Karoon Gas Australia Limited (ASX: KAR) has seen its share price drop 35% over the past year to $1.49 currently, and the share price is a long way away from the $12.10 it hit in July 2009 (down 87% since then).
A falling oil price is mostly to blame, but the fact the company has yet to produce $1 of oil revenue despite 10 years of being listed is a major factor.
Several promising results have yet to come to anything substantial, while shareholders have kicked in more than $800 million in equity since Karoon listed. Tellingly, the company's market cap is just $366 million.
In June 2014, the company announced the sale of its 40% interest in two Browse Basin exploration permits to Origin Energy Ltd (ASX: ORG) for US$600 million in cash up front and potentially additional payments of up to US$200 million. Karoon received A$655 million in 2014 from Origin, but chairman Robert Hosking said at the time that the funds were earmarked for further exploration and drilling.
At the end of December 2015, Karoon had $523 million of cash in the bank and still no oil-producing asset. Much of that cash is likely to go on more drilling and appraisal programs with no guarantee of a producing asset at the end.
In its last quarterly report, Karoon said it "expects to be in a position to consider a final investment decision on the Echidna oil discovery with respect to an early production system."
Echidna is an oil well in the Santos Basin, offshore Brazil.
However, this is similar to what the company said about its Kangaroo oil discovery in the same location two years ago.
Foolish takeaway
Whether investors will ever see a return on their investment remains to be seen and Karoon remains a highly risky, speculative proposition.
