Karoon Energy (KAR) H1 2024 earnings summary

Executive summary

• Diversified production base in Brazil (Baúna) and US Gulf of Mexico (Who Dat) supported resilient cash flow, shareholder returns, and organic growth, with a focus on safety, reliability, and sustainability initiatives.

• 1H24 underlying NPAT was US$115.8 million, down 20% year-over-year, mainly due to lower Baúna production, partially offset by the first full half-year contribution from Who Dat.

• Announced inaugural interim dividend of 4.496 AUD cents per share (fully franked, 21% payout ratio) and commenced a US$25 million share buyback.

• Strong liquidity of US$528.2 million at 30 June 2024, with US$282.2 million in cash and leverage at 0.1x and gearing at 6%.

• Focused on operational excellence, with improved resilience post-Who Dat acquisition and ongoing emissions offset and social investment initiatives.

Financial highlights

• Sales revenue for 1H24 was US$409.4 million, down 1% from the previous half, with underlying EBITDAX at US$266.8 million and underlying NPAT at US$115.8 million.

• Operating cash flow was US$224.3 million, with free cash flow of US$45 million after a US$86 million contingent payment to Petrobras and capex.

• Unit production costs increased 22% to US$13.51/boe, mainly due to lower Baúna output; Who Dat unit cost was US$8.74/boe (NRI basis).

• Net assets rose to US$977.4 million, with total liquidity at US$528.2 million and net gearing at 6%.

• Dividend payout ratio was 21% of underlying NPAT, with a ~5% annualized yield.

Outlook and guidance

• 2024 capex guidance revised to US$150–177 million, reflecting new drilling and deferral of SPS-88 intervention to 2025.

• Baúna production expected at the lower end of 7.5–9 MMbbl guidance due to maintenance and SPS-88 delay; Who Dat guidance unchanged at 3.0–3.5 MMboe (NRI basis) for 2024.

• Near-term catalysts include Who Dat South and West exploration wells in 2H24 and Neon Foundation Project Concept Select decision in early 2025.

• Ongoing strategic review to be completed by early 2025.