Don't forget that being a heavy oil reservoir it may be amenable...

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timboz

183 Posts.

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31/03/22

17:26

Post #: 60557570
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Originally posted by Edson: ↑

My feeling is that this acquisition is an excellent fit, if completed at the right price.

1. Atlanta extends the production road map for Karoon for over 2 decades initially net 25k/bbls/day by 2H2024. 1.3 billion bbls in place is huge.
2. Atlanta diversifies Karoon's risk further from a one site Bauna/ Patola FPSO production facility to a 2 site facility in Brazil.
3. Atlanta as an existing producing area, would appear a lower risk prospect than Neon. Much shorted dated risk with a clear path to production in 2024. Neon more likely post 2026 production if FID approved but a longer runway.
4. Enauta would also appear to be a good mid-tier local partner for Karoon. Gives Karoon much deeper links in Brazil than a super major.
5. Execution risks would to be the key issue for me given the size of the CAPEX involved. However by the end of this year Karoon's management team will have substantial in-house experience in Bauna workover and Patola FPSO expansion. Value add for Enauta.
6. Growth of production timeline now assuming all is completed is extremely exciting with strong tailwinds on the POO above $100:-
2021 -13,000 /bbls / day
1H2022 - 20,000
Q1 2023 - 30,000
mid 2024 - 55,000

All of the above sets Karoon up as a very attractive M&A target by 2H2024.

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Don't forget that being a heavy oil reservoir it may be amenable to enhanced oil recovery techniques. This could have great significance to the EOR; perhaps raising it to 50% of the 1.3 billion barrels of OOIP. The link attached will help demonstrate the possibilities albiet constrained by technical and economic considerations.

https://www.hindawi.com/journals/geofluids/2022/5015045/
KAR Price at posting: $2.15 Sentiment: Hold Disclosure: Held
4 Upvote

0 Great analysis

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