kronos round-up, page-6

KB

I had a quick look at their updates regarding past cap raise programs. In the last 6 years, they've raised capital in Apr '05, Oct '06, May & Nov '07, June '08 & June '09, so CR is a regular feature.

So we r due for 1 this year & IMO this could b once their phase 1 drilling comes to an end & there's nothing wrong with getting the house in shape for nxt years aggressive drilling campaign.

All their qtrly presentations have a slide highlighting increase in Capex/Opex from 2011 onwards (moreso frm 2012-2014 actually), as they kick off their intensive drilling campaign in Oz & Sth America.

For now they have sufficient funds. So not a show-stopper IMO, but going fwd into Phase-2 drilling in 2011, the appraisal wells & testing will b capital intensive. I hope existing shareholders get invited to the SPP like last year, that will b nice.

As for BRZ, it will depend on the terms of farmout as Austin pointed out. Noticed on the DMP site, COP had an applicn to shoot a single-line seismic frm P1 to Lion in March, so thats good to know.

For BRZ, it will come down to the farminee/s & how much capital they are willing to pump in (+ reimburse KAR for their seismics), KAR will still need some cash of their own.

Their recent 3D wide-azimuth survey looks pretty good, so shouldn't b a problem getting a partner/s on board.

Woodside r drilling a follow-up (or 2nd) appraisal well (as per their qtrly update), Panoramix-2, north of KAR's acreage. Still I'd expect KAR to have sufficient cash depending on no. of wells planned on their Jaragua prospect.

For now, cashflow status is as under:

1) March end they had A$152 mil in the bank.
2) Q2 anticipated outflow: A$ 67 mil
3) Balance estimate by 30june: A$85mil (i.e 152-67mil)
4) 12 months expenses until June '10: A$92.421m + A$67m = A$159.421m

$159.4 mil is the amount KAR have used to drill KT1, P2, KR1 & L1 + shoot 3D seismics over the Kronos structure + Sth American seismics (both in Peru + BRZ) + Admin costs, so depending on success at Kronos, this prospect should b considerably derisked & they should drill Kr2, P3, Grace & other wells nxt year.

Main thing is, shares on issue are still low, i.e 177.5462 mil so depending on whatevr the SP is in Q3/4 they may issue another 15-25 mil to raise capital (say between $100-180mil).

All worth it, atleast thats how I see it, hope the mkt sees it that way too.

cheers