KAROON ENERGY LTD (ASX:KAR) has completed a major operational overhaul at its Baúna Project in Brazil, restoring production to around 22,000 barrels of oil per day and positioning the company for stronger free cash flow in the second half of 2026.
The company produced 1.08 million barrels of oil equivalent on a net revenue interest basis during the June quarter and generated sales revenue of US$116.4 million, supported by materially higher realised oil prices.
Baúna crude achieved an average realised price of US$94.56 per barrel, up 33% from the March quarter, while realised prices for Who Dat liquids rose 55% to US$101.93 per barrel.
Baúna overhaul lifts operational performance
Karoon transferred operatorship of the Baúna floating production, storage and offloading vessel on May 27, giving the company greater operational control and supporting structurally lower costs.
The company also completed a 28-day maintenance shutdown and the largest FPSO revitalisation campaign in its history, including inspections, facility upgrades and replacement of the production header.
Production was restored from the key SPS-92 well following replacement of its electrical submersible pump, while PRA-2 was returned to service after its umbilical was reconnected.
All Baúna production wells are now online, with FPSO operating efficiency reaching 97.2% during the quarter, above Karoon’s target range of 90% to 95%.
CEO and managing director Carri Lockhart said the work had established “a stronger operating platform for higher operational efficiency, structurally lower operating costs and stronger cash generation going forward”.
Who Dat sidetrack adds near-term production
At the Who Dat assets in the US Gulf Coast, the A1 sidetrack came online on July 13 and was producing about 1,700 barrels of oil equivalent per day net to Karoon as it continued to ramp up.
Production remained affected by the temporary shutdown of the E manifold after a minor riser leak was identified in February.
Operator LLOG plans to remove and inspect the affected riser during the third quarter. Karoon’s current base case assumes one or both E risers will require replacement, with production from the E manifold expected to resume in the fourth quarter of 2027.
A further G1 sidetrack is being assessed for drilling during the second half of 2026, subject to technical, joint venture and regulatory approvals.
Growth projects move toward decisions
Karoon expects the Who Dat East joint venture to consider a final investment decision during the third quarter after completing its final project evaluation and receiving an authorisation for expenditure.
In Brazil, work on the wholly owned Neon development continues across subsurface modelling, subsea design, cost estimates and host facility assessments. The next project milestone is expected in the fourth quarter of 2026.
Karoon has maintained full-year production guidance of 7.2 million to 8.2 million barrels of oil equivalent and capital expenditure guidance of US$178 million to US$202 million.
With around 85% of its full-year capital program invested during the first half, the company expects stronger second-half free cash flow, subject to oil prices and operating performance.
Karoon ended June with US$363.6 million in liquidity and bought back 2.8 million shares during the quarter. A further on-market buyback was scheduled to begin in July.
About Karoon Energy
Karoon Energy is an international oil and gas exploration and production company with assets in Brazil, the United States and Australia. Its portfolio includes the producing Baúna and Who Dat assets, as well as potential developments at Neon and Who Dat East.