Key Highlights

  • 1H26 sales Revenue was US$244.9 million, down 21% on 1H25, with underlying EBITDAX of US$129.7 million, down 35%.
  • Underlying NPAT declined 35% to US$29.2 million, while statutory NPAT fell 62% to US$26.7 million.
  • Net Debt increased to US$269.7 million from US$143.9 million at the end of 2025, primarily due to the large Baúna Capital program.
  • An Interim Dividend of AUD 1.2 cents per share fully franked was declared, down 50% on 1H25, equivalent to 20% of underlying NPAT.

Karoon Energy Ltd (ASX:KAR) share price was trading at $1.70, down 1.45% or $0.025 on the day, as at 27 August 2026, 10:58am AEST, as the company reported 1H26 sales revenue of US$244.9 million, down 21% on 1H25's US$308.3 million, as the company undertook what CEO and Managing Director Carri Lockhart described as its largest-ever program of capital projects at Baúna in Brazil during the half. Underlying EBITDAX fell 35% to US$129.7 million from US$200.5 million, while underlying net profit after tax declined 35% to US$29.2 million from US$45.0 million. Statutory NPAT, adjusted for non-underlying impacts, was US$26.7 million, down 62% on 1H25's US$71.0 million.

Net Working Interest production fell 44% to 3.17 million barrels of oil equivalent, and net revenue interest sales Volume declined 35% to 3.08 million barrels of oil equivalent. Ms Lockhart said the planned Baúna activities, together with a riser issue at Who Dat, impacted 1H26 production and hydrocarbon sales, though revenue benefited from a material lift in realised oil prices, highlighting the company's Leverage to oil price movements given approximately 97% of 1H26 hydrocarbon sales were oil or liquids with no hedging in place.

Cost Reductions Following FPSO Acquisition

Total Baúna and Who Dat production costs fell to US$59.3 million in 1H26 from US$74.0 million in 1H25, primarily reflecting the removal of Baúna FPSO Lease charges following Karoon's purchase of the vessel in 2025, though this was partly offset by temporary costs relating to a transitional services agreement with the prior FPSO operator. Following the transfer of FPSO operatorship to Karoon in late May 2026, this transitional agreement has expired, which the company said will result in further cost reduction in the second half of the year.

The company said it remains on track to achieve its targeted US$30-40 million of annual cost savings associated with the FPSO acquisition. Unit NWI production costs rose 44% to US$18.82 per barrel of oil equivalent, up from US$13.11, reflecting the lower production volumes over which fixed costs were spread during the half.

Net Debt Rises on Capital Program, Expected to Reverse in Second Half

Net debt increased from US$143.9 million at the end of 2025 to US$269.7 million at 30 June 2026, primarily due to the large capital program at Baúna. The company said cash outflows are expected to be materially lower in the second half of the year, resulting in de-levering through to year end, subject to oil prices and operational performance. Operating Cash Flow for the half was US$58.4 million, down 28% on US$81.6 million in 1H25.

In line with its Capital Allocation Framework, the Board declared an interim dividend of AUD 1.2 cents per share fully franked, down 50% on 1H25's 2.4 cents, equating to 20% of underlying NPAT. The dividend is in addition to the company's on-market share buyback program, under which US$15.3 million was spent in 1H26 buying back 11.8 million shares at an average price of A$1.84 per share. With a further 12.6 million shares acquired over July and August, more than 13.3% of shares on issue have been acquired since the buyback program began in 2024.

Growth Milestones and FY26 Guidance

On 12 August 2026, the Who Dat East Joint Venture, operated by LLOG, sanctioned the development of the Who Dat East field, with the initial one-well development expected to generate an internal rate of return in excess of 20% based on the company's midcase economics, leveraging existing infrastructure. Revised concept select work on the potential development of Neon is progressing, with a decision on whether to enter Front-End Engineering and Design expected in the fourth quarter of 2026.

The company updated its full-year 2026 guidance to include Who Dat East Development second-half Capital Expenditure of US$15-20 million, reflecting the recent positive development decision. Total 2026 capital expenditure guidance now stands at US$193-222 million. Ms Lockhart said the company enters the second half in a position supported by a low-cost asset base, restored production at Baúna, and a Balance Sheet expected to delever through to year end, with core objectives remaining focused on safe and reliable operations, mitigating natural decline, advancing growth opportunities, and maintaining capital discipline.

Conclusion

Karoon Energy's 1H26 results reflect the near-term Earnings impact of the company's largest-ever Capital Investment program at Baúna, which reduced production and drove declines across revenue, EBITDAX and profit measures, alongside a riser issue at Who Dat. With the FPSO transition now complete and associated transitional service costs having expired, the company expects cost reductions and de-levering through the second half, while the sanctioning of the Who Dat East development and progress on the Neon concept selection provide the basis for the company's growth agenda heading into the remainder of the year.