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For what its worh Merrill Lynch have them as a buy to $9.00

Downsizing Kontiki’s potential
KAR have advised that Kontiki has intersected ~40m of interbedded sands. This
is well below pre-drill estimates and means that KAR’s P50, 7Tcf target is not
achievable. Additionally the log data currently available is incomplete and cannot
conclusively demonstrate that the sands are gas bearing. Additional data should
be available early next week to confirm if the reservoir is gas charged.
Lower PO to A$9.07ps
As a consequence of the results released today we move our success case
risking to 5% from 15% and lower the potential size of Kontiki to 2Tcf from 6Tcf
leaving us with a residual valuation of A$0.20ps for the target. We have also
lowered our chance of success for Grace to 10% from 15% due to some
interdependence between the two targets. Our base NAV for KAR excluding
Kontiki and Grace is A$7.37ps.
No Impact on Poseidon
As highlighted in our previous note “Over-hyped or Undervalued?” failure at
Kontiki will see a greater emphasis placed on the commerciality and thus the
valuation case at Poseidon. Given the result of Kontiki does not have a read
through to Poseidon we maintain our unrisked net valuation for Poseidon of
A$14.7ps (US$2.0bn), A$3.7ps risked, predicated on a proposed brownfield LNG
development. Based on our assessment of the material upside at Poseidon,
which will be tested by Poseidon-2, we maintain our Buy call.
�� Estimates