- Karoon Energy (KAR) says it will continue with its Baúna acquisition despite market uncertainty
- The company is currently engaged in regulatory processes required to purchase the Brazil-based oil asset from Petrobras
- However, Karoon has said that closing the deal will be pushed back beyond the first quarter of this year
- Production at Baúna was reported at 19,000 barrels per day in 2019
- Karoon Energy is trading down 3.8 per cent today, with shares selling for 38 cents each
Karoon Energy (KAR) has said that it will continue with its Baúna acquisition despite current market uncertainty.
The oil and gas company is currently seeking Government and other contractual approvals in order to complete the transaction.
Located in Brazil, the Petrobras-owned Baúna deposit reported production of 6.94 million barrels of oil last year at $94.96 (USD $60.20) per barrel.
Karoon says that the asset has remained cash flow positive and will offer the company access to additional reserves and long-term financial returns.
However, the deal is not expected to close in the first quarter of this year, pushing back previously indicated time frames.
Robert Hosking, Managing Director of Karoon, acknowledged the turbulent market but was set on reassuring investors.
“The recent financial market conditions have created a more complex backdrop for the completion of transactions, however, Karoon continues to believe Baúna to be a quality asset that can deliver long term value to its shareholders,” Robert explained.
“Karoon is always looking to create value wherever it can be found for its investors and we will work through the current environment in an attempt to complete this acquisition successfully to the satisfaction of the stakeholders involved,” he said.
The widespread impact of Covid-19, compounded by the Russia-Saudi Arabia oil battle, has taken an immense toll on the price of crude.
President Trump’s recent ban on travel between the US and Europe has also contributed to the oil industry’s demise.
Covid-19 panic had already driven the demand for jet fuel into a steep decline, while the situation is only expected to worsen as a result of the ban.
Karoon Energy is trading down 3.8 per cent today, with shares selling for 38 cents each at 11:40 am AEDT.