Karoon Energy Ltd (ASX: KAR) shares have been on a bit of wild ride lately.
On 11 June, shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed the day trading for $2.05. Last Friday, 26 June, shares finished at $1.26 each, putting the stock down 29.5% in two weeks.
This week, Karoon Energy shares have come charging back, trading for $1.44 apiece on Tuesday.
But does the rebound have legs?
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Should I buy Karoon Energy shares today?
Dolphin Partners Financial Services' Arthur Garipoli analysed the outlook for Karoon Energy stock late last week, prior to this week's rebound (courtesy of The Bull).
"This international oil and gas explorer and producer develops and operates offshore energy assets across Brazil, the United States and Australia," he said.
Commenting on the stiff headwinds battering the ASX 200 energy stock earlier this month, Garipoli noted, "Karoon recently announced a downgrade in production guidance at the Who Dat asset in the US Gulf of Mexico for calendar year 2026."
On 16 June, Karoon Energy shares closed down 11.6% and tumbled another 13.4% the following day after reporting the lowered guidance.
With damaged equipment at its Who Dat joint venture project taking longer to repair and replace than expected, management lowered 2026 production guidance from the project to between 1.2 million and 1.5 million net barrels of oil equivalent (boe). That's down from prior guidance of of 2.1 million to 2.5 million boe.
Across its assets, Karoon Energy decreased its full year production guidance to between 7.2 million and 8.2 million boe, down from prior guidance of 8.1 million to 9.2 million boe.
And Garipoli believes a potential peace deal in the Middle East could see Karoon Energy shares come under further pressure.
Summarising his sell recommendation on the ASX energy stock, he concluded:
The shares have fallen sharply post the production cut, but there may be further downside in response to falling crude oil prices resulting from increasing tanker traffic crossing the Strait of Hormuz.
Why is the ASX 200 energy stock rebounding this week?
This week's rebound has nothing to do with a resurgent oil price, with Brent crude oil recently trading for just over US$72 per barrel. That's right around where the oil price was before the commencement of the Iran war.
Rather, investors look to have been bidding up Karoon Energy shares after the company announced it had restored production at a key well within its Bauna project, located offshore Brazil. The well was reported to be back to pumping 8,600 barrels of oil per day.
Investor interest also looks to have been piqued by the company announcing that, following the recent completion its US$75 million on-market share buyback program, it will commence a further on market share buyback this month.
