Karoon Energy (KAR) H1 2024 earnings summary

Executive summary

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

• 1H24 underlying EBITDAX was US$266.8 million and underlying NPAT was US$115.8 million, reflecting resilience despite lower Baúna production and prices, partially offset by Who Dat's full contribution.

• Announced inaugural interim dividend (4.496 AUD cents/share, fully franked) and commenced a US$25 million on-market buyback, representing a 21% payout of underlying earnings and a 5% annualized yield.

• Strong liquidity of US$528.2 million at 30 June 2024, with net cash of US$282.2 million, leverage at 0.1x, and gearing at 6%.

• Completed scheduled shutdown at Baúna FPSO; Who Dat production exceeded 42,000 boepd gross at June-end.

Financial highlights

• Sales revenue for 1H24 was US$409.4 million, down 1% from 2H23, mainly due to lower Baúna output and prices, offset by Who Dat volumes.

• Production totaled just over 5 million boe in 1H24, a 7% decrease from the prior half, but more than double H1 2021 levels.

• Unit production costs increased to US$13.51/boe in 1H24 from US$11.09/boe, mainly due to lower Baúna output; Who Dat unit cost was US$8.74/boe (NRI basis).

• Operating cash flow was US$202–224.3 million, with free cash flow of US$45 million after capex and contingent payments.

• Net assets rose to US$977.4 million, with total liquidity at US$528.2 million and improved gearing.

Outlook and guidance

• 2024 production guidance unchanged at 10.5–12.5 MMboe (Brazil: 7.5–9.0 MMboe, Who Dat: 3.0–3.5 MMboe), with Baúna expected at the lower end.

• Capex guidance for 2024 is US$150–177 million, with some interventions deferred to 2025 and increased focus on exploration/appraisal.

• Near-term catalysts include drilling of Who Dat South (September) and West (4Q24) wells, and Neon Foundation Project decision in early 2025.

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