* Results raises skepticism about size of Poseidon field
* Lower field size may dent hopes of a standalone LNG project
* Karoon says partners will test a new area later this year (Adds details of drill report, background)
PERTH, Feb 4 Shares in Australia's Karoon Gas Ltd (KAR.AX) dived on Thursday after poor drilling results damaged market confidence in its plan to develop a gas field and liquefication plant with U.S. major ConocoPhillips (COP.N).
Latest testing of the Poseidon discovery by ConocoPhillips and Karoon in the Browse Basin off Western Australia failed to meet investors' high hopes, sending Karoon plunging 30 percent.
Karoon said in a statement late on Wednesday that although the Poseidon-2 well had discovered a new gas zone, a drill stem test was inconclusive.
Karoon, which has said the Poseidon field could hold as much as 15 trillion cubic feet of gas (tcf), said the venture would drill two more exploration wells, Lion-1 and Kronos-1, this year.
Karoon said the latest drill results did not alter its pre-drill estimate that Poseidon could contain about 7 tcf of gas, but analysts were skeptical, saying there was a risk that a standalone liquefied natural gas project might not be justified.
"This is a potential problem as the commerciality threshold is high in the Browse Basin and any significant cut from 7 tcf could rule Poseidon uncommercial as a standalone project," said Macquarie Bank's energy analyst, Adrian Wood.
Karoon shares recovered some ground in late morning trade to stand at A$5.75, down 13.7 percent. It has fallen from above A$11 in early January due to uncertainty over initial drill results.
ConocoPhillips owns a 60 percent stake in the field, while Karoon holds the rest. (Reporting by Fayen Wong; Editing by Mark Bendeich)