InterOil Shares Fall As Analyst Downgrades Stock

NEW YORK (AP) — Shares of InterOil Corp. on Monday reversed some of last week's gains as an analyst downgraded the Australian oil company's stock, citing its sharp price appreciation.

InterOil shares fell $2.95, or 7.3 percent, to $38.65 in afternoon trading. On Thursday, the company said its Antelope-2 natural gas well could be much larger than expected, sending shares soaring. The stock jumped 31 percent to close at $41.69 on Friday.

Raymond James analyst Pavel Molchanov downgraded the stock to "Market Perform" from "Strong Buy," given its rapid price rise and the challenges it faces in making its gas discovery translate to production and sales.

Since the start of the year, the stock has tripled in value.

"Many InterOil investors are overly focused on near-term catalysts without fully recognizing the long-term challenges inherent in monetizing the gas that InterOil has discovered," Molchanov said as he explained his downgrade.

This is a common challenge, but InterOil's small size, concentrated geographic footprint and limited financial resources elevate its risk profile compared with larger players, said Molchanov.