Ann: Karoon to evaluate potential listing of Sth , page-2

re: Ann: Karoon to evaluate potential listing...
ASX ANNOUNCEMENT

Karoon to evaluate potential listing of South American assets.

Karoon has evaluated the independent DeGolyer & McNaughton report on the companys South American assets of 30
May, 2010 and believes that the value of its Brazilian and Peruvian assets is not properly reflected in Karoons market
capitalisation.

Karoon Gas Australia Ltd is therefore assessing the possibility of a separate stock exchange listing for its Brazilian and
Peruvian asset portfolio. A separate listing of these assets is likely to establish a comparable value with other South
American oil exploration companies.

The DeGolyer & MacNaughton report states that Karoons Brazilian and Peruvian assets had risked, mean, Net
Prospective Resources, of 577 million boe (barrels of oil equivalent). The unrisked mean estimate was 2,080 million boe.

Karoon believes that companies with South American exploration assets, whose shares are listed on overseas exchanges,
achieve far greater value for their assets than that achieved by Karoon in Australia.

Karoon believes that the value discrepancy arises from different emphasis and values given to its Australian and South
American assets in different markets.

The Brazilian stock exchange (Bovespa) is the likely exchange of choice for this possible listing. Whilst Karoon is assessing
the possibility of a separate listing and no final decisions have been made, the following is considered to be the most
likely process of evaluation and structure should such a listing take place:

Karoon would, through its wholly owned subsidiary, Karoon Petroleo & Gas Ltda (Karoon Brazil), undertake a private
seed-capital raising to gauge interest in the listing and also to determine the possible pricing of any capital raising to
be undertaken with any subsequent listing. If such seed capital raising was not successful, Karoon would not proceed
to an initial public offering (IPO).
Following the seed capital raising, Karoon would take steps, subject to market conditions, to conduct a full IPO
process in preparation to list 30% of the assets of Karoon Brazil on the Bovespa.
Karoon Gas Australia Ltd would retain a majority interest in Karoon Brazil to ensure that Karoon shareholders
maintain exposure to the South American assets and any exploration success enjoyed by Karoon Brazil. The retention
of interest in the new company would ensure Karoon shareholders have a transparent valuation for the South
American unit with which to price Karoon.

Karoon will update shareholders as soon as any decision regarding the possible listing is made.