Karoon Gas' shares have soared almost 60% after the group confirmed it is to sell its 40% stake in two exploration permits in Western Australia's Browse Basin to Origin Energy for up to $US800 million ($A859.1m).
At 10.15am (AEST), Karoon shares were 57.93% higher at $3.885, against a benchmark index lift of 0.02%.
In earlier trade, Karoon shares reached as high as $4.05, a 64.6% rise on yesterday's close.
Meanwhile, Origin shares fell the most in three months and were 1.92% lower at $14.80 at 10.15am.
Origin has entered into a conditional agreement to buy from Karoon Gas a 40% interest in the permits, which contain large and prospective gas fields including the highly regarded Poseidon discovery.
US energy giant ConocoPhillips is the project operator of the gas fields, and PetroChina also holds major stakes in the permits.
Origin has agreed to pay $US600 million in cash upfront for the stake, with additional payments to be made when a final investment decision is made, and at first production.
Origin managing director Grant King said the acquisition would give the company a strategic position in one of Australia's largest recent offshore gas discoveries.
ConocoPhillips is a partner in Origin's major Australia Pacific liquefied natural gas project (APLNG) in Queensland, due to begin production in 2015.
Origin expects the APLNG project to provide a significant boost to its long-term cash flow and earnings, and Mr King said the company needed to invest now for its continued development.
The Browse purchase will be funded by debt, and Origin plans to conduct a $1 billion equity offer later in the year to help refinance that debt.