Karoon reports 39% full-year profit fall, buys floating facility for $182m
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The news: Oil and gas explorer Karoon Energy has agreed to acquire floating production, storage and offloading facility (FPSO) Baúna Cidade de Itajaí (CDI) for USD115 million ($182 million) from Brazil's Altera & Ocyan.
Karoon also reported a 39% decline in full-year net profit to USD127.5 million, impacted by lower production at its Baúna field in Brazil.
The numbers: Karoon said its Brazilian subsidiary Karoon Petróleo & Gas has signed a sale and purchase agreement to acquire the FPSO for USD115 million, plus around USD8 million in transaction costs.
The FPSO, owned and operated by Altera & Ocyan, is the production facility for Karoon's 100% owned Baúna project in the southern Santos Basin.
The takeover is subject to customary approvals, with the deal expected to close by 30 April. The acquisition is expected to be funded from existing cash on hand.
Karoon also reported its full-year results, showing a slump in net profit, due to lower Baúna production, a USD60.9 million deferred tax adjustment, and expenses of USD15.1 million related to the unsuccessful Who Dat West well.
The company delivered its highest ever annual production of 10.4 million barrels of oil equivalent, but came in 20% below originally anticipated.
Karoon shares were up 4.3% to $1.45 at 11:20am AEDT, having retreated more than 20% over the last 12 months.
The context: CEO and managing director Julian Fowles said that the company's acquisition of Baúna FPSO is aimed at taking direct control over a "vital asset" for Karoon. The move will enable the company to improve operational efficiencies and extend the field life of the project, he said.
Fowles said that full-year result was negatively impacted by operational challenges at its Baúna and Who Dat projects.
What they said: "We recognise the impact this had on shareholder value over the period and are committed to addressing these issues and restoring reliable and predictable operations, as well as the market's confidence in the company," Fowles said.
