The Karoon Energy Ltd (ASX: KAR) share price could be on the move today after the company announced the final investment decision (FID) on developing its Who Dat East oil and gas field in the Gulf of America. Production is slated to start in the second half of 2028, with Karoon expecting a strong return of over 20% IRR.
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What did Karoon Energy report?
- The Who Dat East development in the Gulf of America has been officially approved.
- First production is planned for H2 2028 at approximately 5,900 barrels of oil equivalent per day (boepd), 45% liquids and 55% gas (net to Karoon).
- Total capital cost net to Karoon is estimated at US$155–165 million, with US$15–20 million expected to be spent in 2H26.
- At the midpoint, Karoon forecasts an internal rate of return (IRR) above 20% for the project.
- Karoon's working interest in Who Dat East is 40% (NRI), shared with LLOG (operator, 40%) and Westlawn Americas Offshore (20%).
What else do investors need to know?
The Who Dat East project will be a one-well development, tying into existing infrastructure with a 29-kilometre pipeline and upgrades to the floating production system. Oil and gas production will be co-mingled and processed using established Who Dat facilities, keeping costs and operational risks lower.
Karoon plans to review and likely upgrade its current Who Dat East Contingent Resources as part of the 2026 year-end review. The development paves the way for the company to potentially increase reported reserves, boosting future production and revenue streams.
What did Karoon Energy management say?
Commenting on the news, Karoon Energy's CEO, Ms Carri Lockhart, said:
We are delighted to reach FID on Who Dat East. The development is economically attractive and will deliver material low cost, high margin production to Karoon when it comes online in the second half of 2028.
We would like to thank the Who Dat operator, LLOG, and our JV partner Westlawn Americas Offshore, for the strong collaboration on this development and look forward to commencing the construction phase of the project.
What's next for Karoon Energy?
Karoon Energy will focus on construction and installation over the coming years, with capital investments planned mainly from 2026 onwards. The initial production from Who Dat East is expected to augment Karoon's portfolio with higher-margin barrels and diversify its revenue mix once operations begin in 2028.
In the near term, management will assess its resources and reserves position, considering the Who Dat East development milestone ahead of the upcoming 2026 year-end review. Investors can also expect further updates as the project progresses through construction and into production.
Karoon Energy share price snapshot
The Karoon Energy share price trails the S&P/ASX 200 index (ASX: XJO) on a 12-month basis with a decline of almost 11%.
