U ask a good question, Harold. Its all about risk-management &...

U ask a good question, Harold. Its all about risk-management & y'r appetite for it.

If u r an investor then hang on for the long haul, if u trade it then a thumb rule is if a stk's SP drops 20% then its a sell & SP drop can happen anytime (while u r stuck in a meeting or picking up the kids or having a snooze). One can always re-enter & ride it, but that's the difference, plus taxes etc. So entirely upto yr strategy.

It's a valuable lesson that the GFC has taught us & I mean the mkt in general, we know KAR has defied that trend but there were long term investors who thought Babcock & Brown was the nxt Maq Bank, how wrong were the experts!! So b very careful of y'r hard-earned & do spread y'r risks.

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If u r in KAR for the long haul u should b allright, but u need to look at their short/mid/long term strategy & the key triggers to the SP moving up, which I've listed below,

Short term (3-6 mths):

- Drill 3 wells in the Browse (this makes the SP very volatile as people bail out on bad news or its simply profit taking). I sense a decent flowtest here (20-35mmcfd) should do wonders to the SP, whilst a flat mkt update will keep it above the $6.80 mark.

- IMHO, the mkt wont even notice Lion-1, as it is a <10% CoS well, so I dont expect anything drastic by Jan-end.

- However mid-late April is the next major trigger, when Kronos is at the bizness end. So keep this in mind.

- For now, KAR are cashed up for this exploration program, so cash is not a show-stopper or risk.

Mid term (12-18):
Farm out Brazil by Q3 2010 & drill in Peru in 2011.

Long term (18 mths+):
Drill a well in the Bonaparte basin, Develop Browse FLNG etc

KAR r very well placed in the Browse, so any decent sized discovery should meet their internal hurdles first & then its mkt'ing the LNG to Asia (roadshows etc).

Note that Conoco will b itching to do a deal, as their last major deal was with TEPCO for A$17b in 2005 & recent deals are 5x that deal!! PLus no deals have been signed on the east coast with ORG-JV, so about time COP do a major headline.

I think KAR would have looked at Shell's drilling strategy at Prelude & surely would have taken a leaf out of that book. Shell drilled like crazy at Prelude (12 wells or so in 15 months, most of them this year for a ~3tcf size field). Such is the hunger to lock in the field reserves, that they plan to go solo. HESS are back, to drill 12 wells this year & Chevron plan to drill 20 odd wells in 18 months, as does Woodside.

IMO, the Dash for gas has already begun & I don't think COP-KAR JV would want to b left behind.

I guess thats pretty much it for now.

Hope u find this handy.