Join our daily newsletter At The Bell to receive exclusive market insights
Karoon Energy (ASX:KAR) has notched up a major milestone in the development of its Neon Oil Project in the Santos Basin in Brazil by approving Decision Gate 2 – and now the company can move into the Define phase.
Listen to the HotCopper podcast for in-depth discussions and insights on all the biggest headlines from throughout the week. On Spotify, Apple, and more.
This phase includes front-end engineering and design and will advance on a staged commitment basis to mitigate risk amid market volatility.
Karoon’s updated contingent resource estimates for Neon have also been materially improved, with 1C increasing by 59% to 59.8 million barrels, 2C rising 44% to 86.5 MMbbl, and 3C up 21% to 108.0 MMbbl.
The initial development phase will target 60–70 MMbbl. Additionally, 2U prospective resources of 6.7 MMbbl have been recognised inaugurally.
The “Define” phase comprises three stages and has an initial capital commitment of US$7 to $10 million, which is to be funded from the company’s cash reserves.
This stage focuses on FPSO selection, development planning, and market engagement.
A farm-down process, crucial to making a final investment decision, will commence in Q2, with a data room to then open in the third quarter.
Revised capital estimates for Phase One1 development stand between US$900 million ($1.4 million) and US$1.2 billion ($1.89 billion), with the first oil targeted for early 2029 and a peak production rate of 40,000–50,000 barrels per day.
Under a model of US$65/bbl of Brent oil, the Karoon project is likely to score a payback period of approximately two years and an IRR of more than 20%.
More market news
Kowtow: “Biggest day in financial history” on Trump’s tariffs retreat
Meet GeoGeorge: The HotCopper poster so accurate he got hired as an analyst
Karoon presently owns 100% of the Neon project and plans to farm down a 30–50% interest. The company targets an FID by mid-2026, contingent on securing a partner and preferred market conditions.
At the time of writing Karoon Energy has been trading at $1.24.
Join the discussion: See what HotCopper users are saying about Karoon Energy and be part of the conversations that move the markets.
The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.
