Fund Manager Summary
The fund managers believe that the outlook for Karoon Energy Ltd is promising, presenting a compelling opportunity for exposure to the oil & gas sector. In their opinion, the company demonstrates strong cash generation, low production costs, and significant growth potential. The recent acquisition of the Who Dat asset in the U.S. Gulf of Mexico is seen as a strategic move that enhances its scale and diversification. Additionally, upcoming drilling activity and potential development projects are expected to create exciting opportunities for growth. Overall, they believe that Karoon is currently undervalued compared to its peers and represents a more attractive long-term investment than BPT at this time.
Source: Trading View
Commentary From The Managers
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Tyndall Asset Management
30 June 2025
$1.92
Summary
- Karoon Energy outperformed due to geopolitical risk in the Middle East, leading to increased oil prices.
- Company has low-cost assets in Brazil and the US Gulf of Mexico.
- Currently trading on 8-times earnings.
- Active share buyback program in place.
- Tyndall Asset Management continues to hold as they see Karoon as an attractive investment proposition amidst geopolitical uncertainties.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Tyndall Asset Management
30 June 2025
$1.92
- Karoon Energy outperformed due to geopolitical risk in the Middle East, leading to increased oil prices.
- Company has low-cost assets in Brazil and the US Gulf of Mexico.
- Currently trading on 8-times earnings.
- Active share buyback program in place.
- Tyndall Asset Management continues to hold as they see Karoon as an attractive investment proposition amidst geopolitical uncertainties.
Summary
Sandon Capital
30 June 2025
$1.92
- KAR secured 100% interests in six Santos Basin blocks offshore from Brazil.
- Includes Piracucá near the Neon field and four deepwater blocks near Baúna.
- Considered a low-cost option for KAR to potentially add incremental reserves.
- Enhances proximity to nearby hydrocarbon fields and infrastructure.
- Sandon Capital continues to hold because of these strategic acquisitions.
Summary
Sandon Capital
30 Apr 2025
$1.44
- Sandon Capital notes that KAR’s shares have been negatively impacted by a falling oil price, which declined almost 9% due to global trade volatility and OPEC’s decision to increase oil production.
- Despite oil market volatility, KAR’s quarterly production report indicates that the company’s renewed focus on its existing assets is yielding positive results.
- The flotel supported maintenance campaign at Bauna has been successfully completed, and production has resumed at the SPS-88 well.
- The acquisition of the Bauna Floating Production, Storage and Offloading vessel (FPSO) was completed, enhancing Karoon’s operational control.
- Sandon Capital looks forward to updated production guidance in the upcoming months.
Summary
Sandon Capital
28 Feb 2025
$1.54
- Sandon Capital notes KAR's new focus on delivering shareholder returns through improved operating performance.
- The shift towards organic growth instead of M&A is viewed positively.
- KAR announced the acquisition of the Cidade de Itajaí FPSO for US$115 million, anticipated to yield a high teens rate of return.
- Sandon Capital commends the Board and management for addressing investor concerns regarding M&A ambitions.
- The new strategy is seen as more shareholder friendly, with expectations of benefits over time.
Summary
Sandon Capital
31 Jan 2025
$1.58
- Sandon Capital notes that Karoon Energy Ltd (KAR) plans an additional US$75.0 million buyback in 2025, following two previously announced buybacks of US$25.0 million.
- The dividend payout ratio remains steady at 20-40% of underlying Net Profit After Tax.
- Sandon Capital is encouraged by the company's focus on returning excess capital to shareholders efficiently.
- KAR is in constructive negotiations with Altera & Ocyan regarding the potential acquisition of the Baúna FPSO.
- If the price is right, this acquisition could be a sensible use of capital, addressing operational issues.
- The acquisition could save approximately US$60 million in annual lease costs and enable commercial development of ~10mmbbls of resources.
- It may also help defer abandonment spending.
Summary
Sandon Capital
31 Dec 2024
$1.39
- Sandon Capital notes a disappointing production update from Karoon Energy Ltd (KAR).
- Bauna production affected by broken mooring chains and Who Dat production impacted by Hurricane Rafael.
- Total production for CY24 revised to 10.1-10.3Mboe, significantly below original guidance of 12.0-14.5Mboe.
- Unit costs increased from US$9.00-14.00/boe to US$13.00-15.00/boe due to high fixed costs.
- High acquisition cost for Who Dat assets in late 2023 adds to the disappointment.
- Unforced capital allocation errors and operational challenges have damaged investor confidence.
- Recent capital management initiatives and a focus on consistent production could restore investor faith.
- A moratorium on acquisitions is suggested to help drive a re-rating of KAR shares.
- Investor patience with KAR appears to be wearing thin.
Summary
Monash Investors
31 Oct 2024
$1.39
- Monash Investors recently reintroduced a position in Karoon Energy due to positive fundamental developments.
- The investment follows a significant de-rating of shares, making them more financially attractive.
- Karoon operates in Australia, Brazil, and the US, previously facing negative sentiment due to low reserve life.
- The company's concentrated asset exposure has limited its broader investment appeal.
- Historical capital allocation towards growth over returning capital to shareholders has affected market rating.
- Recent adoption of a capital management framework includes initiating dividends and share buybacks.
- Monash Investors sees this framework as a significant step, anticipating increased cashflow distribution to shareholders.
- With a market cap around $1b and a broad shareholder base, Karoon could be a target for acquisition by larger operators if shareholder-friendly actions do not follow.
Summary
Sandon Capital
31 Oct 2024
$1.39
- Sandon Capital notes a downgrade in Karoon Energy Ltd's full year production guidance to the bottom end of the previous range.
- The relatively fixed cost base has resulted in increased unit costs, now at the upper end of the previous range.
- On a positive note, Karoon announced a US$25m buyback.
- There has been a significant increase in contingent resources at Who Dat East.
- The discovery of hydrocarbons at the Who Dat South exploration well is promising.
- If Who Dat East and Who Dat South prove economical, they could unlock attractive, low capex growth options for Karoon Energy Ltd.
Summary
Clime Investment Management
30 Sept 2024
$1.57
- Clime Investment Management downgraded their outlook for KAR due to poor operational performance.
- Exiting the position was influenced by lack of exploration success in the Gulf of Mexico.
- KAR's Who Dat assets disappointed relative to expectations, increasing growth risk.
- Focus on lower probability exploration in the Gulf of Mexico and Brazil raised concerns.
- With slowing global growth and potential for lower oil prices, exposure to commodities was reduced.
- Exiting KAR aligns with the strategy to minimize risk in the portfolio.
- KAR's share price weakened, reflecting trends in the broader energy sector.
- Reduced confidence in management and the company's strategy contributed to the exit decision.
- Capital from the exit will be redeployed into higher conviction investments.
Summary
Endeavor Asset Management
31 July 2024
$1.87
- Endeavor Asset Management exited their position in Karoon Energy (KAR) at $1.78 per share.
- The decision was influenced by the current spot valuation.
- A weaker near term cash flow outlook was identified.
- The exit was partly due to ongoing production issues.
- There is a concern regarding increasing capital intensity.
Summary
Endeavor Asset Management
31 May 2024
$1.81
- Karoon Energy’s (KAR) share price fell 9% due to downgraded production guidance.
- Shareholder activism is influencing changes in the strategic direction and governance practices.
- Despite current challenges, Karoon is positioned as a key player in the energy sector.
- Recent acquisitions and ongoing projects offer significant growth potential.
- The activism could serve as a positive catalyst for improvements in operations and governance, potentially unlocking further value for shareholders.
Summary
Sandon Capital
30 Apr 2024
$1.95
- Sandon Capital continues to hold an interest in Karoon Energy Ltd (ASX:KAR), an Australian oil and gas producer.
- Karoon has transitioned from exploration to production, particularly after acquiring the Baúna project in Brazil.
- In 2023, Karoon raised equity by issuing shares at $2.05 to fund an acquisition in the Gulf of Mexico.
- Karoon’s shares are trading at a significant discount compared to its Australian peers that pay dividends.
- The fund believes that allocating free cash flow to regular dividend payments could narrow the valuation gap.
- Karoon seems to prioritize growth through exploration and acquisitions rather than immediate dividend payments.
- Sandon Capital has formed an association with Samuel Terry Asset Management to influence the upcoming 2024 Annual General Meeting.
- Efforts are underway to campaign for voting intentions that align with the interests of shareholders.
Summary
Endeavor Asset Management
31 Mar 2024
$2.18
- Karoon Energy presents a compelling opportunity for exposure to the oil & gas sector.
- The company boasts strong cash generation and low production costs.
- Significant growth potential is anticipated for Karoon Energy.
- Recent acquisition of the Who Dat asset in the U.S. Gulf of Mexico enhances scale and diversification.
- Upcoming drilling activity and potential development projects offer exciting possibilities.
- Endeavor Asset Management believes Karoon is currently undervalued compared to its peers.
- Represents a better long-term investment opportunity than BPT at this time.
Summary
Oracle Advisory Group
31 Mar 2024
$2.18
- Oracle Advisory Group continues to hold a positive outlook on Karoon Energy.
- The firm has increased their position in Karoon Energy due to a recent acquisition.
- Karoon has acquired a non-operating stake in the “Who Dat” oil field located in the Gulf of Mexico.
- This oil field is classified as low-cost compared to Karoon’s existing operations in Brazil.
- Oracle believes that oil prices will remain elevated due to ongoing OPEC+ supply influences.
- Recent events in the Red Sea are also impacting supply levels.
- If oil prices maintain their current levels, Karoon is expected to become a cash-making machine over the next few years.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"With its strong cash flow and strategic U.S. Gulf acquisition, the oil & gas landscape seems to favor Karoon Energy as a potential undervalued gem, suggesting that investors might want to keep a keen eye on its unfolding growth narrative."
Last Updated: 30 Jun 2025
Query The Data
Frequently Asked Questions
Who is investing in Karoon Energy Ltd (ASX:KAR)?
Fund managers including Endeavor Asset Management, Monash Investors, Oracle Advisory Group, Sandon Capital, Clime Investment Management and Tyndall Asset Management have invested in Karoon Energy Ltd (ASX:KAR).
Why do fund managers invest in Karoon Energy Ltd?
Fund managers are investing in Karoon Energy Ltd due to its strong cash generation, low production costs, and significant growth potential within the oil and gas sector. The recent acquisition of the Who Dat asset in the U.S. Gulf of Mexico enhances the company's scale and diversification. Upcoming drilling activities and development projects further position Karoon as an undervalued investment compared to its peers, making it an attractive long-term opportunity.
What happened to Karoon Energy Ltd (ASX:KAR)?
There have been no recent updates from fund managers regarding Karoon Energy Ltd although fund managers including Endeavor Asset Management, Monash Investors, Oracle Advisory Group, Sandon Capital, Clime Investment Management and Tyndall Asset Management have previously commented.