Some additional comments by Scott Hosking in the Bloomberg...

Some additional comments by Scott Hosking in the Bloomberg report below. Note that it says the results they got are very mixed.

Jan. 15 (Bloomberg) -- Karoon Gas Australia Ltd. extended its decline in Sydney trading and headed for the biggest weekly drop in more than a year after reporting inconclusive test results at its main gas field.

Karoon dropped as much as 7.8 percent to A$7.37, adding to yesterdays 24 percent slump. The shares traded at A$7.57 at 2:57 p.m. local time, poised for their biggest weekly decline since Oct. 10, 2008. The benchmark S&P/ASX 200 Index was down 0.6 percent.

Karoon, whose stock almost tripled in 2009, said last month the Poseidon field in the Browse Basin it is exploring with ConocoPhillips has the potential to become a major gas resource. The company said in a statement yesterday that it couldnt yet make any initial conclusions about the fields prospects, disappointing some investors.

No news is usually bad news, so I guess if they are not able to come out with anything positive, it must be negative, said Peter Strachan, a Perth-based analyst at StockAnalysis.

The stock is volatile because its value depends heavily on the Poseidon-2 well, he said. Karoon gained 11 percent on Dec. 23 after saying its drilling detected gas.

You get vertigo watching it, Strachan said of the stock by phone yesterday. Its not for the fainthearted, is it?

Testing to evaluate the field, including gas flow rates, is set to continue through Jan. 18, Scott Hosking, secretary at Mt. Martha, Victoria-based Karoon, said by phone today.

Conoco Funding

Its not that we are writing it off, and its not that we are saying its great, he said. Were just saying we dont know whats going on down there and were trying to find out.

Karoon said in December that Houston-based ConocoPhillips, the third-largest U.S. oil company, would acquire an extra 9 percent stake in two exploration permits and fund 80 percent of the next $125 million of spending on the venture. Karoon shifted its focus to Poseidon-2 when a mechanical fault ruled out production tests at its previous well.

The project in the Browse Basin, which holds more than a third of Australias known offshore gas reserves, is targeting a potential resource of 7 trillion cubic feet of gas, the company said last year. Karoon owns a 40 percent stake in the exploration permit and ConocoPhillips the rest.

Investors have been disappointed by a lack of information about the companys progress, Mark Hume, an analyst at Bank of America Corp.s Merrill Lynch, wrote in a report last month. Even so, he said ConocoPhillips wouldnt have acquired the additional interest if it doubted the potential of Poseidon.

The volatility stems from an expectation that everything will run smoothly all the time, Karoons Hosking said. We just dont have the information to be able to go out and say, Heres a defined result. Thats what the market wants to see. We cant go out and say, No, it didnt flow, or Yes, it did flow because the results weve got are very mixed.