If approved by shareholders, the placement would see the issue of 19 million new shares at $2.20 each to sophisticated and professional investors.
“The capital raising will provide Karoon with the flexibility to fund the company’s expected exploration commitments in the Browse Basin … including existing permits WA-314-P and WA-315-P, and for general working capital,” it said.
Karoon said these two permits lie close to and on trend with the giant Scott Reef/Brecknock gas fields, which were discovered in the 1970s and are currently being appraised by Woodside Petroleum.
In February, Karoon said recent seismic data indicated the potential for over 20 trillion cubic feet of gas and associated liquids in the company’s Browse leases.
The company ran two seismic surveys - a 2D program using the Ramform Victory and a 3D program using the Pacific Sword.
“On a risked basis, Karoon believes that the 2D seismic interpretation indicates the potential for over 20Tcf of gas and associated liquids," the company said.
The interpretation process is expected to take a few more months to complete and drill sites should be selected in the second half of this year, according to Karoon exploration manager Mark Smith.
“The Browse is a great basin for gas and condensate,” Smith told PNN’s sister magazine Petroleum recently.
“We’ve firmed up seven prospects with huge gas and condensate potential.
“All the major structures are filled to spill with gas and they have high ratios of condensate to gas. The condensate is a huge bonus – it can fund the LNG developments.”
Partner ConocoPhillips, already a key player in Australian gas via its Darwin LNG project in the Timor Sea, is also keen on Browse as a growth region.
In October, the US giant agreed to pay Karoon Gas $US9.6 million as part of a farm-in deal on the WA-314-P and WA-315-P.
The deal gives ConocoPhillips a 51% stake in the permits – located less than 10km from Woodside’s Browse venture – with an option to acquire a further 9%.
“ConocoPhillips did months of due diligence and their assessment was similar to ours,” Smith said.
Karoon also separately commissioned WorleyParsons to carry out a conceptual review of the development options, and sales products based on gas samples from the Buffon-1 well drilled in 1981.
Based on the gas analysis in the WorleyParsons review, Karoon has calculated a potential condensate yield of 33bbl per MMcf and a liquefied petroleum gas yield of 6.4t/MMcf, approximately doubling the total liquid content of previous estimates.
If these estimates hold true, a liquids development could well come first with LNG to follow.
ConocoPhillips has approval to expand Darwin LNG threefold and gas could be piped from the Browse to Darwin. The other option would be to develop a facility in the Browse either on its own or in partnership with one or more other gas players.
