Kronos-1. The Kronos well was located on the south-western high of the greater Poseidon structure. Kronos-1 was spudded during February 2010, 15 kilometres to the south west of the Poseidon-1 exploration well. The well was designed to test and evaluate the Plover reservoirs located high on the greater Poseidon structure. A key Kronos-1 objective that was achieved was to define potential commercial production rates and gas composition on the crest of the greater Poseidon structure. Mud-logging, core and petrophysical interpretation indicated that the well penetrated a gas bearing sand interval within the Plover Formation. MDT pressure data showed a clear gas gradient with pressures indicating that this sand interval in the Kronos area is a separate gas accumulation from that seen in the Poseidon-1 exploration well. The pressure data indicated that the gas water contact in this sand was over 200 metres deeper than that indicated in Poseidon-1.

The Kronos-1 exploration well was drilled to a total depth of 5,329 mRT and production tested over the interval 4,999 - 5,052 mRT. The maximum sustainable flow rate attained during a multi-phase test was 26 mmscf/d through a 32/64 inch choke, with flowing well head pressure of 3,900 psia. Significantly, the flow rate achieved was equipment constrained. A condensate-gas ratio of 9.5 bbl/mmscf was measured at the surface, along with a 10% carbon dioxide content taken from the gas flow on a volume basis.

Based on the analysis of the well test data, Karoon believes that future possible production wells drilled adjacent to the Kronos-1 location could have the potential to flow at commercial rates in excess of 100 mmscf/d. Data from the three wells drilled on the greater Poseidon structure will be analysed over the coming months, together with the new Poseidon 3D seismic data which is currently being processed. Further appraisal and exploration well locations will be identified for drilling during early 2011. The tendering process is underway for a new rig to start the Phase-2 exploration and appraisal program planned.

Karoon maintains is contingent resource assessment range for Poseidon of: P90 3TCF; P50 7TCF and P10 15TCF. These results will be revised after new 3D seismic data is available and well results are integrated into a new field model. The offshore Browse Basin is located 350 km offshore from the North-Western Australian coastline.