KAR 1.33% 76.0¢ karoon energy ltd

potentially biggest browse gas discovery

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    Browse basin gas find puts rocket under Karoon shares

    Matt Chambers | April 28, 2009
    Article from: The Australian

    KAROON GAS shares surged to a record yesterday after a big gas find at the Poseidon-1 well in the Browse Basin that boosted ConocoPhillips prospects for expanding its Darwin liquefied natural gas plant.

    The stock rose $1.60, or 42 per cent, to a record high of $5.40 on the news. The surging share price delivered a handsome on-paper profit to Karoon's biggest shareholder, former Macarthur Coal boss Ken Talbot.

    Mr Talbot bought in to the stock in 2007 for $26 million and has seen his investment more than double.

    The share price hike gives the Mt Martha, Victoria-based junior explorer, which picked up the permit for free when its previous holder let it lapse, a market value of $735 million.

    Karoon said drilling at its Poseidon-1 exploration well 480km north of Broome, which is targeting 5 to 10 trillion cubic feet of gas, had so far intersected more than 200m of gross bearing sand containing hydrocarbons.

    "The base of the lowermost sand interval is yet to be penetrated," Karoon said.

    Conoco has a 51 per cent stake in the WA-315-P permit Poseidon is in and is covering 80 per cent of the drilling costs.

    It has previously said a successful find could provide gas for a second LNG production unit, or train, at its Darwin plant.

    The find is about 500km from the Bayu Undan field that supplies the Darwin plant.

    A slightly closer option, but without the existing infrastructure advantages, would be the LNG park the West Australian Government is trying to establish at James Price Point, about 60km north of Broome.

    One analyst said the discovery was potentially one of the biggest in the gas-rich Browse Basin to date and was open-ended, meaning future announcements would be keenly watched. But he warned LNG projects took a long time to come to production, a decade or more, and that the stock had run hard recently.

    Conoco did not comment on the find, but any statement of a discovery issued overnight by the US oil giant will add to the sentiment around Poseidon.

    Poseidon-1 is the first of a multi-well drilling program in three permits in the Browse Basin owned by Conoco and Karoon.
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