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 (see page 7 for details).
- 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 (see separate release).
- 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 (see
page 8 for details).
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 (see separate release for further details).”
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 efficiency1
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.
1 FPSO efficiency is defined as the proportion of actual and potential production.
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.
COMMERCIAL AND CORPORATE
CAPITAL EXPENDITURE1
Total capital expenditure (on an accruals basis) for 4Q24 was US$36.1 million, of which US$31.4 million was
mainly on the Who Dat exploration wells.
CASH, LIQUIDITY AND CASH FLOWS
As at 31 December 2024, Karoon’s net debt position was US$8.8m million, comprising US$341.2 million in cash
and cash equivalents and US$350.0 million of drawn debt.
Cash inflows during the quarter consisted of proceeds from the sale of hydrocarbons of US$215.5 million,
which included receipts from revenue recognised in the previous quarter. In addition to operating costs and
royalty payments, major cash outflows during the period included US$18.4 million of bond coupon interest,
US$12.3 million spent on the share buyback announced in October 2024, US$24.2 million for the interim
dividend payment and US$31.2 million spent on capital items primarily related to the Who Dat exploration
wells.
HEDGING
Following the Who Dat acquisition and commodity hedging executed to support the related draw down on
the RBL, outstanding hedge volumes have continued to run off, with 697,500 bought put options and 697,500
sold call options expiring out of the money during the quarter.
Given the RBL commodity hedging requirement is linked to amounts drawn on the RBL, and the RBL is
currently undrawn, no additional hedges were put in place over the quarter
EXPLORATION, APPRAISAL AND POTENTIAL DEVELOPMENT UPDATE
SANTOS BASIN, S-M-1037, S-M-1101
Equity interest: 100%. Operator: Karoon
Over the quarter, the Neon project team made good progress on deliverables for Phase 2 “Select”, including
updating the Neon reservoir models based on reprocessed seismic datasets, seismic inversion reservoir
characterisation products and finalised core studies. These reservoir models will form the basis for updated
reservoir development studies, aimed at optimising the development plan and capex requirements,
generating production profiles and estimating the recoverable resource range.
The Company also continued to actively screen potential production units, with the objective of identifying
the optimal candidate for redeployment on Neon. Redeployment and modification of an FPSO is expected to
provide both project cost and schedule benefits, and hence improved value. In addition, other studies
focused on optimising the costs and economics of a potential development were ongoing.
The next milestone for the Neon project is expected in or around April 2025 (Decision Gate 2), when Karoon
will decide whether to progress the project into the ‘Define’ phase (FEED entry). This phase would include
developing detailed project execution plans, basis for design specifications, procurement planning,
commercial agreements negotiation, funding and detailed cost estimates. In addition, a data room would be
opened and a farm-down process commenced, to secure a partner prior to any Final Investment Decision.
SANTOS BASIN, S-M-1537
Equity interest: 100%. Operator: Karoon
No work took place on Block S-M-1537 during the quarter.
SANTOS BASIN, S-M-1356, S-M-1482
Equity interest: 100%. Operator: Karoon
Studies are continuing to assess the potential prospectivity of these blocks.
US GULF OF MEXICO, MC 508, MC 509, MC 421, MC 464, MC 465, MC 545, MC 589, MC 629
Equity interests: Various. Operator: LLOG
Who Dat East (KAR: 40%)
In October 2024, Karoon increased its 2C Contingent Resource estimates for Who Dat East from 5.4 MMboe
to 15.7 MMboe (NRI)2
after integrating the results of the MC 509-1 (LLOG) appraisal/exploration well. The
revised Contingent Resource estimates include data from wireline logs, fluid samples and subsurface
studies.
The Joint Venture, led by operator, LLOG, has commenced development concept studies. The results will
assist the technical and commercial assessment of the potential development of Who Dat East.
Who Dat South (KAR:30%)
During the quarter, the Who Dat South exploration well, MC 545-1 (LLOG), located 11 kilometres west of the
Who Dat FPS and 6 kilometres from the Who Dat G subsea manifold, was drilled by the operator, LLOG, to a
final total depth of 7,014 metres Measured Depth (MD). The well encountered several hydrocarbon-bearing
sandstone intervals through the targeted Miocene zones3
.
Preliminary interpretation indicated the hydrocarbon-bearing zones have an aggregate True Vertical
Thickness (TVT) of 67 metres. This comprised approximately 51 metres TVT in the 12-¼” hole section and a
further 16 metres in the 8-½” hole section based on logging while drilling and drilling parameters. The results
exceeded Karoon’s pre-drill prognosis of 40 metres. Initial analysis of formation pressure measurements and
fluid samples indicated the presence of a high liquid yield gas-condensate fluid. Karoon’s estimate of Who
Dat South resources is being reevaluated based on the data gathered from the well and will be included in
the annual Reserves and Resource Statement to be released next month.
The well was suspended as a potential future producer pending the completion of Joint Venture studies on
potential development concept options.
Who Dat West (KAR: 35%)
The Who Dat West exploration well, MC 629-1, was spudded on 24 December 2025 and reached final Total
Depth (TD) of 7,147 metres in January 2025. No significant hydrocarbon bearing intervals were interpreted
within the drilled section and the well has been plugged and abandoned.
SUSTAINABILITY
In December 2024, Karoon signed an offtake agreement with Suzano S.A. for the purchase of 100,000 Verra
certified ARR (Afforestation, Reforestation & Revegetation) carbon credits per year on a five year term. This
enables Karoon to build a portfolio of REDD+ and ARR credits and ensures the Company can meet its
commitment to remain Carbon Neutral4
on Scope 1 and 2 emissions through the use of high quality and
verified carbon credits.
GUIDANCE FOR CALENDAR YEAR 20241
Karoon’s 2024 full year results will be released to the market on Thursday 27 February 2025.
Full year unit production cost guidance has been narrowed to US$14 – 15/boe. Capex for 2024 is expected to
be lower than prior guidance, at US$135 - 138 million, due to the deferral of some of the Who Dat West costs
from 2024 into 2025, due to the timing of drilling. The reduction in Other capex to US$7 - 8 million also reflects
the deferral of some costs into 2025. Finance costs (net of income interest income) and other operating costs
guidance has been narrowed.
Karoon expects to produce 9.0 – 10.5 MMboe in 2025. Production guidance assumes:
- Natural production decline for the Baúna Project and Who Dat assets of approximately 15% pa, as
previously communicated to the market.
- The SPS-88 well at Baúna re-commencing production before the end of 2Q25.
- Two well interventions at Who Dat later in 2H25 to mitigate natural decline.
- Baúna FPSO monthly efficiency of 88 – 92% (excluding shutdowns).
- Scheduled production shutdowns for planned maintenance of approximately 30 days for the Baúna
Project, but no annual full field maintenance shutdown planned for Who Dat.
Unit production cost and DD&A (depreciation, depletion and amortisation) guidance for CY25 is provided
using Who Dat production on a Net Working Interest (NWI) basis rather than Net Revenue Interest (NRI), which
formed the basis of CY24 guidance. This better represents Karoon’s actual costs and DD&A for Baúna and
Who Dat per boe produced. (NRI production is after government and overriding royalties, which at Who Dat
comprise approximately 20% of production).
2025 NWI unit production costs are expected to be US$12.5 – 17.5/boe (2024 guidance US$13 – 14/boe). The
increase in unit production costs at the mid-point reflects a largely fixed cost base spread over lower
production, as well as additional maintenance expenditure, increased vessel logistics rates and inflation.
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.
This announcement was authorised by the Board of Karoon Energy Ltd.