Karoon March quarter output dips, to lift spending on Neon

The news: Oil and gas producer Karoon Energy has reported a drop in first quarter production and sales, as it flagged increased capital spending on its Neon oil field project.

The numbers: Production for the three months to March was down 9% from the prior quarter to 2.36 million barrels of oil equivalent, while sales volumes dropped 32% on quarter to 2.15 mboe.

Karoon shares were unchanged at $1.23 in early trading on the ASX.

The context: The company said first quarter production was affected by a 20-day maintenance shutdown in March at its Baúna field in Brazil, which accounts for the bulk of its current production. Output at its Who Dat field in the Gulf of Mexico was slightly higher.

The explorer has lifted its full-year guidance for investment to a range of USD105 million to USD125 million ($165 million to $197 million), due to an expected increase in costs at its planned Neon oil field project. Karoon has committed between USD7 million and USD10 million on preparing the project for a final investment decision, which includes confirming final well numbers and undertaking a farm-down process.