brent oil passes 70USD, page-240

Obviously KAR will be volatile in the the short term but for those with a slightly longer time horizon, the proposition is shaping up nicely over the medium term:

Investment Case:

* Ignores hedging in place at $65 (Hedges cover around 30% or less of forecast production in respect of the balance of the2022 financial year (FY) and FY2023.
** Investor Day Commentary:

Q: BOA - Any indication on potential size of assets you are looking at?
JF: We are constantly evaluating. 13-15k a day is a good size for us. We have a no of elements that need to be satisfied like operatorship. We are happy for a partner to operate. Slightly bigger opportunities where we are not operating. Where operating we need to have in house capacity. Not looking at anything significantly smaller than Bauna. Points us towards incrementally larger opportunities providing long term sustainability.

Q: Morgan’s – How many data rooms you are active in? Timelines?
JF: Focused strategy of initial screening of potential opportunities if they meet our hurdles. We have been in more than 1 and less than 6 in the last year. Focused on oil assets with significant upside potential and assets that make sense for KAR to be a part of. Very capable and experienced team in Brazil that have worked on some of the potential assets previously.

Q: MST Marquee – M&A – banks will be getting excited – will deals be organically funded?
JF: Timing of M&A is important with how we can fund it. Have strong cashflow and debt facility. Will have benefit of cashflows from workovers but depends on the scale of any opportunity we find ourselves involved in. Could even be self-funded if buying a producing asset. We have a larger capacity to raise debt than we have currently raised. Will look to self-fund and debt before equity. Want to expand to enable debt and funding costs to come down over time.