Business Description:
Karoon Gas Australia Limited (KAR) invests in exploration and evaluation projects for hydrocarbons offshore in Australia, Brazil and Peru. KAR currently has five projects, the producing Browse Basin offshore gas reservoirs and the Bonaparte Basin (Western Australia), the Tumbes and Maranon Basins (Peru) and the Santos Basin (Brazil).

Strategy Analysis:
The Karoon Board and management are committed to securing high quality hydrocarbon exploration areas with the right partner. KAR is currently in a JV with ConocoPhillips in regards to the WA-389-P permit, with Karoon contributing 40% equity. The Board believes that the Browse Basin permits are ideally located and will continue to take advantage of continuingly favourable hydrocarbon prices. The company strategy will focus around capitalizing on oil prices and accelerating exploration programs. KAR has completed processing seismic surveys of WA-314P and WA-316-P and is now interpreting the data set in preparation for the selection of drilling targets. The Poseidon Prospect remains a high grade source of production, with other areas in that region, anticipated to result in important additions to the potential resource base Karoon reported positive cash flow of $6.96m for quarter ended 30 September 2011. Operating cash flow for the period was $(3.91m). Payments for exploration and evaluation were $(9.48m). Investing cash flow was $10.87m. Financing cash flow was nil. Cash in hand at the end of the quarter was $280.78m. During the quarter, in Australian, the Karoon and ConocoPhillips JV received regulatory approval to conduct drilling in the Browse Basin, which is now expected to commence in late 2011/early 2012; in Brazil, the final processed dataset of wide azimuth 3D seismic was received and interpretation is continuing with positive results thus far; and in Peru, interpretation of 1,500 sq km of new 3D seismic data continued.