Karoon Energy (KAR) H1 2024 earnings summary

Executive summary

• Diversified production base in Brazil (Baúna) and US Gulf of Mexico (Who Dat) supported shareholder returns and organic growth, with a focus on safety, reliability, and sustainability initiatives.

• Underlying NPAT for 1H24 was US$115.8 million, down 20% year-over-year, mainly due to lower Baúna production, partially offset by the first full half-year contribution from Who Dat.

• Statutory NPAT was US$61.8 million, a 50% decrease, impacted by non-cash foreign exchange on deferred tax.

• Announced inaugural interim dividend of 4.496 AUD cents/share (fully franked, 21% payout ratio) and commenced a US$25 million share buyback.

• Strong liquidity of US$528.2 million at 30 June 2024, with US$282.2 million in cash, US$246 million undrawn debt, and gearing at 6%.

Financial highlights

• Sales revenue for 1H24 was US$409.4 million, down 1% from the previous half, mainly due to lower Baúna output and prices, partially offset by Who Dat.

• Underlying EBITDAX was US$266.8 million, down 6% sequentially but up fivefold from H1 2021.

• Operating cash flow was US$224.3 million, with free cash flow of US$45 million after capex and contingent payments.

• Unit production costs rose 22% to US$13.51/boe, mainly due to lower Baúna output; Who Dat unit cost was US$8.74/boe (NRI basis).

• Net assets increased to US$977.4 million from US$914.0 million at 31 Dec 2023.

Outlook and guidance

• 2024 capex guidance revised to US$150–177 million, reflecting new drilling and deferral of SPS-88 intervention to 2025.

• 2024 production guidance unchanged: 10.5–12.5 MMboe (Brazil: 7.5–9.0 MMboe, Who Dat: 3.0–3.5 MMboe NRI), with Baúna expected at the lower end due to maintenance and SPS-88 delay.

• Unit production cost guidance maintained at US$10.5–15.0/boe; unit DD&A at US$16.0–17.0/boe.

• Near-term catalysts include Who Dat South and West wells to spud in 2H24; Neon Foundation Project in Concept Select phase with key decision in early 2025.

• Ongoing strategic review to be completed by year-end, with outcomes discussed in early 2025.