Karoon Energy Ltd: Risk Reward Update

Research evidence excerpt

Karoon Energy Ltd: Risk Reward Update

UpdateM

RiskRisk RewardReward– Karoon- EnergyKaroonLtd (KAR.AX)Energy Ltd (KAR.AX)

Leverage to liquids, fresh developments in 2026

PRICE TARGET A$1.63 EQUAL-WEIGHT THESIS

Approximates base case DCF ▪KAR seeks to develop select offshore oil

We discount at pretax WACC estimates of 12-15%. fields, underpinned by producing projects in

We use an approximate Brent forward curve for 2026-27 and a long-term price of Brazil and the US Gulf of Mexico.

US$70/bbl (real) from Sep-2028 quarter onward. ▪KAR offers strong leverage to oil prices, as

We value non-producing assets at book value or on industry accepted yardsticks. the company restores production and

We apply a qualitative risk factor to each project. pursues modest development.

We apply no discount or premium to our SOTP DCF, reflecting growth prospects, funding, ▪KAR's Baúna FPSO acquisition and further

and oil price risk skew. planned turnaround offer upside to field

A$1.88 productivity, but we are cautious of KAR's

production reliability track record, andConsensus Price Target Distribution A$1.49 A$2.26 anticipate 10-15% depletion profiles in MS PT

Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates future.

Consensus Rating Distribution

RISK REWARD CHART

63% Overweight

38% Equal-weight

AUD 0% Underweight

A$3.35A$3.35(+107.43%)A$3.35(+107.43%)(+107.43%) MS Rating

3.2 Source: Refinitiv, Morgan Stanley Research

2.4 Risk Reward Themes

Renewable Energy: Negative

Secular Growth: Positive

1.6 A$1.62A$1.62A$1.62 A$1.63A$1.63(+0.93%)A$1.63(+0.93%)(+0.93%) Self-help: Positive

View descriptions of Risk Rewards Themes here

0.8

0 A$0.31A$0.31(-80.80%)A$0.31(-80.80%)(-80.80%)

JUL '25 JAN '26 JUL '26 JUL '27

Key: Historical Stock Performance Current Stock Price Price Target