hopes for news on karoon’s brazil farm-out

Hopes for news on Karoon’s Brazil farm-out
PUBLISHED: 0 hour 1 MINUTES AGO | UPDATE: 0 hour 1 MINUTES ago

Edited by Sarah Thompson and Anthony Macdonald

Karoon Gas’s trading halt pending an “operational update” has raised hopes of some imminent news on the explorer’s overdue farm-out in Brazil.

However, some more definitive news is also expected on the Boreas-1 exploration well drilling in the prospective Browse Basin acreage.

Karoon originally flagged a deal with a partner to help fund its offshore Brazilian exploration work by the end of 2011, but the process has taken much longer to reach a conclusion.

Potentially helping the explorer’s cause was last week’s announcement by Oslo-listed Panoro Energy from its Sabia well in a Santos Basin permit adjacent to Karoon’s wholly owned blocks.

The drilling confirmed the presence of oil and gas in the area, even though discovered volumes are at the low end of the range targeted, Panoro said.

Meanwhile, in the Browse Basin in WA, Karoon’s last regular drilling announcement for Boreas-1 indicated the well had found sands in the primary target, and that logging signalled a potential gas find.

The well is the first of a drilling campaign by partners Karoon and ConocoPhillips that will comprise between five and eight wells to narrow down estimates of gas in the region around their Poseidon and Kronos gas discoveries from the existing 3-15 trillion cubic feet range.

The Boreas well is to be followed by wells on the Zephyros and Proteus targets, all close to Poseidon and Kronos.

The two short-term catalysts for Karoon have prompted Morgan Stanley to reiterate its “overweight” recommendation on the stock.

http://afr.com/p/opinion/hopes_for_news_on_karoon_brazil