Karoon Energy Ltd

Karoon reported production of 10.3 million BOE, down marginally from 2024, and sales revenue of $628.6 million versus $776.5 million in 2024, with lower oil prices the main driver. Underlying NPAT was $107.5 million, and pretax cash margin remained above 65% per BOE; unit production costs improved to $13.20 per BOE and breakeven realized price improved from $33 to $31 per BOE. Operating cash flow was $231.3 million, free cash from operations was $57.8 million, and year-end net debt was $143.9 million with $206.1 million of cash and $546.1 million of total liquidity. For 2026, management expects approximately 85% of planned CapEx to be spent in the first half, and said Who Dat 2026 production is currently expected to be within guidance of 2.1 million to 2.5 million BOE NRI, toward the lower end due to the riser leak and related work.

Carri Lockhart framed 2025 as a year of resilience and disciplined execution, emphasizing that Karoon’s low-cost, high-margin assets still produced strong operating cash flow despite lower oil prices. She highlighted the Bauna FPSO acquisition as a strategic milestone that improved safety, reliability, costs, and field life, and said the company now has a balanced pipeline across short-, medium-, and long-term opportunities. Her tone on 2026 was constructive but cautious: the first half is focused on heavy maintenance and repairs, while the second half should benefit if the work goes to plan and prices stay steady.

Ray Church focused on underlying results and the factors that distorted statutory numbers, including the FPSO acquisition, Petrobras contingent consideration movements, and flotel campaign costs. He said revenue fell because realized prices were 14% lower at Bauna and 17% lower at Who Dat, plus sales volume declined mostly at Bauna; offsets included $40 million of FPSO lease D&A and interest savings, partly offset by $28 million of temporary FPSO transition support costs and $5 million of logistics and mooring-line repair costs. He noted a $17.8 million withholding tax accounting item was fully offset in income tax expense, leaving an underlying tax rate of 33%, and said the company ended with $206.1 million of cash and $546.1 million of liquidity, with no additional debt draw needed in the year.

Analysts focused on Neon optimization, who Dat’s riser leak, Bauna flotel progress, and the implications of Harbour Energy’s acquisition of Who Dat operator LLOG. Management said Neon is being reworked through a disciplined review that could incorporate Bauna FPSO ownership, Piracuca, and Goia synergies, with a farm-down process targeting a 30% to 50% sell-down and more detail expected midyear. On Who Dat, management said the riser issue appears to be a two-step repair, with most production potentially rerouted in the next one or two months and final repairs later in the year; they still expect full-year 2026 volumes within guidance, though toward the lower end. On Bauna, management said the flotel campaign is on track so far, and on Harbour they said they continue to engage with the operator and do not see plans materially changing yet.