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Macquarie’s Adrian Wood, a Karoon bull with a A$10.00 target, reckons recent drilling success indicates the Browse Basin resource could be nearing the 5 trillion cubic feet needed to underpin an expansion of Conoco’s existing gas-export plant at Darwin.

Anyone expecting a resource upgrade anytime soon could be disappointed, though. Mr. Munks notes the joint venture is only two wells into a five-to-eight well appraisal program.

“We’ll be looking at putting out a number once we’ve done a lot more work. We’re still early in the piece,” he says.

Apart from Darwin, homes for Browse Basin gas could include a standalone floating liquefied natural gas, or LNG, terminal that would process the resource out at sea where it lies. The gas could also be combined with Woodside’s Browse LNG project or Inpex’s Ichthys LNG project nearby, assuming that rising development costs don’t become prohibitive.

Whatever the outcome, analysts think it could take another three years for a final investment decision to be made on any of Karoon’s prospects, and then most likely in Brazil.

Karoon has a reputation as one of Australia’s most volatile stocks. Investors should be keeping their seatbelts firmly fastened.