Capital Allocation & Who Dat Returns

Hi All,

1. Has anyone run an IRR model on the Who Dat acquisition?
- At their acquisition price of $720m, the IRR I get using the futures curve for WTI & Natural gas is close to a 0% IRR. I even allow for nearly all of the 2U being developed into 2P. Meaning at what they paid, it's all risk and no return.
- To get a 15% IRR on Who Dat, which is what you should be targeting for an asset like this, the acquisition price has to be circa $200m.
- So they effectively torched US $520m of shareholder funds.

2. They have a "50 for 10" strategy, meaning they want to grow to 50,000 BOE per day.
- This is ~50% more than they're producing and means they plan to make further acquisitions.
- In what world does Karoon board and mangement believe they have been given the mandate to do this?
- They just torched a few hundred million on Who Dat.
- Management appear to be empire builders and want to grow their pay packet at the cost of shareholders.

The Karoon share price will never rocket, because as soon as it gets on a run and becomes fairly priced, you can bet there's another cap raise at a discount to buy another overpriced asset to grow the remuneration package.

As a holder, I would like to see management removed and no further acquisitions or large capex projects and all free cash flow returned to shareholders.