Karoon Confirms Gas Potential at Poseidon-2

During the Quarter, Karoon and its joint venture partner, ConocoPhillips, continued exploration of the Browse Basin permits
with the drilling of the Poseidon-2 exploration well, now entering the testing phase of the evaluation. ConocoPhillips also
exercised its right to acquire an additional 9% equity in exploration permits WA-314-P and WA-315-P. As part of the exercise of
its option ConocoPhillips will pay 80% of the next US $125 million in Joint Venture expenditure within exploration permits WA-
314-P and WA-315-P.

During October 2009, the Poseidon-2 exploration well was spudded with the objective to test the extent, presence and quality
of reservoirs down-dip from Poseidon-1 where the Plover Formation is interpreted to thicken. The well planned to intersect the
upper sand intervals in the gas column and then the gas-water contact within the lower sand interval. Current interpretation
indicates that the well has met these objectives.

As such, with these objectives and the well position located on the flank of the structure, the well was not expected to intersect
a gross gas column as large as that penetrated in Poseidon-1 although the gross sand column was expected to be larger than
that seen in Poseidon-1. The well is currently working through these objectives providing additional data that will be used in the
planning of future wells and the potential development of the Poseidon field.

Prior to intersecting the Plover Formation the well penetrated a 20 meter gross hydrocarbon bearing sand in the Montara
Formation. This interval is planned to be tested during the current testing program in the Poseidon-2 well.

An initial Plover formation level drill stem test failed due to technical difficulties, resulting in the test not achieving a connection
of the reservoir with the well bore. The drill stem test is currently being re-run.

The Poseidon-2 well fulfils one of the primary term well commitments in WA-398-P. The drilling of the Kronos-1 exploration well
and the Lion-1 exploration well will continue to fulfil the work commitments.

During October 2009, the CGG Veritas seismic vessel, the M/V Geowave Voyager commenced a 2,828 square kilometre 3D
seismic acquisition program over the greater Poseidon structure. The acquisition is currently 80% complete. This new 3D seismic
covers southern WA-315-P and the northern section of WA-398-P. The survey will provide a uniform set of high quality seismic
data over the entire Poseidon trend also covering additional leads that could be tied into a Poseidon development in the event
of exploration success.

The offshore Browse Basin is located 350 km offshore from the North-Western Australian coastline.