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Buying Wave in InterOil

June 20th, 2008 · No Comments

InterOil is making slow but steady progress. The story is getting a wider audience, and more investors now want in. We even experienced the wild west that the Amex can be at times, when someone with a market order was probably taken to the cleaners by the Amex market maker.

This is pretty scandalous, but it happens. As long-time InterOil longs we have seen it all, to be honest, it doesn’t surprise us. It does show what a market order of something like 20k shares can do. These cannot be happy times for the funds that have long-time short positions in InterOil.

The trading volume is steadily increasing. Today, we’re barely half an hour into the trading day, and already 600k shares have traded. That used to be a good volume day only weeks ago. It means what we said above, InterOil is getting a lot more traction. Bigger investors are lining up.

That people want in is understandable. The upside is enormous, the downside risk has all but disappeared after the two successful DST test at the Elk4 well. We now know they, in all likelihood, have a second, even bigger gas reservoir, and the two (Elk and Antelope) are likely to be connected.

There is still a good chance of finding an oil leg, and the liquids that have already been discovered are usable in the refinery, producing instant cash-flow. Anyway, if you want to read our whole viewpoint on InterOil, go to the article we wrote for SeekingAlfa

You will notice some funny comments at the end of the article, we will write something about that today. It’s a measure of the shorts insetting desperation.

We’re only days away from results of the next DST, DST no.3. That should be interesting. We wonder whether they will have removed the measuring problems that held back the flow rates in the first two DST’s, and finally show what this well is capable off. People will be surprised.

Tags: IOC