Karoon Plans Total $125M Share Buybacks Through 2025 Amid Strong Capital Returns

Karoon’s Strategic Capital Returns Plan

Karoon Energy has announced its intention to undertake an additional US$75 million in on-market share buybacks during 2025, supplementing the existing US$25 million program initiated in 2024. This move would bring the total capital returned to shareholders via buybacks to US$125 million over an 18-month period from July 2024 through December 2025.

The Board’s decision follows a thorough review of Karoon’s capital allocation framework, balancing the company’s operational funding needs with the desire to enhance shareholder value. Karoon’s Chairman, Peter Botten, emphasized that the company’s shares are currently “significantly undervalued,” presenting an opportune moment to repurchase and cancel shares, thereby improving value for remaining shareholders.

Execution and Approvals

The incremental US$75 million buyback program is contingent on several factors, including regulatory limits on buyback volumes, compliance with credit agreements, prevailing market conditions, and crucially, shareholder approval. Karoon plans to seek this approval through an ordinary resolution at its 2025 Annual General Meeting scheduled for May.

Following completion of the current US$25 million buyback, the company intends to use any remaining buyback capacity not requiring shareholder approval to purchase approximately US$17 million more in shares. The bulk of the incremental buybacks, estimated between US$50 million and US$60 million, will then proceed subject to AGM approval and subsequent Board decisions.

Balancing Growth and Returns

Karoon’s capital returns plan also includes semi-annual distributions targeting 20-40% of underlying net profit after tax (NPAT), reflecting a disciplined approach to returning cash to shareholders while preserving capital for growth. The company anticipates sufficient funds to support these returns alongside investments in its organic growth projects, notably the Who Dat and Neon developments.

Importantly, the Board assumes that a partner will be introduced to the Neon project before a final investment decision is made, a standard approach for large greenfield ventures. This cautious optimism underscores Karoon’s commitment to maintaining a strong balance sheet and liquidity position while pursuing growth opportunities.

Market Implications and Outlook

The planned buybacks signal confidence from Karoon’s leadership in the company’s intrinsic value and future prospects. By aggressively repurchasing shares at current valuations, the Board aims to deliver incremental shareholder value and demonstrate prudent capital management amid a dynamic energy sector landscape.

Investors will be watching closely for the outcome of the 2025 AGM and the company’s execution of the buyback program, which could influence Karoon’s share price trajectory and market perception in the months ahead.