Brazil IPO Launched
Karoon?s expected IPO price range is US$603m ? US$750m
Karoon Gas Australia has launched its Brazil based initial public offering (IPO) for 31.9% of its South American (SA) assets. Karoon?s expected price range is US$603m - US$750m from the IPO. If the guidance is correct, it implies a value of US$1.89bn to US$2.35bn for 100% of Karoon's SA exploration assets.
We think Poseidon is potentially worth A$5.86/share
Our analysis suggests the potential development of a 5 TCF Greater Poseidon gas field to support Darwin LNG T-2 expansion generates a project IRR of 13.5%(including royalty), which results in a value for Poseidon of A$5.86/Karoon share.
Action: Buy rating maintained
In our view, recent Karoon share price weakness is largely related to the Karoon Share Purchase Plan (issue price of A$7/share). If we assume the market is valuing Poseidon at 50% of the UBS estimated value, and after adding in the low case US$1.89bn (A$8.92/KAR share at A$/US$0.97) or US$3.21/bbl Brazil IPO value, it equates to a value for Karoon of A$12.93/KAR share.
Valuation and price target
Karoon continues to rate as our top Australian mid-cap E&P sector Buy for valuation upside from the potential future commercialisation of Poseidon and for its highly attractive exploration assets. Our price target of A$12.33/share is based on a Poseidon to Darwin LNG T-2 development scenario and a low case US$2/bbl for the Brazil IPO / 32% weighting of Karoon?s risked SA exploration prospects.
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Last
$1.71 |
Change
-0.025(1.44%) |
Mkt cap ! $1.391B |
Open | High | Low | Value | Volume |
$1.70 | $1.71 | $1.70 | $170.4K | 100.2K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
9 | 6644 | $1.71 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$1.71 | 47121 | 5 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 28 | 1.810 |
1 | 2808 | 1.780 |
5 | 928 | 1.775 |
2 | 130 | 1.770 |
4 | 11326 | 1.760 |
Price($) | Vol. | No. |
---|---|---|
1.610 | 5489 | 4 |
1.640 | 130 | 1 |
1.650 | 400 | 1 |
1.660 | 978 | 4 |
1.670 | 1999 | 1 |
Last trade - 10.05am 03/09/2024 (20 minute delay) ? |
KAR (ASX) Chart |