UPDATE 1-Interoil says stock plunge "an overreaction"
(Recasts with details, shares, comments)
By Scott Haggett
CALGARY, Alberta, June 29 (Reuters) - A spokesman for Interoil Corp. IOL.TO, whose shares have dropped by more than half since Tuesday, called the plunge "an overreaction" to drilling results at a highly anticipated well.
Shares of Interoil dropped 21 percent on Friday, extending a slide that has seen the stock shed more than half its value since Tuesday.
Interoil, which explores for oil and gas in Papua New Guinea, fell C$5.39 to C$20.47 on volume of 561,588 shares on the Toronto Stock Exchange. That was more than 12 times the average volume over the past 90 days.
The stock had closed Monday at a record peak of C$47.06.
David Larson, a spokesman for the Houston-based company said on Friday the stock's retreat on concerns about drilling results from a highly anticipated natural gas well, was overdone, given that the company has yet to complete work on the well.
"I believe that, like a lot of things on Wall Street, there's a tendency for things to go too high then fall too low," he said. "I think this is a bit of an overreaction on Interoil given that the well has not been finalized."
At a presentation held on Wednesday, Interoil Chief Executive Phil Mulacek said the shares began dropping the day after a meeting with investors following Interoil's annual meeting on Monday.
That meeting may have also have spawned a rumor that the company was poised to issue shares to raise funds to pay a for liquefied natural gas (LNG) facility it is planning in the South Pacific nation, Mulacek said on a recording of the presentation.
"We're not out here issuing stock," he said. "The meeting was a follow-up to our (annual meeting), not that we are doing a placement. We've heard those rumors as well."
On Wednesday Interoil issued an update on its Elk-2 well in Papua New Guinea being drilled to firm up the size of what it said was a massive natural-gas find last year.
The Elk-1 find was said to contain trillions of cubic feet of gas, enough to backstop an LNG facility.
Interoil said Elk-2, about 5 km (3 miles) northwest of the Elk-1 well, has produced some gas, but the company did not detail the quantity that flowed to the surface.
The firm said in its statement that the drilling so far does not confirm a commercial discovery and more definitive results will be available when drilling reaches the planned total depth of 10,000 feet.
Media reports earlier this week said regulators were considering launching an investigation into the trading of Interoil shares following Tuesday's 27 percent fall, given the company didn't issue a press release to explain the drop.
However, Larson said he has not been officially notified of any investigation into the stock trading.
Regulators "haven't officially contacted me," he said. "I had been in contact with them on Tuesday and Wednesday. They were thinking about having their stock watch group take a look... We would appreciate something like that and fully cooperate."
($1=$1.06)
