August reporting season has come and gone.
We often see significant stock price movement as investors react to important financial data from ASX listed companies.
One stock that has tumbled following results has been Karoon Energy Ltd (ASX: KAR).
The oil and gas explorer and producer has still risen more than 20% year to date, however in the last 5 days its share price has shed more than 11%.
Image source: Getty Images
What did the company report?
Karoon Energy reported for 2025 Half Year Results:
- Revenue of $308.3 million USD (down 25% on 1H24)
- Underlying EBITDAX of $200.5 million USD (down 25% on 1H24).
- Underlying NPAT of $45.0 million USD (down 61% on 1H24).
- Interim dividend 2.4 AUD cents/share (unfranked)
Commenting on the results, Chief Executive Officer and Managing Director, Dr Julian Fowles, said:
While 1H25 production improved, underlying NPAT declined, primarily due to 14% lower average realised liquids prices and timing of Baúna Project shipments, with revenue from late June cargo booked in July. NPAT was also impacted by increased finance costs, due to a higher average net debt position as the balance sheet was deployed in line with the capital allocation framework, as well as several non-cash charges.
What did Macquarie have to say?
Following the results on August 27, broker Macquarie released analysis on Karoon Energy shares.
The broker noted that the interim dividend of A2.4 cents per share (US1.6 cps) was above Macquarie's expectations, but below consensus, reflecting a 25% payout within the guided 20–40% range.
The broker also raised that operationally, Karoon's Bauna field is facing reduced output due to an electrical failure in one of the three connections to the electric submersible pump (ESP) at the SPS-92 well, a key producer. This issue is expected to reduce production for more than 6 to 9 months.
KAR looks relatively fairly valued on our US$65/bbl long-term Brent price. Major organisational change, including new CEO (in an important period of taking on Bauna FPSO and encountering another ESP issue while planning 2026 flotel campaign) has potential to be disruptive.
Updated price target for Karoon Energy shares
As a result of lower Bauna output, Macquarie has cut its EPS estimates for CY25 and CY26 by 22% and 15% respectively, though CY27 EPS is increased by 12% on expectations of a production rebound.
However the 12-month target price has been raised 5.6% to $1.90 (from $1.80).
Based on yesterday's closing price of $1.70, this indicates a solid upside of 11.76% should its share price reach the target set by Macquarie.
It seems following earnings results and a selloff, Karoon Energy shares may now be slightly undervalued.
