InterOil Jumps On Well Surprise, Analyst Rating

NEW YORK (AP) — Shares of InterOil Corp. rose for a second day Friday after the Australian oil company said its natural gas reservoir in the Antelope-2 well could be much larger than expected and as an analyst urged investors to buy the stock, citing InterOil's significant exploration opportunities and stock price.

InterOil shares rose $6.91, or 20 percent, to $41.56. Earlier, shares reached as high as $41.73, a level that has not been reached in the past year.

On Thursday the company said that drilling at the Antelope-2 well in Papua New Guinea hit the top of its natural gas reservoir 345 feet higher than expected, leading the company to believe that the size of the reservoir is much larger than it had originally estimated. Following the news, shares climbed $2.74, or 7.9 percent, to close at $34.65 on Thursday.

Morgan Stanley analyst Evan Callo said, in a note to clients, that the company has a compelling story and recommended investors buy the stock. Callo said current exploration projects present sizable upside potential for the company. He also noted that the stock price is trading at attractive levels. He assigned a price target for InterOil of $65.

Callo said the company is "poised for a major transformation - from a volatile, and often controversial, exploration-focused integrate oil company to a global liquid natural gas player with significant exploration upside in Papua New Guinea."