after the dust settle, page-6

For what it is worth. Here is one from CRiterion in The Australian.

"KAROON Gas is now free to focus on Brazil ? its drilling program, not the soccer ? after finally offloading its 40 per cent interest in two Browse Basin exploration permits in Western Australia for between $US600 million to $US800m.

Not for the first time Karoon (KAR, $3.51) shares this morning were violently rerated after the sale of the assets, aka the Poseidon field, to surprise buyer Origin Energy (ORG, $14.59).

But the stock had been trundling along at record lows on concerns about Karoon’s dwindling cash reserves and the pace of the year-long sale negotiations.

The sale ensures immediate money in the bank of $US600m, with a further payment of $US75m on final investment decision and $US100m on first production.

What’s more, the transaction obviates the need for another capital raising, following a $175m effort last August at $5.10 a share.

The sale is viewed as a decent outcome given brokers had valued the Browse assets at between $440m and $708m.

Last year PetroChina acquired a 20 per cent stake in Poseidon from ConocoPhillips for an estimated $US370m, implying a $A830m valuation for Karoon’s 40 per cent stake.

Karoon exec chair Bob Hosking says Karoon is now in a position to advance its Kangaroo discovery, in Brazil’s offshore Santos basin, to development “pending a successful outcome from the Kangaroo-2 appraisal well’’.

Criterion last had Karoon as a spec buy at $3.02 in early February, after the company reported its Grace-1 exploration well in an adjoining Browse Basin tenement had been plugged and abandoned.

The company focus on big targets and big costs for commensurate big rewards. As with February’s fall from Grace, the shares are hard hit on any disappointment.

As for Origin, the purchase expands its gas acreage from the Queensland LNG feeder fields and broadens the theme of a gas grab in anticipation of a domestic shortage.

ConocoPhillips, which operates the fields, is Origin’s partner in the Australia Pacific LNG export project in Qld.

On the market’s appraisal Karoon has got the better end of the pineapple, with its shares soaring 42 per cent and Origin shares swooning 3.3 per cent.

Then again, Origin’s dive is a natural reaction to the company’s promise/threat of a $1bn capital raising at an “appropriate” time after the acquisition.

Our calls are under review as we drill down further into the announcement."