SUMMARY
- Quarterly production (3Q24) on a Net Revenue Interest (NRI) basis increased 25% compared to 2Q24, to 2.68 MMboe. Baúna Project production was 44% higher than the prior quarter, while Who Dat NRI production fell 10% due to seasonal hurricane-related shut-ins and planned maintenance.
- 3Q24 sales volumes of 2.06 MMboe were 24% lower than the prior quarter, primarily due to the timing of liftings, with a cargo in transit at the end of the quarter.
- Sales Revenue (NRI basis) for the quarter was US$144.9 million, down 32% from the prior quarter reflecting both lower sales volumes and 8% lower realised oil prices.
- While no personal safety incidents were reported during the quarter, a Tier 2 loss of containment process safety event occurred and was investigated.
- Karoon continues to evaluate the successful Who Dat East appraisal/exploration well. The initial results support Karoon’s positive view on Who Dat East and its surrounding potential. Karoon intends to provide a resource update in the fourth quarter of 2024.
- The Who Dat South exploration well commenced drilling on 5 September. As at the reporting date, the well was at 6,535 metres Measured Depth and drilling ahead in 8 ½” hole.
- An inaugural dividend of 4.496 Australian cents per share was announced and paid on 21 October, and a US$25 million buyback was completed.
- The Board has determined to undertake a further US$25 million buyback, to be executed over the period through to 30 June 2025.
- CY24 production and unit production cost guidance has been narrowed, with production expected to be 10.5 – 10.8 MMboe, and unit production costs US$13 – 15/boe. Net finance and interest costs have increased to US$40 – 46 million, while guidance for total capital expenditure has been reduced to US$144 – 156 million. Full details are on page 7.
Karoon CEO and MD, Dr Julian Fowles, said:
'During the quarter, Karoon continued to focus on improving the reliability of its two producing assets and de-risking its organic growth opportunities. The ongoing focus on reliability is paying off, with 2024 third quarter NRI production at 2.68 MMboe, compared to 2.14 MMboe in the second quarter. Baúna Project FPSO efficiency in the quarter was 82.9% compared to 78.3% in the prior quarter (excluding the planned three week shutdown), a good improvement albeit below our target range of 90 – 95%. Revenues in 3Q24 were 32% lower than the prior quarter due to timing of Baúna shipments, with a 0.5 MMbbl cargo in transit at quarter end, and an 8% decline in realised oil prices, reflecting weaker global oil demand.
The Baúna Project produced 1.99 MMbbl in the third quarter, 44% higher than the prior quarter which was impacted by a three week planned shutdown. Following work on the gas compressors and main production header in July, production ramped up in early August and stabilised at average rates of 24,000 – 25,000 bopd for the balance of the quarter. The Baúna Project is expected to produce 7.5 – 7.7 MMbbl in the 2024 full year, in line with our statement in August that production would be towards the lower end of the prior guidance range. Ongoing maintenance activities to address integrity and reliability of the FPSO are expected to continue over the balance of 2024 and into 2025. Discussions are continuing with the Baúna FPSO owner, Altera & Ocyan, to define the scope of work required for the Baúna life extension project, to extend the FPSO life from 2028 to 2032 and possibly beyond.
The Who Dat asset achieved high production rates during the quarter, of up to 42,000 boepd, through optimisation of wells and the production system overall. However, this was offset by planned maintenance on one of two gas export compressors and shutdowns in response to seasonal hurricanes Francine and Helene. As a result, gross third quarter Who Dat production was 12% lower than the prior quarter, averaging 30,543 boepd. Who Dat gross production in the first two weeks of October has averaged approximately 40,000 boepd. The 2024 full year production forecast for Who Dat has been narrowed to 3.0 – 3.1 MMboe on an NRI basis, reflecting production achieved in 3Q24. The 2024 production guidance remains subject to further weather impacts over the remainder of the hurricane season and delivery of the planned two week annual shutdown in November.
The Who Dat South well commenced drilling in September. Progress has also been impacted by the recent hurricanes. Despite these weather disruptions, the drilling activity is progressing and the well is expected to reach total depth by late October. Meanwhile, analysis of the data gathered during the successful drilling of the Who Dat East appraisal/exploration well continued and an update of resource estimates is expected to be completed in the fourth quarter. While yet to be finalised, these studies support our positive view on the potential of Who Dat East and the greater Who Dat area.
The decision on whether the Neon Foundation Project will enter FEED (Decision Gate 2) is on track for 1Q25. During the quarter, the project team continued exploring opportunities to enhance and de-risk project economics over the range of possible subsurface outcomes.
During the quarter, Karoon announced a maiden fully franked dividend of 4.496 Australian cents per share which was paid to shareholders on 21 October 2024. In addition, the Company completed a US$25 million on-market share buyback, acquiring 24.0 million shares at an average price of A$1.55/share. These shares have now been cancelled, reducing issued capital by approximately 3% to 779.3 million shares on issue at the reporting date. The Board believes that the current share price does not reflect Karoon’s underlying value and has decided to undertake a further US$25 million on-market share buyback after considering the capital needs of Karoon and maximising shareholder returns. The buyback is expected to be executed over the period to 30 June 2025, in accordance with s 257B of the Corporations Act, subject to regulatory constraints, market conditions and the Company’s evolving capital requirements.
Karoon’s balance sheet remains robust, with net debt of US$41.8 million at 30 September 2024. Assuming no major changes to production and commodity price expectations, the Company’s financial position is anticipated to remain strong through the fourth quarter of 2024, providing sufficient funding for the next Petrobras contingent payment and a tax true-up, scheduled for January 2025, remaining capex for the Who Dat exploration campaign and the share buyback.
A strategy review continued during the quarter, aimed at updating the Company’s strategic direction for the next four years, following the delivery of all the key objectives from the 2021 Strategic Refresh. This work is on track to be completed and reported to the market by 1Q25.'
Source: Karoon Energy
