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DJ Karoon Gas Equity Raising Likely Says Citi -- Market Talk

0027 GMT [Dow Jones] It's crunch time again for Karoon Gas (KAR.AU) on
funding, as the Australian oil company tries to develop its share of expensive but
promising natural gas prospects offshore Australia with partners including ConocoPhillips
(COP), and oil prospects offshore Brazil with Columbia's Pacific Rubiales (PRE.T).
It appears, though, that Karoon's preferred option of selling down another stake in
both projects has failed to attract adequate bids. Citigroup's Dale Koenders says an
issue of new shares to raise around US$200 million will cut his valuation of the company
to A$4.70 a share from A$5.88. Many oil companies in the region are trying to sell assets
to return cash to yield-hungry investors, making it a buyer's market, Koenders says.
"We still believe there is value in the assets, and think an asset farm-down will
get done, but Karoon may need to further de-risk the assets before it can realize a price
in line with expectations." Karoon was last at A$2.46, having been suspended from
trading since May 1. ([email protected])

-Write to the Sydney newsroom at [email protected]


(END) Dow Jones Newswires
May 12, 2014 20:27 ET (00:27 GMT)
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Tuesday 13 May 2014 10:27:00.000 AEST