Karoon Energy has confirmed an electrical fault in the newly installed power cable serving Baúna’s SPS-92 well, deferring about 3,500 barrels of oil a day. The repair requires a rig-based intervention, prompting cuts to production guidance and higher unit cost forecasts for 2026.
- SPS-92 operating conservatively on two electrical phases
- Approximately 3,500 bopd deferred until cable replacement
- Baúna production guidance reduced to 5.4-5.7 MMbbl
- Total 2026 production guidance cut to 6.6-7.2 MMboe
- Insurance recovery remains possible but unconfirmed
SPS-92 Cable Fault Defers 3,500 Bopd
Karoon Energy Ltd (ASX:KAR) has confirmed a fault in one of the three electrical phases in the newly installed power cable powering the downhole pump at Baúna’s SPS-92 well. The well is operating on two phases under a conservative regime, but Karoon estimates that about 3,500 barrels of oil a day will remain deferred until the cable system is replaced.
The fault emerged less than three months after the new electrical submersible pump and cable system entered service. Karoon says the pump was shut down in a controlled manner on 22 September to protect its integrity while the company investigated the monitoring-system fault. It now believes a rig-based intervention will be required to restore full operability.
Rig Intervention Timing Remains Uncertain
Karoon has an existing option over a suitable drilling rig and has started planning the intervention, including permit approvals, equipment and service arrangements. The company has not provided a timetable: execution depends on securing those approvals and services.
The production shortfall is not currently expected to affect Baúna reserves, according to the release. Chief executive and managing director Carri Lockhart said the immediate priorities were bringing SPS-92 back to full production, maximising output from the other Baúna wells and pursuing equipment warranty and insurance recoveries. Karoon will update the market when there is greater clarity on the intervention schedule.
2026 Production and Cost Guidance Reduced
Baúna full-year production guidance has been cut from 6.0-6.7 million barrels to 5.4-5.7 million barrels. The lower end assumes a conversion to gas lift if required. Guidance for Who Dat is unchanged at 1.2-1.5 million barrels of oil equivalent, leaving total 2026 production guidance at 6.6-7.2 MMboe, down from 7.2-8.2 MMboe.
With production falling against a relatively fixed cost base, unit production cost guidance has increased to US$15-US$16 per barrel of oil equivalent, from US$12-US$15/boe. The change isolates the operating consequence of the fault in the guidance table, even before the final repair duration is known.
Insurance Could Offset Part of the Damage
Karoon says its insurance programme may partially offset lost production revenue and reimburse substantially all costs associated with the intervention and repair. That assessment is preliminary and non-binding, however, and remains subject to deductibles, policy terms and final confirmation by insurers. The company is still investigating the root cause of the failure and assessing the event against the relevant policies.
Bottom Line?
The immediate earnings risk is tied less to the fault itself than to how quickly Karoon can secure a rig, permits and services, and whether insurers ultimately cover the resulting costs and lost revenue.
Questions in the middle?
- How long will SPS-92 remain on reduced output before the intervention is completed?
- Will the two-phase operating mode remain stable while permits, equipment and services are secured?
- How much of the deferred revenue and repair bill will warranty or insurance recoveries ultimately offset?