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Business |
InterOil shares plunge K55 from
record highs
Short sellers in US
and Canada blamed for fall from K134 to K79 a share
By BRIAN GOMEZ in Sydney
HEAVY market speculation on the outcome of InterOil’s Elk-2 well
in Gulf province has caused the company’s shares to soar to a
record US$44.25 (K134) last Monday, but an overhang of short
sellers caused prices to plummet to and close on US$26.02 (K79).
The market speculation and volatility led InterOil to release
interim results from Elk2, which company executives say remained
in line with previous expectations.
The Perth-based PNGIndustryNews.net website yesterday reported
that InterOil shares had fallen almost 19% to C$27.96 (K70.25)
overnight Wednesday after dropping 27% or C$12.57 (K35.63) on
Tuesday.
A good gas intersection at Elk-2 is needed for InterOil to
continue to fast track plans for its proposed multi-billion dollar
LNG plant.
In its statement, InterOil said an interim drill stem test at
Elk-2 had indicated a minimum gas column of 715m from the highest
known gas in Elk-1 to the top of the Puri limestone in Elk-2.
Planned total depth was 3,050m.
Natural gas flowed to the surface with minimal flows to the flare
and no formation water was detected during natural gas flows to
the surface.
The well has been drilled to 2,647m and has intersected limestone
over 320m with limited fracturing.
Following the acquisition of core from the underlying Mendi
limestone, the well would be drilled to its proposed total depth
when a full evaluation, including drill stem tests had been
conducted.
“The structure may need further geological, geophysical and
appraisal work before a commercial confirmation of gas reserves,”
InterOil said.
Company executives told The National the fall in InterOil’s share
price had mostly taken place prior to the Elk-2 drilling update,
which the company still viewed positively.
There has been considerable concern that short sellers have been
active in the market in the past year, with their holdings
reaching a recent peak of seven million shares.
 
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