Highlights

• 2024 fourth quarter production (4Q24) on a Net Revenue Interest (NRI) basis was 2.59 MMboe, 3% lower than the third quarter (3Q24). Total 2024 full year NRI production was 10.4 MMboe.
• 4Q24 sales volumes of 3.14 MMboe were 53% higher than 3Q24 due to the timing of Baúna liftings, resulting in sales revenue of US$222.2 million. This took sales revenue for the 2024 full year to US$776.5 million, a record for Karoon.
• A medical treatment and a lost time injury were reported during the quarter.
• Karoon has completed its exploration program in the US Gulf of Mexico, with two of the three wells successful. The Company has revised its NRI Who Dat East 2C Contingent Resource up 190%, from 5.4 MMboe to 15.7 MMboe, and is currently evaluating resources in Who Dat South following better than
• expected results. Who Dat West did not encounter significant hydrocarbons. The operator, LLOG, has commenced development studies for Who Dat East and South.
• The 2024 full year results are scheduled to be released on Thursday 27 February 2025. 2024 guidance is largely unchanged, except for a reduction in capex to US$135 – 138 million.
• A flotel-supported maintenance campaign on the FPSO, with the aim of improving Baúna production systems reliability, is expected to commence shortly.
• Karoon is in constructive negotiations with Altera & Ocyan (A&O) regarding the potential acquisition of the Baúna FPSO.
• A vessel has been secured to undertake an intervention in SPS-88 in Baúna. Operations are expected to commence in late first/early second quarter of 2025, with the well back onstream before mid-year.
• After completion of the current US$25m buyback, the Board intends to undertake additional onmarket share buybacks in 2025 totalling US$75 million (subject to market conditions, capital requirements and shareholder approvals). The buybacks are over and above the 20—40% of NPAT to be returned under Karoon’s capital management framework.
• Initial 2025 production guidance is 9.0 – 10.5 MMboe (NRI basis), while unit production costs (NWI basis) are expected to be US$12.5 – 17.5/bbl. Capex guidance for 2025 is US$99 – 117 million. This excludes the potential FPSO purchase and will be revised should the transaction be completed.

Karoon’s CEO and MD, Dr Julian Fowles, said:
“Despite a number of operational challenges in the last quarter of 2024, including a 12 day shut-in to repair two FPSO anchor chains at Baúna and an active hurricane season in the US Gulf of Mexico, CY24 full year production of 10.4 MMboe (NRI basis) was a record for the Company. Full year sales revenue of US$776.5 million was also the highest ever achieved by Karoon.

While the Baúna Project production is starting to benefit from the work completed to clear the most production-critical maintenance issues, FPSO efficiency in CY24 was 84.5%, well below our long term expectations of 90-95%. A key focus in 2025 will be to increase FPSO efficiency towards that goal. The first step, a flotel-supported campaign to substantially reduce the maintenance backlog and improve equipment redundancy, is expected to commence shortly, once remaining regulatory approvals are received. This, together with the reinstatement of production from SPS-88, which we expect back online at rates of 2,000 – 2,500 bopd before mid-year, is expected to help mitigate natural decline in 2025. We will also be focusing on improving our safety performance relative to 2024 levels.

Longer term, given the significance of the FPSO to our operations, we see measurable operational and economic advantages in having direct control over the vessel. The Company is in negotiations to acquire the FPSO from the current owner and operator, A&O, subject to finalising terms. Further details will be provided if and when a binding agreement is reached.

Karoon’s Strategy Seminar, planned for 7 February, will be deferred until after the status of this highly strategic proposed transaction is known.

In the US, the Who Dat gross production for the quarter was 3% lower than in 3Q24, primarily due to the planned annual platform shutdown and gas compressor maintenance. As a mature asset, without interventions Who Dat production, is expected to naturally decline by approximately 15% pa on average. During 2024, natural decline was largely offset by well interventions, sidetracks and production system optimisations. 2025 production will also benefit later in the second half from two well interventions, in line with our long term aim to offset decline rates through periodic infield activities.

Additionally, following the positive results at Who Dat East and Who Dat South, the Operator and joint venture partners have commenced work on potential development options for these discoveries. An update to Who Dat South resources and Who Dat East prospective resources is expected to be included in the annual Reserves and Resources Statement next month. Given their size and proximity to existing production infrastructure, we believe it is likely that they will both prove to be value-accretive development candidates. Together with the potential Neon field development in Brazil, which is progressing towards a Board decision on whether to enter FEED, we now have a range of attractive organic growth opportunities that could potentially create substantial value for shareholders.

Over 2024, net debt fell from US$104 million to just US$9 million at 31 December 2024, despite the Baúna production disruptions, active exploration campaign at Who Dat and share buybacks. Following a review of our expected capital requirements in 2025, considering the current share price and applying capital allocation discipline, the Board intends to undertake a series of additional on-market share buybacks totalling a further US$75 million, subject to various conditions. Together with the two US$25 million share buybacks announced in 2024, this represents an intended total investment of US$125 million in Karoon shares over the 18 month period from July 2024 to December 2025, over and above the 20-40% NPAT shareholder distributions."

BAÚNA PROJECT, SANTOS BASIN, BRAZIL

Equity interest: 100%. Operator: Karoon
Baúna Project (BM-S-40) production in 4Q24 was 1.92 MMbbl, 4% lower than the 3Q24. Production was shutin on 11 December (Brasilia Time) following the failure of two of the 16 FPSO mooring anchor chains. Production recommenced on 22 December (Brasilia Time) after the completion of repairs. Karoon and the FPSO owner and operator, A&O, are reviewing root causes for the failures to help mitigate risks of recurrence.

FPSO efficiency for 4Q24 was 84.6%. This was higher than the 82.9% achieved in the prior quarter which was impacted by works on the gas compressors and main production header in July and August. FPSO efficiency for the full year (excluding scheduled shutdowns) was 84.5%. 4Q24 production averaged approximately 20,900 bopd, or approximately 23,600 bopd excluding the impact of the anchor chain shut in.

A medical treatment case and a lost time injury were reported at Baúna in 4Q24. Together with Karoon’s contractors, additional steps are being taken to strengthen the focus on safety.

Five cargoes were lifted during the period, totalling 2.46 MMbbl, with the cargoes sold to refineries in North America and Europe. Sales volumes during the quarter were higher than 3Q24 due to the sale of a 0.5 MMbbl cargo that was offloaded and in transit, therefore held as inventory, last quarter. The average realised price for the cargoes, net of selling expenses, was US$74.97/bbl, 1% lower than the average realised price in the prior quarter due to lower global oil prices.

A flotel (a floating hotel moored adjacent to the FPSO), has been contracted to accommodate extra manpower for a planned maintenance program, which is expected to commence shortly, following the receipt of remaining regulatory approvals. The aim of the program is to reduce materially the maintenance backlog and improve equipment redundancy on the FPSO. The maintenance campaign is scheduled to take approximately 60 days, during which the FPSO will be shut down for up to 30 days.

A lightweight well intervention vessel has been contracted to replace the faulty gas lift valve in the SPS-88 completion string, support vessels have been secured and regulatory approvals to undertake the activity received. Operations are expected in the late first or early second quarter of 2025, with SPS-88 back online at forecast rates of 2,000 – 2,500 bopd before the end of 2Q25.

WHO DAT ASSETS, OFFSHORE GULF OF MEXICO, US

Equity interests: Who Dat and Dome Patrol – 30%, Abilene – 16%. Operator: LLOG
Gross Who Dat production in 4Q24 was 29,576 boepd, 3% lower than the prior quarter (30,543 boepd). Production was impacted by an extension of the planned 10 - 14 days shut-down for maintenance to 18 days due to Hurricane Rafael, and a gradual ramp up, over approximately 10 days, to bring Who Dat back to full production. Production on an NRI basis, net to Karoon, was 0.67 MMboe, 3% lower than the 0.68 MMboe produced in the third quarter of 2024.

The average realised price for Who Dat liquids (including oil, condensate and NGLs) was down 9% on the previous quarter, at US$68.44/bbl, reflecting the decline in global oil prices. However, the Who Dat average realised sales gas price increased 8%, to US$3.07/mcf. The increase reflected higher Henry Hub gas prices in December due to increased demand resulting from seasonal winter temperatures.

2025 Capex

2025 capex is expected to be US$99 – 117 million. Who Dat capex of US$58 – 67 million reflects the remaining spend for the Who Dat West exploration well and the planned infill activities. Neon capex of US$2 -3 million comprises Phase 2 expenditures up to the DG-2 decision. If the project progresses into the ‘Define’ phase (FEED entry), additional costs will be incurred. Other capex of US$39 – 47 million includes costs related to the SPS-88 intervention, acquisition of a new production header for the FPSO and equipment required for potential future workover activity at Baúna.

KeyFacts Energy: Karoon Gas Brazil country profile   l   Karoon US Gulf of Mexico country profile