Karoon Energy Ltd (KAR)
BUY

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 14 Apr 2023
Sector: Energy

PRODUCTION HALT EXTENDED

Need To Know

  • Bauna production halt extended into May
  • FY23 production to be at low end of guidance range
  • Quarterly production report due 27 April

The opportunity to bring forward maintenance work on the FPSO will extend the interrupted production from Bauna and Patola into May. As a consequence, Karoon is pointing towards the lower end of its FY23 production guidance. This is all happening during the Brazilian Government’s 4-month oil export tax hike.

Essential and proactive work, as KAR describes it, is being done on the FPSO (floating production storage offtake vessel). This is now expected to be completed in May rather than mid-April as first guided.

4Q23 and FY23 production is clearly affected by the suspension of production at the Bauna and Patola fields while the maintenance work is carried out. KAR is now pointing to the lower end of its current FY23 production guidance range of 7.5-9.0MMbbls.

Unit production costs will also creep higher towards the upper end of the guidance range of US$13-17/bbl. 

Investment View

The quarterly production report due on 27 April will contain further detail of the outage as well as the expected restart of production.

KAR will obviously now produce less oil during the 4-month period of the Brazilian Government’s temporary 9.2% export tax.

We continue to await news on the data analysis from the Neon project which looks promising based on the recent drilling results.

KAR remains a pure oil producer and is a well-run business with an excellent balance sheet and opportunities for acquisition and organic growth.

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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.

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