🔍 Karoon Energy Ltd – Fundamental Analysis

🏢 Company Overview

Karoon Energy Ltd is an ASX-listed international oil and gas exploration and production company with assets in:

Brazil: Baúna Project (100% interest)
USA: Who Dat, Dome Patrol, Abilene (various interests)
Australia: Exploration assets

📈 Financial Performance

2024 Full-Year Highlights

Revenue: US$776.5 million (+14% YoY)
Underlying NPAT: US$214.0 million (+3% YoY)
Statutory NPAT: US$127.5 million (↓39% YoY due to non-cash tax adjustments and exploration write-offs)
Operating Cash Flow: US$434.6 million
Free Cash Flow: US$176.6 million
Net Debt: US$8.8 million (↓from US$103.7 million in 2023)
Capital Returns: US$85.7 million (dividends + buybacks)

Q2 2025 Performance

Production (NRI): 2.94 MMboe (↑25% QoQ)
Sales Revenue: US$159.7 million (↑7% QoQ)
Capex: US$102.9 million (includes Baúna FPSO acquisition)
Net Debt: US$237.9 million (↑due to FPSO acquisition and buybacks)

⚙️ Operational Performance

Baúna Project (Brazil)

2024 Production: 7.5 MMbbl
FPSO Efficiency: 84.5% in 2024; targeted 88–92% in 2025
FPSO Acquisition: Completed April 2025; expected to reduce opex by US$4–6/bbl from 2026
SPS-92 ESP Issue: Temporary production drop; intervention planned for Q2 2026

Who Dat (USA)

2024 Production: 2.9 MMboe (NRI)
2025 Guidance: 2.3–2.8 MMboe
Development: Sidetrack drilling and tieback studies underway; FID for East/South expected by early 2026

🛢️ Reserves & Resources

2P Reserves (2024): 67.9 MMboe (↓from 77.5 MMboe due to production)
2C Contingent Resources: 121.4 MMboe (↑17% YoY)
- Includes Neon (Brazil) and Who Dat East/South (USA)

🌱 Sustainability & ESG

Carbon Neutral (Scope 1 & 2): Achieved since FY21
Net Zero Target: By 2050 or sooner
Social Projects: 21 planned for 2025; aligned with UN SDGs

💰 2025 Guidance (as of August 2025)

MetricGuidanceTotal Production9.7–10.5 MMboeUnit Production Cost (NWI)US$12.5–17.5/boeCapexUS$99–117 millionFinance CostsUS$50–60 millionPetrobras PaymentUS$88 million

📊 Investment Considerations

✅ Strengths

Diversified production base (Brazil + USA)
Strong cash generation and liquidity
Strategic FPSO acquisition to improve efficiency
Mature development pipeline (Neon, Who Dat East/South)
Active capital return policy (dividends + buybacks)

⚠️ Risks

Operational reliability issues (e.g., ESP failure at Baúna)
High capex and net debt increase in 2025
Commodity price volatility
Regulatory and environmental risks in Brazil and USA

📌 Conclusion

Karoon Energy is fundamentally strong with solid financials, a diversified asset base, and a clear strategy for growth and shareholder returns. However, operational execution and commodity price stability will be key to sustaining performance. The FPSO acquisition and development of contingent resources could unlock significant long-term value.

Disclaimer

The user kapirey has a position in ASX:KAR. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.