afr today

All publicity is good publicity:

STREET TALK
Karoon knocking on doors for Grace farm-out partner
PUBLISHED: 6 HOURS 17 MINUTES AGO | UPDATE: 6 HOURS 17 MINUTES AGO

EDITED BY SARAH THOMPSON, ANTHONY MACDONALD AND GRETCHEN FRIEMANN
With the October date for drilling its costly Grace exploration well in the Browse Basin off the far north-west coast looming large, Karoon Gas is thought to be keen to seal a deal with a partner to help fund the work.

At a potential cost of $100 million for Grace, Karoon is understandably keen to cut its 90 per cent stake in the WA-314-P permit that holds the prospect.

Grace is targeting a 2.5 trillion-cubic-feet gas discovery, so even if it comes in, it’s not big enough to develop alone.

Karoon, which wants to sell up to 40 per cent of WA-314-P, also has a small stake up for sale in its nearby Poseidon gas venture. That stake could sweeten the deal for a potential bidder.

ConocoPhillips, the operator of the Poseidon venture, has already brought PetroChina in as a partner, which has altered the dynamics for Karoon.

When the PetroChina deal was announced in February Karoon is said to have put feelers out for a potential backer for a pre-emption but found no takers and waved the deal through.

It is understood to have started knocking on doors again last month. However price could be an issue, with signs emerging that PetroChina paid a hefty $US370 million ($414 million) or so for its 20 per cent stake. Karoon has also been pointing at Woodside’s $US2 billion deal last year with Mitsui/Mitsubishi for a stake in Browse LNG. While Poseidon is maybe a third of the size of Browse gas, the comparison confirms some elevated expectations. With PetroChina already in Poseidon, other Chinese players are less likely to join. Mitsui/Mitsubishi is looking stretched after deals at Browse, the US and Mozambique, while potential Indian investors have also sunk funds into Mozambique, signalling they see east Africa as more realistic for new LNG.

The Australian Financial Review