.95 mill barrels in Peru from April 2010 to September 2012 (hedged at WTI 80 per bbl)
ii. 50% of estimated oil production in Colombia
iii. 50% of the interest rate risk in the case Libor reaches 1.75% before Maturity

☐ Financial Covenants
i. Senior Debt / Ebitda < 1.25x
ii. Debt Service Coverage ratio > 2.0x
iii. Total Liabilities / Total Net Worth < 1.5x
iv. Current Ratio > 1.0x
v. Minimum cash
vi. Minimum daily average production
vii. 1P reserves at Loan maturity / Total 1P reserves > 30%

☐ Negative Covenants
i. No financial liabilities over USD 90 million
ii. No liens on properties
iii. No sale or disposal of assets

☐ Mandatory prepayment on shareholder dividend
i. Dividend triggers equal mandatory dollar for dollar prepayment
ii. Any prepayment to reduce future instalment level on a pro-rata basis for all future instalments
iii. 70% of all free cash flow in Peru to go to mandatory prepayment ("Cash Sweep") if no licence extension by 31 December 2010

☐ Optional prepayment at 102%, or 100% if Citibank do not offer additional funds on extension Peru or increased reserves Colombia 1)

☐ Governing Law: NY Law

1) Citibank has indicated that they will consider an increase in the facilities on extension of Peru or increase in proved reserves in Colombia.

INTEROIL

Main Terms New Senior Secured Bond

☐ Issuer: Interoil Exploration & Production ASA (Norway)
☐ Amount USD 67 million
i. USD 40 million from West Face
ii. USD 11 million conversion of bonds with warrants
iii. Up to NOK 100 million (or USD equivalent) conversion of unsecured bonds
☐ Currency: Two tranches - USD and NOK
☐ Coupon Rate: 15% quarterly interest payments
☐ Final Maturity Date: 5 years after settlement
☐ Security: First ranking over direct assets of Borrower
☐ Security to rank only behind Preferred Senior Debt
i. First priority pledge over retention account (minimum 3 months interest in cash) and cash sweep account (see below)
ii. Pledge over subsidiaries (other than Peru and Colombian subsidiaries)
iii. Assignment of management agreements
iv. Certain other specified assets
☐ Accelerated prepayment: Preferred senior debt limited to USD 90 million unless the Issuer makes a dollar-for-dollar equivalent prepayment of the bonds

☐ Cash Sweep/Amortization
i. Peru and Colombian subsidiaries to distribute 100% of free cash flow to the Issuer, subject to compliance with Preferred Senior Debt terms
ii. Distributions, less USD 600,000 per month (to cover operating expenses in Issuer), to be swept into Cash Sweep Account
iii. Issuer to use Cash Sweep Account to redeem bonds on a quarterly basis (at 100%)
iv. Issuer will redeem any remaining amount on Final Maturity Date (at 100%)

☐ Change of control
i. Issuer entitled redeem at 100%
ii. Each bondholder with put option at 105% if no Issuer redemption has occurred

☐ Covenants:
i. Customary negative covenants, including no dividends, no additional debt, no sale of all or substantially all of assets or operations.
ii. Customary positive covenants, including maintenance of business, reporting requirements, compliance with laws.

☐ Cross default provisions
☐ Governing Law: Norway
☐ Trustee: NT

INTEROIL

Timetable

☐ Offer document approved and released 2 June 2010
☐ Acceptance Period to end 2 August 2010
☐ Bondholder Meeting, Unsecured Bonds, 13 July
☐ Closing Citibank expected by end of Acceptance Period
☐ Enforcement court ruled on 4 June that NT may enforce the security on the USD 115 million Secured Bonds

INTEROIL

Best Offer Presented by Macquarie

☐ Best Macquarie offer represented max NOK 8.0-12.4 per share

i. Extensive sales process May-December 2009
ii. Regional oil company offered USD 196 million net of recognised transaction costs for InterOil Colombia and Peru
iii. USD 15 million (NOK 4.4 per share) upside on license extension in Peru

"Best Offer" Presented by Macquarie	Offer	Potential Upside
Gross Offer Price Assets	USDm	201
- Transaction Costs	"	(5)
= Net Offer Price Assets	"	196
- Net Debt 30/6	"	(169)
= Value of Equity	"	27
NOK per Share		8,0

☐ Several issues linked to upside

i. Extension to be awarded within 18 months from Jan 2010
ii. Payment to be revised if extension for less than 10 years
iii. Capex commitment not greater than USD 95 million
iv. No governmental interest in License Block III or IV
v. Extension must not be subject to abandonment or reclamation liabilities on existing or future wells

☐ Other material conditions

i. All officers and directors in Peru and Colombia to resign or be terminated for InterOil's account
ii. Definitive Agreement subject to due diligence
iii. No material change during the LOI period

Conclusion

INTEROIL

☐ The company has received an offer from West Face that provides for a complete refinancing of the company with a concurrent public to private transaction

☐ The board of directors of InterOil recommends the proposal as no other alternatives are available

☐ West Face proposal allows unsecured bonds move to an improved security position ranking behind only permitted secured bank debt

☐ West Face will invest USD 40 million on the same terms as existing unsecured bondholders, plus USD 10 million in subordinate equity

☐ The terms of new bonds reflect that InterOil intends, and is required, to repay the new bonds as soon as possible

> It is recommended that unsecured bondholders accept the proposal

INTEROIL

Operational Status Peru

☐ Decline in production expected to be reversed as drilling program kicks-off
I. Currently producing 3,400 bpd versus 4,800 at start of year. Targeting 5,000 by year-end
II. Drilling program delayed due to liquidity constraints
III. Rapid decline in production from mature Mirador South Field. Artificial Lifting Systems (gaslift) to be implemented with the aim to reduce declination
IV. New well in April tested a separate segment North of the Mirador South Field however production had 80% water cut because of close vicinity to O/W contact
V. 9 new wells to be drilled to the crest of the structure to prevent water
VI. 6 shallow wells to be drilled in the Bronco field as infill production wells

☐ Working on reducing costs
I. Focus on alternative drilling and completion designs (15-25% cost reduction pr well)
II. Targeting 10% cost reduction in local organization

☐ Expect licence extension but uncertain of timing
I. Licence expires March 2013
II. Application for extension sent to Perupetro
III. Decision is with the Ministry of Mines & Energy
IV. Parliamentary Election May 2011

Bondholder meeting 10 June 2010

Operational Status Colombia

INTEROIL

☐ Stable production from existing fields
I. Currently producing 2,000 bpd versus 2,280 at start of year. Targeting 3,500 by year-end
II. 6 infill production wells to be drilled in the Mana Field and Rio Opia Field during the next 4 months. (200 – 350 bpd initial production pr well)

☐ Discovered oil in Altair, however too early to conclude on production, decline and reservoir size
I. Two exploration wells drilled on independent structures: Altair-1 discovered oil. Purrita-1 was dry
II. Will start a 6 month Long Term Test of Altair-1 in June
III. Initial production expected at 700-900 bpd level
IV. However water cut expected to rise during testing
V. Will use the next 6 months to evaluate the discovered structure and remaining potential on the block

☐ Colombian Hydrocarbon Agency (ANH) has ranked Interoil as preferred operator on 3 licences in 2010 Licence Round
I. Subject to final approval by the Directive Council of the ANH
II. Interoil will evaluate and conclude when formal ANH offers are put forward

Bondholder meeting 10 June 2010

INTEROIL

InterOil in Brief

	Peru	Colombia	Group
Production boe/day 1	4'248	2'136	6'384
Reserves Mmboe 2
P1	8.2	4.9	13.1
P2	8.7	6.3	15.0
P3	9.1	7.3	16.4
Resources (risked)
Contingent	19.9	2.0	21.9

1) Average production Q1 '10
2) Certified by independent Reservoir Consultant, Gaffney, Cline & Associates 31. December 2009, WI before Royalty in Peru and WI after Royalty in Colombia

Average Daily Production WI, per quarter

HIGHLIGHTS

Drilled more than 60 wells in Peru and 25 in Colombia since 2006
81 wells encountered oil
More than doubled the production since 2005

INTEROIL

InterOil Exploration & Production ASA Senior Secured Bond Issue 2010/2015

(the "Bonds")

Settlement date: Expected to be ultimo August 2010

Issuer: InterOil Exploration & Production ASA (Norway) (organization no. 988 247 006) (the "Issuer").

Subsidiaries: Means the following directly and indirectly 100% owned subsidiaries of the Issuer:

(i) InterOil Exploration & Production Latin America AS (Norway) (registration no. 988 672 653) being a 100% owned subsidiary of the Issuer,

(ii) North Oil Services S.A.C. (Peru) being a 100% owned subsidiary of InterOil Exploration & Production Latin America AS,

(iii) InterOil Peru S.A. (Peru) being a 100% owned subsidiary of InterOil Exploration & Production Latin America AS,

(iv) InterOil Colombia Exploration & Production Inc (British Virgin Island) being a 100% owned subsidiary of InterOil Exploration & Production Latin America AS,

(v) InterOil Latinamerica AS (Norway) (registration no. 992 249 765) being a 100% owned subsidiary of the Issuer,

(vi) InterOil Colombia Exploration & Production Inc (Colombia) being a 100% owned subsidiary of InterOil Colombia Exploration & Production Inc.,

(vii) InterOil E&P Switzerland AG (Switzerland) being a 100% owned subsidiary of the Issuer, and

(viii) InterOil SA (Switzerland) being a 100% owned subsidiary of the Issuer.

African Subsidiaries: Means the following 100% owned subsidiaries of the Issuer:

(i) InterOil Exploration & Production Ghana AS (Norway) (registration no. 888 672 702) which holds a 31.5% working interest in the Tano Shallow exploration license offshore Ghana,

(ii) InterOil Exploration & Production Africa AS (Norway) (registration no. 988 673 528) which holds a 40% working interest in Block V and 20% working interest in Block VI offshore Angola,

(iii) InterOil Cabinda North Company Limited (Cyprus) which holds a 3.5% working interest in the Cabinda North license onshore Angola, including also its branch office in Angola, named Interoil Cabinda North Limited,

(iv) InterOil Africa II Company Limited (Cyprus),

(v) InterOil Block 5 Company Limited (Cyprus), and

(vi) InterOil Block 6 Company Limited (Cyprus)

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Group: The Issuer with all its subsidiaries from time to time (the "Group").

Settlement Agent: Pareto Securities AS, Dronning Mauds gt. 3, NO-0115 Oslo, Norway (the "Settlement Agent").

Trustee: Norsk Tillitsmann ASA, Postboks 1470 Vika, 0116 Oslo.

Hydrocarbon Resources: Means the:
(i) 100% owner share in Block III and Block IV in the Talara province in Peru, and
(ii) 50-70% owner share and operatorship in the three producing concessions Puli-B, Puli-C and Armero and a 100% working interest in the Altair exploration license in Colombia.

Currency: US Dollars ("USD") and Norwegian Kroner ("NOK") as described in this Term Sheet, ranking equally pari passu, except for that the Temporary Bonds (as defined below) and the NOK tranche will not be secured by the Escrow Account.

Offering Size: Equivalent of approximately USD 77 million split on the USD and NOK tranches as described in this Term Sheet, the exact figures of which depending on the exact Settlement Date, approximately USD 9 million (plus accrued interest) of which will be converted into shares soon after Settlement Date as described in this Term Sheet.

Coupon rate: 15% p.a., quarterly interest payments.

Settlement Date: Expected to be ultimo August 2010 (the "Settlement Date").

Notice is expected to be given to acquirers minimum two banking days prior to Settlement Date.

Final Maturity Date: The day 5 years after Settlement Date, at price 100.00 % of par (the "Final Maturity Date").

First scheduled interest payment day: On or about 28 November 2010 (first interest payment day after Settlement Date).

Last scheduled interest payment day: Final Maturity Date.

Interest Payments: Interest on the Bonds will accrue daily commencing on, and including, the Settlement Date and shall be calculated and payable quarterly in arrears on or about (pending exact Settlement Date) 28 February, 28 May, 28 August and 28 November of each year. No adjustment will be made, notwithstanding the period end date occurs on a day that is not a Business Day, and if such date is not a Business Day, payments of interest will be made on the first following day that is a Business Day (No Adjustments of Business Day). Day count fraction is 30/360.

Price: 100% of par value.

Ton#: 2548089.6

Nominal value:
The USD denominated Bonds will have a nominal value of USD 1. The NOK denominated Bonds will have a nominal value of NOK 1.

Status of the Bonds:
The Bonds shall be senior secured obligations of the Issuer, ranking at least pari passu with the claims of its other unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies.

Settlement:
The Bonds will be settled;

(i) in cash from West Face Capital Inc. (or any direct or indirect subsidiary or affiliate thereof) (“West Face”) in an amount of USD 40 million (the “West Face Bonds”),

(ii) by delivery of bonds from relevant bondholders in the ISIN No. 001 36280.9 (the “USD Unsecured Bonds”) in an amount equal to the sum of USD 9 million (plus accrued interest), at a ratio of 1 USD Unsecured Bond (par value USD 1,000) into 1,000 USD denominated Bonds (par value USD 1),

(iii) by delivery of USD Unsecured Bonds from bondholders (other than such bondholders referred to in (ii) above in this paragraph) in an amount equal to the sum of USD 11 million, at a ratio of 1 USD Unsecured Bond (par value USD 1,000) into 1,000 USD denominated Bonds (par value USD 1),

(iv) by delivery of bonds from bondholders in the unsecured ISIN No. 001 032535.0 (the “NOK Unsecured Bonds”) in an amount of NOK 100 million at a ratio of 1 NOK Unsecured Bond (par value NOK 500,000) into 500,000 NOK denominated Bonds (par value NOK 1),

(v) by conversion on a USD 1 for USD 1 basis of all accrued and unpaid interest on the USD Unsecured Bonds (save for those mentioned under (ii) above), whether due and payable or not, and

(vi) by conversion on a NOK 1 for NOK 1 basis of all accrued and unpaid interest on the NOK Unsecured Bonds, whether due and payable or not.

Bonds issued in USD under (i) and in NOK under (iv) and (vi) above will be issued with two separate ISIN (a USD ISIN and a NOK ISIN), which will be the surviving ISINs for the USD tranche and the NOK tranche of the Bonds.

Bonds issued under (iii) and (v) above will be issued with a temporary USD ISIN (the “Temporary Bonds”). The Temporary Bonds will be merged with the West Face Bonds in connection with disbursement of the cash proceeds from the Escrow Account (as defined below) to the Issuer. VPS and the Trustee are authorised to carry out the aforesaid in the best practical way.

Bonds issued under (ii) will also be assigned a temporary ISIN and will subsequently be converted to shares.

Issuer’s call option (American):
The Issuer may redeem part of the Bonds or all the Bonds on any date from and including the second interest payment day to, but excluding the Final Maturity Date at a price equal to 100% of par value (plus accrued interest on redeemed amount).

Tor#: 2548089.6

If such call options as described above are exercised, the Bonds shall be redeemed on a pro rata basis.

Amount and Use of Proceeds:

The net cash proceeds from the sale of the Bonds, after deducting transaction costs (including e.g. West Face expenses) and any other agreed expenses of the Bond issue, shall be employed (i) to repay approximately USD 28 million principal amount (including accrued interest) of the balance of the existing senior secured debt obligations of the Issuer which are not being repaid with proceeds from the Preferred Senior Debt (described below) (together the “Senior Secured Bonds”), (ii) to pay, up to a maximum of USD 10 million (NOK 57.15 million in principal amount), the amounts owing to Eksportconsult AS and Force Capital Partners AS for the reimbursement of tax liabilities incurred and paid in connection with the transfer of assets to the Issuer (described below), and (iii) for general corporate purposes.

Security:

All amounts outstanding under or in respect of the Bonds, including but not limited to principal, interest, premium, expenses and other amounts shall (to the extent legally permitted) be fully secured by:

Pre-Settlement:

(i) a first priority pledge over the Escrow Account, as defined below (according to Norwegian law), in favour of the Trustee on behalf of the holders of West Face Bonds only;

Pre disbursement to Issuer:

(ii) a first priority pledge over, and claim against the bank for, the amount from time to time standing to the credit in the Retention Accounts (as defined below) in favor of the Trustee on behalf of the bondholders,

(iii) a first priority pledge over, and claim against the bank for, the amount from time to time standing to the credit in the Bondholder Cash Sweep Account (as defined below) in favor of the Trustee on behalf of the bondholders,

(iv) an unconditional and irrevocable on-demand guarantee from each of the Subsidiaries, other than Interoil Peru S.A. and Interoil Colombia Exploration & Production Inc. and their subsidiaries,

(v) a security interest over all present and after acquired property and assets, whether real, personal, immovable or moveable, of the Subsidiaries other than the property and assets of Interoil Peru S.A., Interoil Colombia Exploration & Production Inc. and their subsidiaries,

(vi) a pledge over the shares (100%) in the Subsidiaries and African Subsidiaries other than the property and assets of Interoil Peru S.A., Interoil Colombia Exploration & Production Inc. and their subsidiaries (the “Share Pledge”), together with letters of resignation executed but undated of each director of such Subsidiaries and African Subsidiaries,

(vii) a security interest over any permitted loans made by the Issuer to any of the Subsidiaries, and

(viii) a first priority assignment over the claims of the Borrower towards Exportconsult AS and Force Capital AS related to any Tax Refund, and over any proceeds from such claims.

The Security referred to above shall be established no later than at the Settlement Date.

To the extent required under the Preferred Senior Debt (defined below), the Pre-

Tor#: 2548089.6

Disbursement Security (v) – (vii) shall rank only behind the Preferred Senior Debt. The assets serving as security for the Bonds may not be assigned or mortgaged/pledged to any other party, except for the Preferred Lenders as security for the Preferred Senior Debt (Security (v)-(vii)).

Potential Additional Security:

To the extent permitted by the Preferred Senior Debt (or any replacement thereof) at any time, the Issuer shall take commercially reasonable steps to ensure that all amounts outstanding under or in respect of the Bonds, including but not limited to principal, interest, premium, expenses and other amounts shall also (to the extent legally permitted) be secured by the following on a second priority basis:

(i) an unconditional and irrevocable on-demand guarantee from each of Interoil Peru S.A., Interoil Colombia Exploration & Production Inc. and their subsidiaries
(ii) a security interest over all present and after acquired property and assets, whether real, personal, immovable or moveable, of Interoil Peru S.A., Interoil Colombia Exploration & Production Inc. and their subsidiaries (including any and all ownership, interests, licenses and contracts related to the Hydrocarbon Resources),
(iii) a pledge over the shares (100%) in Interoil Peru S.A., Interoil Colombia Exploration & Production Inc. and their subsidiaries, together with letters of resignation executed but undated of each director of such Subsidiaries,
(iv) an assignment of any relevant management agreements including declaration of subordination of any amounts payable by the Issuer. The assignment to contain notices of default or breach, consultation rights, cure rights, direct step-in rights and termination rights in case of default or breach,
(v) an assignment of earnings related to the Hydrocarbon Resources including notices and acknowledgements to the extent obtainable, always provided that the Issuer shall use its best endeavors to procure the acknowledgement and facilitate the assignment pursuant to any contract, all assignments to be in the relevant intra-group contracts,

The Potential Additional Security set out above in (i) through (v) shall rank only behind the Preferred Senior Debt.

Preferred Senior Debt:

The secured debt advanced by lender(s) to certain of the Subsidiaries (the "Preferred Senior Lenders") with prior ranking security in relation to the Bonds in the Pre-Disbursement Security described above, equaling a maximum principal amount of USD 90 million (plus accrued interest, costs, expenses owed to the Preferred Senior Lenders related to such loans), as such amount may be increased from time to time as contemplated under the heading "Accelerated Payment" below which shall be defined as the "Preferred Senior Debt".

Accounts:

The Issuer will maintain its Accounts with first class international bank(s) acceptable to the Trustee and West Face. The Accounts will consist of (i) an Escrow Account (in connection with the Settlement of the Bonds), (ii) USD and a NOK Retention Accounts (in connection with the maintenance at all times of 3 months interest on the Bonds), and (iii) a Bondholder Cash Sweep Account (in connection with the cash sweeps and quarterly amortization of principal amounts on the Bonds).

Escrow Account:

The Issuer shall establish prior to issuance of the Bonds an escrow account (the "Escrow Account"). Once the Conditions Precedent (described below) have been satisfied and the Security set out in (i)-(viii) is in place, the net cash proceeds from the Bond issue shall be transferred to the Escrow Account. The Escrow Account shall be pledged to the Trustee on behalf of the holders of the West Face Bonds, and

Tor#: 2548089.6

blocked such that no withdrawals can be made from such account without the Trustee's prior written consent. The amount on the Escrow Account shall only be used according to the Use of Proceeds described above or returned to West Face in the event the Bonds are not issued for any reason.

Before the first release from the Escrow Account takes place, the Conditions Precedent shall again be complied with.

Retention Accounts:

The Issuer shall deposit an amount from the first release from the Escrow Account equal to 3 months interest on each of the total USD denominated Bonds and the total NOK denominated Bonds in two separate bank accounts (the "Retention Accounts"). These amounts shall be used to pay the coupons under the Bonds only in the event of a simultaneous amortisation/redemption on the Bonds or to the extent the Issuer fails to pay any coupons when due, always provided that the Issuer shall make sure that an amount equal to 3 months interest on the total USD denominated Bonds and the total NOK denominated Bonds is deposited in the respective Retention Accounts at any time. The Retention Accounts shall be pledged to the Trustee and blocked such that, subject to the above provisions of this paragraph, no withdrawals can be made from such account without the Trustee's prior written consent.

Bondholder Cash Sweep Account:

The Peru Subsidiaries and the Colombia Subsidiaries shall distribute 100% of their monthly free cash flow to the Issuer on a monthly basis on the last business day of each month. For these purposes, "free cash flow" shall be defined in the definitive Loan Agreement in a manner that (A) is permitted under the Preferred Senior Debt credit agreements, and (B) is acceptable to each of the Trustee and West Face in its sole discretion.

In each case, such distributions (together with all proceeds from the sale of the shares or assets of the African Subsidiaries and all proceeds from any Tax Refund described below), less USD 600,000 per month (which shall be used exclusively to cover operating expenses in the Issuer and InterOil E&P Switzerland AG), shall be swept into a bank account (the "Bondholder Cash Sweep Account") opened by the Issuer which shall be pledged to the Trustee and blocked (such that no withdrawals can be made from such account without the prior written consent of the Trustee, unless amounts being withdrawn are to be transferred from such account directly to the Trustee for payment on the Bonds) and applied to repay the Bonds as provided herein.

For these purposes, "Peru Subsidiaries" means InterOil Peru S.A. (Peru) and North Oil Services S.A.C. ("Peru") and "Colombia Subsidiaries" means InterOil Colombia Exploration & Production Inc. (BVI) and Interoil Columbia Exploration & Production Inc. (Colombia).

Amortization:

The Issuer shall redeem the Bonds as follows:

(i) On each Interest Payment date, the total amount in the Bondholder Cash Sweep Account, provided that such amount exceeds USD 1,000,000, shall be applied by the Issuer to partially repay the Bonds, upon which such Bonds will be cancelled. The partial redemption shall be carried out pro rate between the USD tranche and the NOK tranche, and pro rate between the bonds in the USD tranche and pro rate between the bonds in the NOK tranche. The call price will be at 100% of par value (plus accrued interest on the relevant Bond; at the Issuer's discretion, and to the extent permitted by the terms of the Retention Accounts, to be drawn from the Retention Accounts).

(ii) Any remaining amounts, at the final Maturity Date at par value plus accrued interest.

Tor#: 2548089.6

Issuer’s Positive Covenants:

The Loan Agreement shall contain customary Issuer covenants including, but not limited, to the following:

a) The Issuer shall maintain and shall procure that each of the Subsidiaries shall maintain, its corporate existence.
b) The Issuer shall comply with the use of proceeds established in the Finance Documents.
c) The Issuer shall ensure and shall procure that the Subsidiaries shall ensure, that there are no limitations under any agreement, except in connection with the Preferred Senior Debt and as contemplated by the definition of "free cash flow" referred to above, on upstream payments required to service the Bond payments.
d) Certain customary reporting requirements including, but not limited to, the following (i) for the Issuer, make annual audited and quarterly interim unaudited reports available on the Issuer’s website (alternatively by sending them to the Trustee for distribution to the bondholders) as soon they are available, and not later than 90 days after the end of the financial year and not later than 45 days after the end of the relevant interim period. Such reports shall be on an unconsolidated and consolidated basis, (ii) within 5 days after an officer obtains knowledge of any default, a certificate of the chief financial officer or chief executive officer setting forth the details thereof shall be sent to the Trustee, (iii) promptly upon knowledge of commencement of any material adverse development in, or any litigation proceeding against, the Issuer that could reasonably be expected to have a Material Adverse Effect (as defined below), notice the Trustee thereof in reasonable detail, and (iv) other customary notices and other information as may be reasonably requested from time to time by the Trustee.

Issuer Negative Covenants:

During the term of the Bonds, the Issuer shall not without the approval of the holders of the Bonds (evidenced by a simple majority of the holder(s) of the Bonds):

a) amend its constitutional documents;
b) declare or make any dividend payment, repurchase shares or make any distributions (capital or otherwise) to its shareholders,
c) cease to carry on its business,
d) other than in connection with a sale of all, or any part of, the African Subsidiaries or the businesses or assets of the African Subsidiaries if, and only if, the proceeds of any such sale or disposition are applied in full to repay the Bonds (a "Permitted African Sale"), sell or dispose of all or a substantial part of its assets or operations or change the nature of its business or merge, demerge with another company or in any other way restructure its business, or enter into future transactions with non-arm's length parties if it has a Material Adverse Effect, (for the avoidance of doubt, please also see item (ii) under "Event of Default"),
e) incur, permit or suffer to exist any additional indebtedness other than (i) ordinary and customary exceptions such as trade payables incurred in the ordinary course of business to an agreed maximum aggregate monthly amount on a consolidated basis, (ii) the Preferred Senior Debt, or (iii) increases in the principal amount of Preferred Senior Debt made in compliance with the provisions set out below under "Accelerated Prepayment",
f) grant any loans, guarantees or other financial assistance to or on behalf of the African Subsidiaries,
g) enter into any other agreements with the African Subsidiaries, or
h) enter into any contracts or arrangements to hedge oil price risk other than those contemplated by the Preferred Senior Debt.

The Loan Agreement shall include other standard covenants as are customary in the

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Norwegian high-yield Bond market as of Settlement Date, or as are otherwise reasonably requested by West Face.

Subsidiaries Covenants:
The covenants listed above under Issuer Negative Covenants shall apply mutatis mutandis to the Subsidiaries, provided that the Subsidiaries shall be permitted to make the distributions contemplated above under the heading Bondholder Cash Sweep Account and provide any such guarantees and security or other financial assistance as contemplated in relation to the Bonds.

Hydrocarbon Resources Covenants:
Standard covenants including, but not limited to: (i) Maintenance and Insurance (ii) no sale of the Hydrocarbon Resources, and (iii) maintenance of registry.

Maintenance and Insurance:
The Issuer shall provide for reasonable and satisfactory maintenance and insurance (in either case, consistent with customary and prudent industry practice for companies operating similar businesses of similar size) of the Hydrocarbon Resources and all relevant assets related thereto at all times.

Change of Control Clause:
Upon a Change of Control Event (defined below) occurring, each holder of Bonds shall have a right of pre-payment (Put Option) of the Bonds at a price of 105% of par value (plus accrued interest) during a period of 60 days following the notice of a Change of Control Event, provided that the Issuer has not voluntarily redeemed the outstanding Bonds, at a price equal to 100% of par value (plus accrued interest on the relevant Bond) during a period of 40 days following the notice of a Change of Control Event.

Change of Control Event:
Change of Control Event means any person or group (as such term is defined in the Norwegian Limited Liability Companies Act § 1-3), other than in connection with the voluntary offer to be presented by West Face (Norway) AS to the shareholders of the Issuer and any subsequent going private transaction, becomes or will become the owner, directly or indirectly, legally or beneficially, or in any other way obtain effective control of more than 50% of the outstanding shares of the Issuer, whether by contract, voting trust or otherwise.

Accelerated Prepayment/Redemption:
With prior written notice to the Trustee, the principal amount advanced under the Preferred Senior Debt may be increased to an amount that exceeds USD 90 million, provided that the Issuer shall immediately on receipt of such funds redeem that portion of the outstanding Bonds that is equal to the amount of the increase, at a price equal to 100% of par value (plus accrued interest on the relevant Bond; at the Issuer’s discretion, and to the extent permitted by the terms of the Retention Accounts, to be drawn from the Retention Accounts).

Tax Refund:
On 25 July 2008, the Issuer entered a settlement agreement with Exportconsult AS and Force Capital Partners AS with respect to the Issuer assuming responsibility for payment of a tax claim against said parties in the amount of NOK 57.15 million following transfer to the Issuer of shares in the Issuer’s Swiss subsidiary. The settlement agreement was amended on 11 March 2010. The settlement agreement and the amendment were both resolved by the General Meeting of the Issuer. Exportconsult AS and Force Capital Partners AS have initiated court proceedings against the Norwegian Tax Authorities to reverse the decision of the tax liability. If the appeal is successful, Exportconsult AS and Force Capital Partners AS have assigned to the Issuer any amount received by it from the Norwegian Tax Authorities or from any other applicable taxation authorities, of which such funds shall be paid to the Issuer. Any such funds shall serve as security for the Bonds and be transferred to

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the Bondholder Cash Sweep Account as provided for above.

Event of Default:

The Loan Agreement shall include standard event of default provisions, including, without limitation, (i) cross default provisions for each member of the Group and where, among other things, a default event under Preferred Senior Debt will constitute a Default Event under the Bonds, and (ii) a default provision if the Issuer’s ownership share in the Hydrocarbon Resources is reduced, either through a single event or through several events, in a manner that has a Material Adverse Effect, including, without limitation, through a material expropriation of any assets or licenses, a sale or disposition of any assets or licenses on non-market terms, or material adverse amendment(s) to any Project Documents, and, for greater certainty, this provision shall not be triggered by individual license expirations in the normal course except if such normal course expirations, either alone or in the aggregate, would or could reasonably be expected to have a Material Adverse Effect. The Loan Agreement will contain waterfall provisions in case of partial payments i.e. first to cover costs, fees and expenses (the “Trustee expenses”) of the Trustee and thereafter any other outstanding amounts under the Loan Agreement.

The Trustee shall declare the Bonds including accrued interest to be in default and due for immediate payment if, and only if: (i) the Trustee receives a demand in writing from bondholders representing at least 5/10 of the outstanding Bonds, and the bondholders' meeting has not decided on other solutions; or (ii) a bondholders' meeting has decided to declare the Bonds in default and due for payment.

For greater certainty, the entire amount of the Escrow Account and the Retention Account may be used to repay all amounts outstanding under the Bonds upon any Event of Default.

Material Adverse Effect:

Means a material adverse effect on (i) the business, assets, property, operations, affairs (financial or otherwise) or prospects of the Issuer or any of its subsidiaries, (ii) the Issuer’s or any relevant subsidiary’s ability to perform and comply with its obligations under the Finance Documents; or (iii) the validity or enforceability of any Finance Document.

Bondholders' Meetings

Quorum for a bondholder meeting requires bondholders holding at least 5/10 of the outstanding Bonds to be present. Decisions at a bondholders' meeting may be made by a simple majority of the bondholders present, provided that the following decisions shall require the approval of 2/3 of the Bonds represented at the meeting:

a) change of Issuer;
b) any modification to any of the following material terms of the Bonds:
i. coupon rate;
ii. maturity;
iii. amortization;
iv. security/collateral;
v. definition of "free cash flow" referenced under the heading "Bondholder Cash Sweep Account" above; or
vi. the 2/3 majority provision(s).

Issuer’s Bonds:

The Issuer has the right to acquire and own the Bonds. Such Bonds may at the Issuer’s discretion be retained by the Issuer, sold or discharged; provided, however that the Issuer shall not have any voting rights associated with such Bonds. The Bonds held by West Face shall in no circumstance be considered Issuer’s Bonds.

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Conditions Precedent:

As customary for these types of transactions, including, but not limited to:

a) the Issuer shall obtain an agreement with all holder(s) of the bonds which are currently involved in the Senior Secured Bonds payment default, in satisfactory form which takes into account the use of proceeds of the Bonds,

b) the Issuer shall obtain an agreement with all holders of the existing bonds with ISIN No. 001 036280.9 and No. 001 032535.0 which are currently involved in the payment default, in satisfactory form which takes into account the rollover of such bonds into the Bonds,

c) no (potential) Default or Event of Default under any debt,

d) all accounts contemplated by this Term Sheet are opened,

e) all relevant security arrangements are in place to the satisfaction of the Trustee,

f) all legal opinions have been received in form, scope and substance satisfactory to the Trustee,

g) the Finance Documents (as defined below) and Project Documents are in form, scope and substance acceptable to the Trustee and West Face and are executed, delivered and enforceable,

h) all transaction costs, fees and expenses payable by the Issuer under this Term Sheet or the Finance Documents shall have been paid, and

i) all other conditions precedent under the Preferred Senior Debt shall have been satisfied and the Preferred Senior Debt shall have been funded or be funding concurrently with the Bonds.

In addition, the purchase of the Bonds by West Face shall be subject to a condition (which may be waived by West Face in its sole discretion) that there shall have been a successful closing of the voluntary offer to be presented to the shareholders of the Issuer by West Face (Norway) AS (or any direct or indirect affiliate thereof).

Governing Law:

Norwegian law and Norwegian courts (at the competent legal venue of the Trustee) for the Loan Agreement and appropriate local law for the other Finance Documents, provided that the Trustee shall be authorized to agree to other governing law if deemed appropriate and acceptable to West Face.

Registration:

The Norwegian Central Securities Depository (VPS). Principal and interest accrued will be credited to the holders of the Bonds through VPS.

Taxation:

The Issuer shall pay any stamp duty and other public fees accruing in connection with the Bonds, but not in respect of trading in the secondary market (except to the extent required by applicable laws), and shall gross up any payment due to the holder as required to pay any applicable withholding tax payable pursuant to law.

Project Documents:

Project Documents means the material contracts and agreements relating to, or entered into in connection with, the Hydrocarbon Resources.

Loan Agreement:

The Loan Agreement and the other Finance Documents will be entered into by the Issuer and the Trustee, acting as the bondholder(s) representative, and the Loan Agreement shall be based on Norwegian standard with appropriate adjustments based on the above terms. The Loan Agreement will contain (i) appropriate conditions precedent reflecting this Term Sheet, e.g. relating to finalization of the other Finance Documents, (ii) provisions relating to the delivery of satisfactory legal opinions, (iii) appropriate representations and (iv) the bondholders' rights and obligations with respect to the Bonds. If any discrepancy should occur between this Term Sheet and the Loan Agreement, then the Loan Agreement shall prevail.

Each of the acquirers of the Bonds shall execute its commitment to acquire the Bonds

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as follows: (i) in the case of West Face, by subscription on an appropriate subscription form following determination of the final Loan Agreement and (ii) in the case of the bondholders in the USD Unsecured Bonds and NOK Unsecured Bonds by way of a qualified majority vote in duly convened bondholder meeting(s) to be held with respect to each of the USD Unsecured Bonds and NOK Unsecured Bonds, confirming the conversion of USD Unsecured Bonds and NOK Unsecured Bonds into Bonds on terms as described in this Term Sheet.

Upon the bondholder meeting(s) with respect to the USD Unsecured Bonds and NOK Unsecured Bonds duly resolving the conversion to Bonds, each of the holders of said USD Unsecured Bonds and NOK Unsecured Bonds is deemed to have granted an irrevocable authority to the Trustee to negotiate, agree, finalize execute and deliver the final and agreed form of the Finance Documents on behalf of the holders (at any time) of the USD Unsecured Bonds and NOK Unsecured Bonds. West Face shall participate in the negotiation of and agree the terms of the Finance Documents prior to executing the subscription form referred to above, which shall include authority to the Trustee to execute and deliver the final and agreed form of the Finance Documents also on its behalf. Although minor adjustments to the structure described in this Term Sheet may occur, the provisions in the Loan Agreement will be substantially consistent with those set forth in this Term Sheet and not less favourable for bondholders in any material respect.

On this basis or such other confirmation deemed appropriate by the Settlement Agent, the Issuer and the Trustee will execute and deliver the Loan Agreement and the latter's execution and delivery will be on behalf of all of the acquirers of the Bonds, such that they thereby will become bound by the Loan Agreement. The Loan Agreement specifies that all Bond transfers shall be subject to the terms thereof, and the Trustee and all Bond transferees shall, when acquiring the Bonds, be deemed to have accepted the terms of the Loan Agreement, which specifies that all such transferees shall automatically become bound by the Loan Agreement upon completed transfer having been registered in the relevant register, without any further action required to be taken or formalities to be complied with. The Loan Agreement shall specify that it shall be made available to the general public for inspection purposes and may, until redemption in full of the Bonds, be obtained on request by the Trustee or the Issuer, and such availability shall be recorded in the VPS particulars relating to the Bonds.

Finance Documents: Means the Loan Agreement, the Security Documents, the Intercreditor Agreement (if any), the Trustee's fee letter and any other document the Issuer and the Trustee agree to be a Finance Document.

Paying Agent: To be confirmed.

Stock Exchange Listing: An application will not be made for the Bonds to be listed.

Market Making: No market-maker agreement has been made for this Issue.

Eligible purchasers: Under the rules of the USD Unsecured Bonds and the NOK Unsecured Bond only "Qualified Institutional Buyers" ("QIB") within the meaning of Rule 144A promulgated under the U.S. Securities Act of 1933, as amended ("Securities Act"), or "accredited investors" within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D of the Securities Act, may be United States investors in the Bonds.

Correspondingly, the Issuer may require any U.S investor to execute and deliver a certification (in a form to be provided by the Issuer) containing confirmation with respect to the investor's status, and customary representations, warranties and covenants designed to result in the issuance of the Bonds being exempt from the

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registerations requirements of the Securities Act.

Transfer Restrictions:

As with respect to the USD Unsecured Bonds and the NOK Unsecured Bonds, holders of the Bonds will not be permitted to transfer the Bonds except in accordance with all applicable laws. Bondholders located in the United States will not be permitted to transfer the Bonds except (a) to the Issuer, (b) pursuant to an effective registration statement under the Securities Act, (c) to a person that the Bondholder reasonably believes is a QIB that is purchasing for its own account, or the account of another QIB, to whom notice is given that the resale, pledge or other transfer may be made in reliance on Rule 144A, (d) outside the United States in accordance with Regulation S under the Securities Act (if applicable), or (e) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available).

Approvals:

The issue of the Bonds shall be subject to approval by the board of directors of the Issuer and the Trustee, as well as any other approvals as may be required by applicable company law.

Oslo, 2 July 2010

As Issuer
As Settlement Agent

InterOil Exploration & Production ASA
Pareto Securities AS

INTEROIL
Pareto Securities

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AI assistant

InterOil Exploration and Production — Proxy Solicitation & Information Statement 2010

3638_rns_2010-07-02_e492d36b-e643-49d2-aeb4-b42af62f7c49.pdf

RESTRUCTURING PROPOSAL – SUMMONS TO BONDHOLDERS’ MEETING

1 BACKGROUND

2 THE RESTRUCTURING PROPOSAL

2.1 The proposed restructuring of the Loans

2.2 Tax Repayment

2.3 Conditions and timetable

3 EVALUATION OF THE PROPOSED CHANGES

3.1 The Borrower’s evaluation

3.2 NTM’s evaluation

INFORMATION MEETING FOR BONDHOLDERS

BONDHOLDERS’ MEETING:

Agenda “Warrant Bond”:

Proposed resolution:

Agenda "Unsecured Bond":

Proposed resolution:

NOTICE TO US BONDHOLDERS

EXHIBIT 1 TO BONDHOLDER SUMMONS - BACKGROUND FOR RESTRUCTURING

1 OFFER AND REFINANCING

2 CITIBANK FINANCING

3 ENFORCEMENT PROCEDURES

4 FURTHER INFORMATION

5 THE RESTRUCTURING PROPOSAL - PLAN AND RATIONALE

INTEROIL

Main Terms New Senior Secured Bond

Timetable

Best Offer Presented by Macquarie

Operational Status Peru

InterOil in Brief

HIGHLIGHTS

InterOil Exploration & Production ASA Senior Secured Bond Issue 2010/2015

Settlement date: Expected to be ultimo August 2010

Amount and Use of Proceeds:

Security:

Pre-Settlement:

Pre disbursement to Issuer:

Potential Additional Security:

Preferred Senior Debt:

Accounts:

Escrow Account:

Issuer’s Positive Covenants:

Issuer Negative Covenants:

Event of Default:

Material Adverse Effect:

Bondholders' Meetings

Issuer’s Bonds:

Conditions Precedent:

Governing Law:

Registration:

Taxation:

Project Documents:

Loan Agreement:

More from InterOil Exploration and Production

InterOil Exploration and Production Proxy Solicitation & Information Statement 2010