Karoon Energy Ltd (ASX: KAR) is an Australian-based oil and gas producer focused on offshore production assets in Brazil and exploration acreage in Australia and Peru. The company’s flagship project is the Baúna oil field, located in Brazil’s Santos Basin, which has been a key revenue driver since Karoon took over operations in 2020. The company is transitioning into a mid-tier producer, with plans to further optimise production infrastructure and reduce unit costs across its portfolio.
Strategic Operations Update: Baúna Restart & Output Surge
Karoon Energy has restarted production at its key offshore asset, the Baúna field, following the successful completion of repairs on the SPS-88 well. The company confirmed that the Floating Production Storage and Offloading (FPSO) unit resumed operations on 28 March 2025, marking a timely and efficient return to production after a brief planned shutdown.
Importantly, the restart was ahead of schedule, and current oil output has reached ~26,500 barrels per day, a significant increase over pre-shutdown levels. This boost reflects not only improved reliability from the FPSO facility but also efficient execution of maintenance and repair activities by Karoon’s operational teams.
The SPS-88 well, which encountered flow restrictions earlier this year, underwent intervention and cleaning procedures designed to restore pressure and enhance recovery rates. The success of these works contributes to Karoon’s broader strategy of maximising value from its Brazilian operations while maintaining tight control over capital expenditure.
In parallel, Karoon also reaffirmed that the planned acquisition of the Baúna FPSO remains on track, with finalisation expected in April 2025. The purchase will shift the company from a lease-based model to full asset ownership — a move expected to improve long-term margins and provide greater control over operating schedules.
Investors responded positively, with shares closing 2.86% higher at $1.62 on 31 March. This aligns with Karoon’s goal of delivering reliable, low-cost production while enhancing shareholder returns through dividends and potential buy-backs. The company’s operational execution and timeline discipline continue to reinforce investor confidence.
Market Position and Outlook
Karoon Energy’s successful restart and production uplift come at a time when the company is working to rebuild investor sentiment following a 25% decline in its share price over the past year. While global oil prices have remained volatile, Karoon’s improving asset reliability and increasing scale present a compelling value proposition — especially when paired with a robust dividend yield of 5.86%.
Trading at a relatively low PE ratio of 6.33, Karoon may appear undervalued compared to peers in the ASX Energy sector. With a current market cap of $1.22 billion, the company maintains a strong capital structure, supported by its Brazilian production and regional exploration optionality in Australia and Peru.
Daily trading volume remains high, with over 5.2 million shares exchanged on 31 March. This highlights ongoing institutional interest and strong liquidity — both important indicators of market trust in the company’s long-term strategy. Investors will be closely watching the upcoming FPSO acquisition in April, which could significantly strengthen Karoon’s cost base and operational autonomy.
Strategically, Karoon has also emphasised longer-term reserve development and FPSO upgrades to drive production beyond the current 26,500 bopd level. By retaining flexibility through modular project phasing and cost-efficient expansions, the company aims to deliver reliable, growing cash flows in both base and bullish oil scenarios.
While the broader energy sector remains sensitive to geopolitical and macroeconomic shifts, Karoon’s operational progress and disciplined project execution have helped it stay on track. As the company closes in on full ownership of its Brazilian infrastructure, its investment profile may appeal to both value and yield-focused portfolios.
