Karoon Revises Who Dat Resources Up 190%, Guides 9-10.5 MMboe Production in 2025
Karoon Energy delivered a record full-year sales revenue of US$776.5 million in 2024 despite a slight production dip in the final quarter. The company’s revised resource estimates and plans to acquire the Baúna FPSO signal a pivotal phase for its growth trajectory.
- 2024 full-year sales revenue hits record US$776.5 million
- Fourth quarter production down 3% to 2.59 MMboe (NRI basis)
- Who Dat East contingent resources revised up 190% to 15.7 MMboe
- Negotiations underway to acquire Baúna FPSO from Altera & Ocyan
- 2025 production guidance set at 9.0 - 10.5 MMboe with reduced capex
Record Revenue Despite Operational Challenges
Karoon Energy Ltd. closed 2024 with a landmark full-year sales revenue of US$776.5 million, setting a new company record. This achievement comes despite a 3% decline in fourth-quarter production on a Net Revenue Interest (NRI) basis, which fell to 2.59 million barrels of oil equivalent (MMboe). The slight production dip was attributed to operational disruptions, including a 12-day FPSO anchor chain repair shutdown at the Baúna Project and an active hurricane season impacting the US Gulf of Mexico assets.
Upgraded Resource Estimates Bolster Growth Prospects
Exploration success in the US Gulf of Mexico has significantly enhanced Karoon’s resource base. The company revised its Who Dat East 2C Contingent Resource estimate upward by 190%, from 5.4 MMboe to 15.7 MMboe (NRI basis), following positive appraisal well results. Additionally, promising outcomes from the Who Dat South well have prompted ongoing resource evaluations, with development studies already underway by operator LLOG. These findings position Karoon well for future production growth and value accretion.
Strategic Move to Acquire Baúna FPSO
Recognizing the critical role of the Floating Production Storage and Offloading (FPSO) vessel in its operations, Karoon is in constructive negotiations with Altera & Ocyan to acquire the Baúna FPSO. This acquisition would grant Karoon direct operational control over the vessel, potentially improving reliability and economic efficiency. The company has deferred its planned Strategy Seminar pending the outcome of these discussions, underscoring the strategic importance of this transaction.
Operational Initiatives and Safety Focus
To address maintenance backlogs and enhance production system reliability, Karoon is set to commence a flotel-supported maintenance campaign on the Baúna FPSO. This 60-day program, including up to 30 days of FPSO shutdown, aims to boost operational efficiency, which stood at 84.5% in 2024, below the company’s long-term target of 90-95%. Additionally, interventions are planned to restore production from the SPS-88 well by mid-2025, expected to add 2,000 to 2,500 barrels per day. The company also reported a medical treatment case and a lost time injury during the quarter, prompting renewed safety initiatives.
Financial Discipline and Capital Management
Karoon’s net debt position improved markedly, falling from US$104 million at the start of 2024 to just US$8.8 million by year-end, despite active exploration and share buybacks. The Board plans additional on-market share buybacks totaling US$75 million in 2025, supplementing the US$25 million buyback underway and the 20-40% NPAT distributions under the capital management framework. Capital expenditure guidance for 2025 has been reduced to US$99-117 million, excluding the potential FPSO acquisition, reflecting disciplined capital allocation amid evolving operational priorities.
Outlook for 2025
Karoon’s initial production guidance for 2025 ranges from 9.0 to 10.5 MMboe (NRI basis), factoring in natural declines offset by planned well interventions and maintenance activities. Unit production costs are expected to rise modestly to US$12.5-17.5 per barrel of oil equivalent on a Net Working Interest (NWI) basis, reflecting inflationary pressures and increased maintenance spend. The company’s focus will be on improving FPSO efficiency, advancing development studies for Who Dat discoveries, and progressing the Neon project in Brazil toward a potential FEED decision.
Bottom Line?
Karoon’s 2024 record revenue and resource upgrades set the stage for a transformative 2025, hinging on FPSO acquisition and operational execution.
Questions in the middle?
- Will Karoon successfully complete the Baúna FPSO acquisition and how will it impact operational control?
- How effectively can Karoon improve FPSO efficiency to meet its 90-95% target in 2025?
- What are the commercial implications of the expanded Who Dat East and South resources for Karoon’s growth?