KAR: Baúna SPS-92 restart and 2026 capex increase

Research evidence excerpt

KAR: Baúna SPS-92 restart and 2026 capex increase

based on updated project estimates and lower contingency EPS, Adj Basic: US$/sh

(prior US$76 – 94m), while Neon costs have increased slightly to US Production:Free Cash Flow:Net US$mto Karoon

$14-16m (prior US$9-11m). AllPricedmarketas ofdatapriorintradingAUD; allday'sfinancialmarketdataclose,in USD;EST dividends(unless otherwisepaid in AUD.noted).

Karoon expects "materially lower sustaining capital requirements at

Baúna over the next few years". Based on Karoon's track record and

after considering the Brazil FPSO is now over 15 years old, this target may

not be that easy to achieve despite significant vessel rectification work

undertaken, in our view. We also see a strong likelihood that both risers at

Who Dat will require replacing, not just the one that had the leaks.

New buy back. Karoon intends to commence a further on-market share

buyback at a ”measured pace” commencing in July 2026.

Oil price sensitivity. A US$10/bbl decrease in our Brent oil price forecast

leads to a 27% reduction in our Karoon 2027 EPS forecast. Karoon oil

exposure is unhedged.

Changes to our 2026 forecast and valuation. We have updated our

forecasts for Karoon’s new capex guidance, and we now assume 2026 capex

will be at around the top end of the new company guidance range. This has

reduced our 2026 FCF forecast by 45% to US$36.4m (prior US$66.6m). We

assume Karoon’s new buy back begins in July 2026, and it is at around US

$21m per half over 2H 2026 and 2027. Our Karoon DCF based valuation has

reduced by 1% to A$2.25/sh. We have reduced our Price Target to A$2.25/

sh. Our Sector Perform rating is maintained.

Disseminated: Jun 29, 2026 15:25EDT; Produced: Jun 29, 2026 15:18EDT

For Required Non-U.S. Analyst and Conflicts Disclosures, see page 7