Karoon, which went into a trading halt this morning pending the announcement, said the current available petrophysical logging data was inadequate to fully assess the potential hydrocarbon content of the sands, and additional data would be assessed over the coming days.

Kontiki-1 is currently drilling ahead in the Plover Formation at 4490m towards a total depth of 4600m.

The Transocean Legend semi-submersible drilling rig is drilling Kontiki-1, which is targeting potential resources of up to 5 trillion cubic feet of gas.

Kontiki-1 is the second well in the joint venture's multi-well drilling campaign in the Browse permits WA-314-P, WA-315-P and WA-389-P, and is about 29 kilometres northwest of the JV's first well, Poseidon-1.

Karoon has said the well has the potential to provide a discovery of equal size and magnitude to Poseidon-1.

Poseidon-1 was drilled by the Sedco-703 semi-submersible and intersected three gross sand intervals of about 10m, 67m and 139m.

ConocoPhillips is operator of the program and holds 51% interest in WA-314-P and WA-315-P, and a 60% interest in WA-398-P.

Karoon holds the remaining stakes in the three permits.