What Happened to the Karoon Gas Share Price?
Shares of Karoon Gas Australia [ASX:KAR] fell by 3.19% on Wednesday, closing at $3.34.
Why Did This Happen to the Karoon Gas Share Price?
After shooting up more than 50%, Karoon Gas Australia shares are going through a normal cooling down period.
Karoon announced that it sold two of its Browse Basin permits (WA-315P & WA398-P) to Origin Energy for roughly $800 million.
With the company previously lacking funding and balance sheet flexibility, this transaction provides significant value to shareholders.
The transaction combines with the recently announced Carnarvon Basin farm-out by Karoon to Apache. Both transactions represent up to one billion dollars of value for Karoon in up front, carry and future payments.
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What Now For Karoon Gas Australia?
Karoon’s strategy and vision have never been clearer.
Karoon’s balance sheet is significantly stronger following these recent transactions. The company is now in a solid position to explore and develop its assets of which many, have significant geological potential.
Over the past four quarters, Karoon has averaged an operating cash burn of roughly $115 million.
As such, the recent transactions should leave Karoon with more than sufficient funds to pursue its aggressive exploration program over the next year. This is great news for shareholders.
Karoon has an exciting 12 months ahead with exploration drilling in Brazil and the Carnarvon Basin.
The share price needs to run through the $3.50 resistance level to rally.
Jason Stevenson+
Resources Analyst, Diggers and Drillers
