29 July 2016

ASX Announcement

Santos Basin JV Partner Status Update

Karoon Gas Australia Ltd (ASX: KAR) would like to update stakeholders on further developments relating to Karoon's 65% owned Santos Basin Brazil blocks S‐M‐1037, 1101, 1102, 1165 & 1166 (the 'Blocks').

Karoon has issued default notices to its joint venture partner Pacific Exploration and Production Corp. ('Pacific') consistent with its rights under the relevant Joint Operating Agreements ('JOAs'). Pacific holds a 35% interest in the Blocks. Notices relate to Pacific's failure to make payments under the JOAs.

Both parties are working together to resolve the issue and Karoon will provide further updates as necessary.

For further information please contact:

About Karoon Gas Australia Ltd

Karoon Gas Australia Ltd is an international oil and gas exploration company with projects in Australia, Brazil and Peru.

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.

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