Karoon Gas Announces Half Year Results (Australia)

Karoon Gas Australia Limited, a company which focuses on identifying, exploring and developing acreage that is highly prospective for oil and gas, has announces its half year financial results.

The Company highlights the following operations:

– Successful drilling and testing of the first well in the phase two Browse Basin drilling campaign. The Boreas-1 exploration well achieved an equipment constrained stabilised gas flow rate of 30.2 million standard cubic feet per day (‘mmscf/d’) through a 40/64 inch choke at a well head pressure of 3,300 psia and an associated condensate rate of 18 barrels per million standard cubic feet (‘mmscf’).

– Commencement of the Zephyros-1 exploration well, the second well in the phase two Browse Basin drilling campaign.

– Execution of final agreements to acquire a 100% interest in exploration permit WA-482-P in the North Carnarvon Basin, Australia.

– Drilling in Brazil commenced with the Kangaroo-1 exploration well, which spudded during December 2012.

– Execution of agreements for Pacific Brasil Exploração e Produção de Óleo e Gás Ltda (‘PRE’), a subsidiary of Pacific Rubiales Energy Corp, to acquire a 35% interest in Karoon’s wholly owned Santos Basin exploration Blocks S-M-1037, S-M-1101, S-M-1102 and S-M-1165, with an option to acquire a 35% interest in Block S-M-1166.

– Preparations for drilling in the Tumbes Basin, Peru continued with long lead items on order, new service contracts approved and tenders received for drilling rigs indicating availability late calendar 2013.

Financial Results

The consolidated loss for the financial half-year was $8,697,796 (2011: profit of $2,689,108). The loss for the financial half-year was largely attributable to net foreign currency losses of $1,614,262 (2011: Gain of $4,920,803) on USD denominated cash and cash equivalents and security deposits held by the Group as at 31 December 2012 and net employee benefits expense of $5,728,163 (2011: $5,170,016), partially offset by interest income of $4,230,742 (2011: 7,982,405).

Brazil, Peru and Australia Farm-out Status

During the financial half-year, Karoon successfully executed agreements to farm-out a 35% equity interest in its wholly owned Santos Basin Blocks and continued to work with interested parties for the farm-out of its equity interests in the Tumbes Basin, Peru and WA-314-P in the Browse Basin, Australia. Karoon aims to complete the remaining farm-outs in advance of anticipated drilling during late calendar 2013.

Future Plans, Development, Business Strategies and Prospects

Other than the matters included in this Directors’ Report or elsewhere in the Interim Financial Report, future developments, business strategies and prospects of the Group 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.

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Press Release, March 8, 2013