morgan stanley - overweight

The latest Morgan Stanley research report on KAR dated 25 Jan says:

"January 25, 2013
Karoon Gas Australia
Quick Comment: Oil discovery offshore Brazil
Karoon Gas has reported an oil discovery, from the first of three planned wells, in the Santos Basin offshore Brazil.
Exploration well “Kangaroo#1” is interpreted to have intersected a gross oil column of 25m, in a secondary Eocene reservoir objective. From seismic mapping, a potential gross hydrocarbon column of 350m is interpreted. Data gathering is under way including the recovery of wire-line samples.
Pre-drill expectations of reservoir size were 272 mbbls (mean estimate) from four targets within the well, and this figure will be re-assessed given oil found in just one zone, nevertheless this result de-risks this same Eocene reservoir in the remaining wells. We will review our expectations of the value implications of this well, following the release of additional data including revised resource estimates.
Following this well, the Emu and Bilby prospects will be drilled next, which are interpreted to have reserves potential of 350 mmbls and 110m mbbls respectively, in multiple reservoir objectives.
Discoveries of these magnitudes are material, if confirmed. KAR will have 65% working interest in this program.
We retain an Overweight rating on KAR."