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Thoughts on Karoon Energy Ltd (KAR) please

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    Thoughts on Karoon Energy Ltd (KAR) please

    Hi MM team, Enjoy your succinct report. Please enlighten me on the recent trading halt and your view on buy, hold or sell KAR. John Hi Team, Thanks for all the daily work and recommendations. Regarding Karoon, what do you think of the current investment in the Gulf of Mexico. Have they bitten off too much, or is this a good move to diversify & increase production and revenue? The current management team seems to have gotten their previous acquisition of the Brazilian field right, so I am inclined to back them now. At what price would you look to get in, and do you think the price will drop below the offer price? Many thanks, Michael

    Answer

    Hi John & Michael,

    This week Karoon Energy (KAR) announced deals worth $720 million to buy stakes in certain offshore oil and gas fields in the Gulf of Mexico from U.S.-based LLOG Exploration, in a move to diversify operations beyond Brazil and Australia. The oil and gas explorer announced it would raise around $480 million to fund a 30% stake purchase in the Who Dat and Dome Patrol fields in offshore Louisiana and a near 16% stake buy in the Abilene field.

    • Karoon Energy issued shares under the equity-raising at A$2.05 apiece, a 14.6% discount to the stock’s close on Tuesday.

    We don’t mind KAR over the longer term but following the share dilution and MM’s negative outlook for oil & gas we are inclined to remain on the side-lines over the coming months.

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    Karoon Energy Ltd (KAR)
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