Karoon Energy Ltd (KAR)
BUY

Not perfect after all

 3 Apr 2023
Sector: Energy

OUTAGE

Need To Know

  • Bauna and Patola production shut-in due to incident on FPSO
  • KAR brings forward maintenance work
  • Work to be completed mid-April

Karoon Energy will lose a few weeks of production due to a shut-in caused by an incident on the FPSO.

Due to a loss of containment incident associated with the high pressure flare on the FPSO (floating production storage and offtake vessel), KAR has shut-in production from Bauna and Patola. KAR is taking the opportunity to bring forward some maintenance work so that a return to production is anticipated for mid-April.

Production guidance for FY23 is unchanged.

Investment View

Production disruptions for an oil producer, while unwelcome, are not unexpected from time to time. KAR’s outage has occurred just as the Patola field was beginning to make a meaningful contribution to group production following the highly successful series of projects to reach the current state of operations.

The repairs have already been completed and the higher-than-expected flow rates from Patola has placed additional pressure on the FPSO. KAR and the operator of the FPSO have decided to extend the shutdown to fully inspect the total system – a sensible move.

The silver lining to this outage will be a slightly smaller volume of production on which KAR will pay the temporary 9.2% export tax to the Brazilian Government.

KAR continues to investigate material inorganic growth opportunities focusing on productive (or near production) assets in Brazil and North America.

Meanwhile, the potential to develop the nearby Neon project is undergoing data analysis and engineering studies. The Neon, Goia and Clorita blocks are all within cooee of Bauna/Patola.

View the latest Research Report

Stock Overview

Share Price

Company Overview

KAR is a Brazil-focused oil production company, based in Melbourne. Its main assets are located in the Santos Basin offshore Brazil where the company has 100% interest in the Bauna field and is the operator.

Disclaimers and Disclosures

Issuer

The information and opinions contained within Sandstone Insights Research were prepared by MST Financial Services Pty Ltd (ABN 54 617 475 180, AFSL 500557) ("MST").

Reliance

Whilst MST make every effort to use reliable, comprehensive information in the construction of its reports, MST make no representation, warranty or undertaking of the accuracy, timeliness or completeness of information in this report. Save for any statutory liability that cannot be excluded, MST and MST employees, representative and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.

General Advice

Any advice contained within Sandstone Insights Research is general advice only and has been prepared without taking into account any person’s objectives, financial situation or needs. Any person, before acting on any advice contained within Sandstone Insights Research, should first consider consulting with a financial adviser to assess whether that advice is appropriate for their objectives, financial situation and needs. 

General Disclosures

This report should be read in conjunction with MST Disclaimers and Disclosures and is published in accordance with MST Conflict Management Policy which are available on the MST website: https://www.sandstoneinsights.com.au. 

Currency of Research

The recommendations made in a Sandstone Insights Research report are current as of the publication date. If you are reading a report materially after publication, it is likely that circumstances will have changed and at least some aspects of the analysis may no longer hold.

Access and Use

Any access to or use of Sandstone Insights Research is subject to the Terms of Use. By accessing or using Sandstone Insights Research you hereby agree to be bound by our Terms and Conditions and hereby liable for any monies due in payment of accessing this service. In addition you consent to us collecting and using your personal data (including cookies) in accordance with MST Privacy Policy, including for the purpose of a) setting your preferences and b) collecting readership data so MST may deliver an improved and personalised service to you. If you do not agree to MST Terms of Use and/or if you do not wish to consent to MST use of your personal data, please do not access this service.

Equities Research Methodology

Please click here for information about MST equities research methodology.