Ann: Who Dat East Well Drilling Update, page-48

"I understand when you look at the whole package, you believe they paid too much and the market agrees."

Maybe, maybe not. There could be other reasons than just the Who Dat acquisition for the fall in KAR's share price:

- The following is a summary of ME's risked valuation of the Who Dat assets as at 19 Dec 23 and 02 May 24:


They place a risked valuation of A$443 for Who Dat Exploration/discovered. (Don't forget that KAR that "It took Karoon nearly two years to find an asset that satisfied all the Board’s value, operating and strategic objectives, with more than 20 opportunities evaluated".

What has also occurred since the Who Dat acquisition is the disclosure that KAR has been unable as yet to find a Joint Venture partner for the development of Neon and Goia. Back in October 23 this asset had a risked valuation of A$496m. As at 02 May this valuation was reduced to only A$152m by ME.

If KAR cannot find a joint venture partner for Neon it may have to fund the development 100% itself or write it off completely. (If it cannot find a joint venture partner it will be harder to find a buyer for 100%).

Goldman Sachs Research Report dated 29 Feb 24 indicates that "We expect the potential development to cost ~US$1 bn". They have provided cash flow for KAR with Neon coming online in FY 2029 funded 100% by KAR. They value Neon unrisked at US$689M. Interesting that show Who Dat will provide a positive EBITDA of US$752M with US$202M capital expenditure over that time. In other words, cash flow from Who Dat may contribute US$550M towards Neon development costs over that time. They also indicate net debt will peak at US$601M in 2028. They have a rather bullish Brent oil price prediction of around US80 per barrel over that period.

Perhaps the Capital Raise and the Debt raise was something that had to happen if Kar was to realise any value from Neon anyway!

Regards

SP