kar contender for artemis farm-in?, page-9

Bob/Sandy,
The way I see it is like this:-
1. If u managed to get ahead of WPL and secured the farm-in to MEO's Artemis (no easy feat) it will cost between $30mm to $50mm (my guess)to drill the Artemis exploration well plus $8mm to MEO for the seismic costs. (Assuming management is very confident about Poseidon then this is only a small sum cf. the market cap currently around $1.4B and likely to be on the rise). These costs could be easily covered from cash on hand.
2. If Artemis is a duster, no more costs.
3. If it is successful then the farminee will also be up for 70% of 2 appraisal wells. Would u be concerned about where the funds are going to come from for this when ur SP has just gone thru the roof? U may need a small CR to fund it but there will be some serious value added to the SP.
4. I wouldn't worry about development costs bcos WPL will break their necks to take the gas to the Pluto plant. If there were any development costs like pipelines etc. I'm sure they could be funded some how. As a last resort u could easily persuade WPL to farm in for a portion of the resource to pay for any costs.

5. In the unlikely event that WPL didn't want the gas there is always Chevron/Wheatstone.

I don't think it is going to happen unless KAR management is very ambitious. They will have alot on their plate, but lets not forget that if they are prepared to go to Peru and Brazil to explore why not to the Carnarvon Basin?

Management is obviously looking at opportunities that arise as indicated by this extract from the Director's Report part of the Annual Report for 2009:-

"Karoon conducted due diligence on a number of exploration new ventures during the financial year and was continuing with investigations as at 30 June 2009. Any projects that are taken up will be announced to the ASX at the appropriate time.

Future Developments, Business Strategies and Prospects
Other than the matters included in this Directors’ Report or elsewhere in the Annual Report, future developments, business strategies and prospects of the Company and the expected results of those operations have not been disclosed as the Directors believe that the inclusion would most likely result in unreasonable prejudice to the Company and/or the Group"

So whilst I think it is unlikely I wouldn't rule it out.

In relation to P2, if it is a success, the gas samples are good, the reservoirs are similar or better than P1 etc.,IMO the SP should surpass $15.70. I am hopeful that it will get closer to $20 but this is a guessing game which I prefer to play after the results are in.

ANZ