KAROON ENERGY LTD — Capital/Financing Update 2014

Oct 23, 2014

24 October 2014

ASX Announcement

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Santos Basin, Brazil Drilling Update:

Karoon Takes Possession of the Olinda Star Drilling Rig

Karoon Gas Australia is pleased to announce the Company has now taken possession of the Olinda Star Semi-submersible drilling rig from Petrobras.

The rig is currently in the Campos Basin and expected to be on location in the Santos Basin running anchors in the next few days with a likely spud date for the Kangaroo-2 appraisal well during the second week of November.

The Kangaroo-2 appraisal well is designed to confirm the following properties for the Kanargoo oil discovery:

• size of the oil column,

• the presence and size of a possible gas cap,

• reservoir continuity and properties, and flow rates.

This information will be crucial for assessing the commerciality of the Kangaroo oil field and, which upon success, will be the basis for the Front End Engineering and Design (’FEED’) phase bringing the project a step closer to commerciality.

The Kangaroo-2 appraisal well is located approximately 300 metres updip from Kangaroo-1 and will test the thick reservoir sequence observed in all surrounding wells. It is anticipated that a 350 metre plus gross hydrocarbon column will be intersected in this well.

For more detail on Karoon’s pending Santos Basin drilling campaign, please refer to the announcement titled ’Santos Basin, Brazil Drilling Update’ released on 16 October 2014.

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Karoon Gas Australia Ltd ABN 53 107 001 338 25/367 Collins Street Melbourne Victoria 3000 � T: +613 9616 7500 F: +613 9640 0406 Website: www.karoongas.com.au

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About Karoon Gas Australia Ltd

Karoon Gas Australia Ltd is an international oil and gas exploration company with projects in Australia, Brazil and Peru and a member of the S&P/ASX 200 Index.

Karoon looks for high equity interests in early stage exploration opportunities containing large potential targets in basins with proven Petroleum Systems. Karoon strives to create shareholder value through the geotechnical work-up of the acreage, leveraging its high equity interests to explore and appraise these opportunities to achieve commercialisation.

While the company’s core strategy is identifying off-shore early stage exploration opportunities, Karoon’s longer-term strategy is to retain residual equity interests in the assets as they go into production.

For further information please see the Karoon website or contact:

Scott Hosking Ian Howarth	Company Secretary James Wootton Investor Relations T: +613 5974 1044 T: +613 9616 7520 E:shosking@karoongas.com.au E:jwootton@karoongas.com.au Collins Street Media T: +614 0782 2319 E:ian@collinsstreetmedia.com.au	Company Secretary James Wootton Investor Relations T: +613 5974 1044 T: +613 9616 7520 E:shosking@karoongas.com.au E:jwootton@karoongas.com.au Collins Street Media T: +614 0782 2319 E:ian@collinsstreetmedia.com.au

Karoon Gas Australia Ltd ABN 53 107 001 338 25/367 Collins Street Melbourne Victoria 3000 � T: +613 9616 7500 F: +613 9640 0406 Website: www.karoongas.com.au

Forward looking statements

This announcement may contain ~~s~~ certain “forward-looking statements” with respect to the financial condition, results of operations and business of Karoon and certain plans and objectives of the management of Karoon. Forward looking statements can generally be identified by words such as ‘may’, ‘could’, ‘believes’, 'plan', 'will', 'likely', ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties, which may include, but are not limited to, the outcome and effects of the subject matter of this announcement. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements.

You are cautioned not to place undue reliance on forward looking statements as actual outcomes may differ materially from forward looking statements. Any forward-looking statements, opinions and estimates provided in this announcement necessarily involve uncertainties, assumptions, contingencies and other factors, and unknown risks may arise, many of which are outside the control of Karoon. Such statements may cause the actual results or performance of Karoon to be materially different from any future results or performance expressed or implied by such forward looking statements. Forward-looking statements including, without limitation, guidance on future plans, are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. Such forward looking statements speak only as of the date of this announcement.

Karoon disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise.

Karoon Gas Australia Ltd ABN 53 107 001 338 25/367 Collins Street Melbourne Victoria 3000 � T: +613 9616 7500 F: +613 9640 0406 Website: www.karoongas.com.au