- Karoon Energy (KAR) has reported on COVID-19’s impact on its third-quarter activities
- Brent crude oil price has dropped over 65 per cent in the March quarter, due in part to the virus
- However, Karoon maintains it is well capitalised, with $504 million in cash and no drawn debt
- Despite COVID-19’s impact on the world energy markets, Karoon says it will continue to pursue the acquisition of a full operational stake interest in the Baúna oil asset.
- Karoon Energy is up slightly on the market today, selling shares for 54.5 cents each
It’s no secret that oil companies are struggling during this pandemic. Karoon Energy (KAR) has reported on COVID-19’s impact on its third-quarter activities.
Governments and corporations around the world have taken dramatic and immediate steps to combat COVID-19 through social distancing. This has resulted in an economic slowdown and contributed to a collapse in oil demand.
As a result, the Brent crude oil price has dropped over 65 per cent in the March quarter.
Whilst there is still uncertainty around COVID-19, Karron does not believe the virus represents permanent long-term destruction in the demand of oil.
“Emerging from COVID‐19, Karoon expects a meaningful rebound in demand as economic activity returns and lower energy prices stimulate incremental demand,” the company said.
Karoon maintains it is well capitalised, with $504 million in cash and no drawn debt, with the majority of its reserves held in USD to mitigate currency risk.
Baúna acquistion
Despite COVID-19’s impact on the world energy markets, Karoon remains invested in the long term future of energy and says it will continue to pursue the acquisition of a full operational stake interest in the Baúna oil asset.
During this quarter, Baúna produced 1.5 million barrels of oil at an average production rate of 16,500 barrels a day.
Strategic review
Due to the current market uncertainty, Karron initiated a strategic review over the quarter to evaluate whether there was a way they could deliver a better outcome for shareholders once the market settles down.
The results of that review are expected to be fully compiled in the third quarter of 2020.
Karron Energy is up slightly on the market today, selling shares for 54.5¢ each at 2:44 pm AEST.