T2 encountered porous limestone/dolomite. Mud losses at up to 40 bbls/hr just in the top of the zone demonstrates without doubt that a porous and permeable zone has been drilled. They may well be drilling with total losses for the next ~2000 ft, utilizing their MPD system (managed pressure drilling).
Mulacek does say in the bolded section below that this proves their "reef hunting" seismic methods. Not sure if that is just pumping or fact?
They also announced contract extensions. EWC extension now to year end 2012.
The lack of definitive DST data (and dramatic flare for internet junkies) may cause the share price to drop on disappointment. Judging by early numbers, the markets don't like it. Not sure if it is the lack of DST or FID delay that makes them unhappy?
For myself, they have demonstrated a porous, permeable gas zone. Time will tell how big or small it may be.
S&P
finance.yahoo.com 
InterOil Provides Triceratops-2 Drilling Update and Extends LNG Project Agreements Triceratops-2 at 5,971 feet, drilling to total depth in carbonate reservoir
LNG Agreements with Energy World and Mitsui extended
PORT MORESBY, Papua New Guinea and HOUSTON, March 30, 2012 /PRNewswire/ -- InterOil Corporation (NYSE: IOC - News) (POMSoX: IOC - News) ("InterOil" or the "Company") announced that the Triceratops-2 well in Papua New Guinea was drilled from the 9 5/8 casing shoe at 4,111 feet (1,253 meters) to current total depth (TD) of 5,971 feet (1,820 meters). The top marl transition zone was encountered at 3,976 feet (1,212 meters) and the top of the carbonate reservoir at 4,482 feet (1,366 meters). Since penetrating the carbonate reservoir to the current TD, background gas and persistent mud losses of between 5 to 40 barrels per hour have been encountered. Delivery of drill stem testing ("DST") equipment has been delayed and InterOil has elected to continue drilling towards an expected total targeted depth of 7,546 feet (2,300 meters) to expedite logging the well. The Company plans to conduct a DST once the wireline logging program has been completed.
"We believe that the initial indications from the mud log demonstrate a permeable and porous reservoir," stated Mr. Phil Mulacek, Chief Executive Officer of InterOil. "We are pleased to find that our aero-magnetic and gravity data utilized in combination with modern seismic data has provided a useful exploration tool to explore for potential reefal reservoirs in our license areas in Papua New Guinea."
The primary objectives of the Triceratops-2 well are to: 1) confirm the presence of gas and condensate; and 2) test for the presence of shallow marine and reefal carbonate reservoir. The forward plan for the well is to drill to approximately 165 to 330 feet (50-100 meters) below the base of the carbonate. This will allow the Company to acquire electric logs over the entire carbonate section, and to take rotary sidewall cores in zones of interest. The electric logs and petrophysical analysis of the rotary core plugs will provide the most definitive information used to determine the quality of the reservoir.
LNG Project Agreements Extended
Separately, InterOil also announced that it has entered into agreements to extend the dates by which certain conditions are to be met and Final Investment Decisions (FID) made in LNG project agreements with Mitsui until June 30, 2012, and Energy World Corp until December 31, 2012.
The Joint Venture Operating Agreement ("JVOA") for the Company's proposed Condensate Stripping Plant ("CSP") with Mitsui & Co., Ltd. ("Mitsui"), and associated agreements, have been amended so that the time allowed for FID has been extended until June 30, 2012. In addition, the parties contemplate additional amendments to further extend the JVOA and associated agreements to allow for FID to December 31, 2012, if such extension proves necessary. The JVOA sets out the rights and obligations of the participants of the joint venture to develop a CSP at InterOil's Elk and Antelope field site in Gulf Province, Papua New Guinea.
The terms of the conditional Project Funding and Construction Agreement (PFCA) and Shareholder Agreement entered into in February 2011 with Energy World Corporation Ltd. (AX: EWC.AX - News) governing the parameters in respect of the development, construction, financing and operation of a planned three million tonne per annum (mtpa) land-based liquefied natural gas (LNG) plant in the Gulf Province of Papua New Guinea (PNG) have been amended so that the date by which conditions are to be met and FID reached has been extended until December 31, 2012. The agreements with EWC provide a framework for the possible expansion of the initial LNG plant's capacity to up to 8 mtpa of LNG.
The conditional framework agreement with Samsung Heavy Industries and FLEX LNG Ltd. (Oslo: FLNG.OL - News) related to the construction and operation of a planned 2 million tonne per annum (mtpa) floating LNG processing vessel (FLNG) has not been renewed. InterOil and FLEX are continuing discussions.
InterOil has continued to progress the development of its LNG Project by completing front end engineering and design (FEED) for its proposed field gathering system, CSP and pipeline to the proposed LNG plant site on the coast. CSP bids have been received, evaluated and are in the process of being finalized. The pipeline bids have been received and are being evaluated. Designs for the marine loading and export facility and common works have been finalized and are currently out for tender. |
