Karoon Energy Ltd (ASX: KAR) shares are the biggest gainer on the S&P/ASX 200 Index (ASX: XJO) on Thursday, but the team at Jarden reckons they've got a bit of a way to run just yet.
The energy company on Thursday released a quarterly update to the ASX, which said that despite third-quarter sales volumes falling 3% compared with the previous quarter to 2.52 million barrels of oil equivalent (mmboe), revenue went up.
The company's third-quarter sales revenue came in at US$164.1 million ($252.9 million), 2.7% higher than the previous quarter and 13.2% up on the same quarter last year, "primarily reflecting higher Baúna (oil field) realised oil prices''.
Karoon also said the next tranche of its US$75 million ($115.6 million) on-market share buyback was expected to start shortly, and would be valued at about US$25 million ($38.5 million).
The company also narrowed its full-year production guidance, from the original 9.7 to 10.5 mmboe, to a range of 9.8 to 10.4 mmboe.
Image source: Getty Images
Result impacted by outages
Karoon managing director Dr Julian Fowles said production from the Baúna Project was better than expected early in the quarter but was hit with technical issues in August and September.
As a result, third quarter Baúna Project production was 12% below the second quarter of 2025. Who Dat net revenue interest production in the third quarter was also 12% lower than the second quarter of 2025, reflecting a planned five-day shutdown for annual maintenance in August, unplanned downtime for repairs and natural decline.
Dr Fowles said strong cash flow from both producing assets led to a US$89 million ($137.2 million) reduction in net debt to US$148.7 million ($229.2 million) at the end of September.
New targets on the cards
He added that the company was also, this week, successful in securing another deepwater exploration block off the coast of Brazil.
He added:
Through prudent bidding in the last three Brazil licensing rounds, Karoon has acquired an extensive but relatively low cost position with no well commitments, over what we believe may be a potentially significant new post salt exploration play. We are maturing the play, with our work currently being reviewed by independent experts.
The analysts at Jarden ran the ruler over the update and have an overweight rating on the stock, with a price target of $1.65.
This compares with the current price of $1.54, up 7.8% on Thursday.
The Jarden analysts said the reinstatement of the buyback showed management's confidence.
Despite likely consensus production downgrades, we think the stock trades higher today due to higher oil prices overnight and Karoon being the most leveraged stock to oil prices in our coverage.
