Karoon Energy Ltd · ASX:KAR
Karoon Energy — Merger or Acquisition (November 2023)
64 slides from Karoon Energy's merger presentation, Nov 16, 2023
Slide 1: Company Announcements Office
16 November 2023 Company Announcements Office ASX Limited Dear Sir / Madam Acquisition of interest in the US Gulf of Mexico Enclosed is a presentation for release. This announcement was authorised by the Board of Directors. Yours faithfully Daniel Murnane Company Secretary
Slide 2: Karoon enters US Gulf of Mexico
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Karoon enters US Gulf of Mexico A c q u i s i t i o n o f i nt e re st s i n Wh o D at a n d s u rro u n d i n g a c re a ge i n t h e U S G u l f o f M ex i co 16 November 2023
Slide 3: Important notice and disclaimer
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Important notice and disclaimer This presentation is dated 16 November 2023 and has been prepared by Karoon Energy Ltd ACN Offer will need to apply in accordance with the instructions contained in the retail offer booklet Reser
Slide 4: Important notice and disclaimer (cont.)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Important notice and disclaimer (cont.) Governance and Competent Person's Statement – Acquisition (cont.) the Company). In particular, no representation, warranty or assurance (express or implied) is cause them to breach the 20
Slide 5: Contents
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Contents 1 Transaction summary 2 Strategic rationale and investment highlights 3 Overview of Who Dat, Dome Patrol and development assets 4 Karoon proforma summary 5 Transaction funding Appendix: A Supporting information B Key r
Slide 6: Transaction summary
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Section 1 Transaction summary
Slide 7: Compelling value proposition
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Compelling value proposition High margin production, near term appraisal, and infrastructure -led exploration upside Transaction highlights Karoon pro-forma Karoon to acquire a 30% interest in offshore Who Dat and Dome Patrol o
Slide 8: Transaction summary
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Transaction summary Karoon Energy Limited (“KAR”, “Karoon”) has entered into an agreement to acquire a 30% interest in Who Dat, Dome Patrol, Who Dat South, a ~16% interest in the Transaction Abilene fields, a 35% interest in Wh
Slide 9: Acquisition overview
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Acquisition overview High margin asset with material production growth underway, development and exploration upside Asset overview Location Mississippi Canyon, US Gulf of Mexico (offshore Louisiana, ~800m Location water depth)
Slide 10: Transformational impact on Karoon's metrics
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Transformational impact on Karoon’s metrics Material increase in Reserves, Resources and production 2P Reserves (MMboe)1 2C + 2U Resources (MMboe)1,4 CY24E Production Guidance (MMboe)2,3 Oil Gas Potential conversion of 2C 2U Gu
Slide 11: Strategic rationale and investment highlights
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Section 2 Strategic rationale and investment highlights
Slide 12: Karoon's M&A objectives
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Karoon’s M&A objectives Delivering Karoon’s key strategic acquisition objectives Karoon’s M&A objectives Who Dat and Dome Patrol acquisition Producing asset Adds 4.0-4.5 MMboe (NRI) production to Karoon in CY24 Generating immed
Slide 13: Investment highlights
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Investment highlights 1 Transforms Karoon into a geographically diversified producer with entry into the US GoM, a Tier 1 hydrocarbon jurisdiction 2 Immediate cash flow generation from low cost, high margin offshore oil and gas
Slide 14: Acquisition diversifies Karoon with long-life asset
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 1a Acquisition diversifies Karoon with long-life asset Provides low risk geographic diversity and significantly expands the asset base Geographic diversification overview Karoon standalone Karoon proforma Located in a Tier 1 oi
Slide 15: Strategic entry to the US GoM
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 1b Strategic entry to the US GoM Tier 1 US jurisdiction provides a foundation for growth Why invest in the US Gulf of Mexico? US Gulf of Mexico surrounding infrastructure 1 Geological and facility similarities between US GoM an
Slide 16: Low cost asset driving strong margins and cash flow
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 2 Low cost asset driving strong margins and cash flow High margin bbls due to low operating cost of US$5.70/boe 1 (KAR US$15.75/bbl 2) Who Dat Gross operating cost and margin per barrel Who Dat historical opex / boe Gross (US$/
Slide 17: LLOG is a leading Gulf of Mexico operator
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 3a LLOG is a leading Gulf of Mexico operator Strong operating track record in cost, efficiency, safety and production Overview 7th largest gross producer in the US GoM Private company founded in 1977 Top 20 Oil & Gas Producers
Slide 18: Reliable operational performance and facility uptime
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 3b Reliable operational performance and facility uptime 94% uptime since first production in 2011 Gross monthly production since inception (‘000 boe)1 Yearly average Floating Production Facility uptime (%)2 Who Dat has demonstr
Slide 19: Material further growth potential
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 4 Material further growth potential Development program underway, attractive near-field exploration identified Current development program Near term appraisal Infrastructure-led exploration ✓ In Sept Q 23, E-2 and E-7 wells bro
Slide 20: Significant increase in scale
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES 5 Significant increase in scale Strengthens Karoon’s position as a material ASX oil producer FY23A Oil Production (MMbbl)1,3 2P Reserves (MMboe)2,3 n/a Woodside Karoon PF Santos Karoon Beach Horizon Cooper Central Strike Woodsi
Slide 21: Overview of Who Dat, Dome Patrol, development and exploration assets
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Section 3 Overview of Who Dat, Dome Patrol, development and exploration assets
Slide 22: Who Dat development milestones
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Who Dat development milestones Ongoing development program Who Dat development timeline Near-term well development program with three wells expected to be online by 4Q 2023 and one expected in early 2024 Potential further infil
Slide 23: Who Dat reservoir development plan
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Who Dat reservoir development plan Stacked reservoir sands allow low-cost development and reserves replacement Overview Reservoir cross section Subsurface geology High quality turbidite reservoirs with high net to Gross, high p
Slide 24: Who Dat infrastructure overview
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Who Dat infrastructure overview Existing infrastructure with expansion capacity available Overview Subsea infrastructure OptiEx Floating Production System (FPS) Water removed and oil and gas separated at FPS before entering exp
Slide 25: Pathway to market
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Pathway to market Existing pipelines provide access to Gulf Coast markets Access to market Overview Oil transport Transco Zone 4, Florida Oil exported via the Mars Pipeline from a Who Dat owned lateral pipeline Offshore Louisia
Slide 26: Reserve growth opportunities
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Reserve growth opportunities Significant potential upside from potential subsea tiebacks Overview Map of prospect locations (offshore Louisiana) Discovered 2C Continent Resource of 17 MMBoe (Gross) and 2U Prospective Resource o
Slide 27: LLOG has a proven track record
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES LLOG has a proven track record Leading exploration returns alongside highly efficient development and drilling Value added through cycle time efficiency1 Leader in drilling efficiency1 US Gulf of Mexico deepwater: subsea tiebac
Slide 28: Who Dat asset historical performance
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Who Dat asset historical performance Strong production and earnings results Production Gross (MMboe)1 EBITDA Gross (US$m)1,2 12.2 772 11.6 10.6 9.7 573 422 186 CY2020 CY2021 CY2022 LTM CY2020 CY2021 CY2022 LTM Oil Gas (31-Jul-2
Slide 29: Karoon proforma summary
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Section 4 Karoon proforma summary
Slide 30: Karoon proforma earnings and scale uplift
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Karoon proforma earnings and scale uplift The acquisition materially increases Karoon’s scale Proforma CY24E production guidance Proforma 2P Reserves (MMboe)3 FY23A operating cost (US$/boe)3 (MMboe)1,2,3,4 +45-50% +60% ~15% pro
Slide 31: Well-capitalised post completion
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Well-capitalised post completion Strong balance sheet and liquidity to support post -acquisition growth Karoon’s proforma capital structure1,2 Balance sheet commentary Karoon Transaction Karoon Pro Standalone Adjustments Forma
Slide 32: Guidance
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Guidance1 Proforma CY24 12 months to Period BASIS OF GUIDANCE 31 Dec 24 Low High 1. Guidance is subject to various risks (including “Key Risks” set out Production2 in Appendix C of this Presentation and 2023 Annual Report) Braz
Slide 33: Transaction funding
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Section 5 Transaction funding
Slide 34: Sources and uses of funds
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Sources and uses of funds Sources and uses of funds1 Transaction funding structure Fully underwritten Equity Raising of approximately A$480m Sources A$m US$m comprising: Equity 480 300 Equity Raising A$170m placement. and A$310
Slide 35: Equity raising details
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Equity raising details Fully underwritten Equity Raising of approximately A$480 million, including: A$170 million institutional placement to eligible investors (“Placement”) Offer size and structure A$310 million 1-for-3.751 pr
Slide 36: Equity raising timetable
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Equity raising timetable Event Date1 Announcement of Acquisition and Equity Raising, trading halted and Institutional Entitlement Offer and Placement opens Thu, 16 November 2023 Announcement of completion of Institutional Entit
Slide 37: Supporting information
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Appendix A Supporting information
Slide 38: Who Dat Reserves & Resources
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Who Dat Reserves & Resources As at 1 August 2023 1P 2P 3P Reserves Gross NWI NRI Gross NWI NRI Gross NWI NRI Oil (mmbbl) 60.5 18.1 14.5 83.1 24.9 19.9 121.7 36.5 29.2 Who Dat, Dome Patrol NGL (mmbbl) - - 0.8 - - 1.3 - - 1.5 and
Slide 39: Land Overview
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Land Overview Joint Venture Blocks Lease effective date Lease expiry date MC 502 1 May 2005 HBP (longhorn unit) MC 503 1 May 2005 HBP Who Dat MC W/2 504 1 July 2014 30 June 2024 MC E/2 546 1 July 2003 HBP (Who Dat and Longhorn
Slide 40: Fiscal regime comparison
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Fiscal regime comparison US Deepwater Gulf of Mexico Brazil Net working interest (NWI) oil and gas Net working interest (NWI) oil and gas PRMS compliant Reserves, Resources and production production production Less: ONRR(1) roy
Slide 41: Baúna operating performance
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Baúna operating performance Focus on maintaining uptime on facilities and active well management Quarterly Production (MMbbl) Production shut-in for Baúna six weeks due to gas leak Key priority is maintaining safe and healthy w
Slide 42: Key risks
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Appendix B Key risks
Slide 43: Key risks
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Key risks This section sets out some key risks associated with an investment in Karoon, which may affect the value of shares in Karoon. The risks do not constitute an exhaustive list of all risks involved with an investment in
Slide 44: Key risks
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Key risks Operational and business risks Laws, regulations Karoon’s business is subject to extensive laws, regulations and government policies in the jurisdictions where Karoon operate s its assets and carries out its business.
Slide 45: Key risks
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Key risks Operational and business risks Health & Safety Exploration and production of oil and gas may expose Karoon’s staff and contractors to potentially dangerous working environm ents. Health and safety legislation and regu
Slide 46: Key risks
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Key risks Operational and business risks Insurance Karoon's insurance does not comprehensively cover all risks that may materialise and some insurances are prohibitively expens ive making them not commercially viable. The occur
Slide 47: Key risks
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Key risks Acquisition risks Risks related to Oil and gas drilling and production activities are subject to numerous risks, including the risk that no commercially product ive oil or natural gas reserves are found. The cost of d
Slide 48: Key risks
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Key risks Acquisition risks Completion The Acquisition may not close or may not achieve closing within the expected timing due to a failure to satisfy the condition s precedent in the purchase and sale agreement, which include
Slide 49: Key risks
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Key risks Acquisition risks Joint venture As is common in the oil and gas industry, Karoon will as a consequence of the acquisition become a party to various unincorpo rated joint ventures and accordingly is subject to joint ve
Slide 50: Key risks
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Key risks General risks Risks associated There are general risks associated with investments in equity capital in general and oil and gas stocks in particular such as Karoon shares. Events may occur within or outside Australia,
Slide 51: Key risks
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Key risks General risks Risk of dilution Investors who do not participate in the Entitlement Offer, or do not take up all of their entitlement under the Entitlement O ffer, will have their percentage security holding in Karoon
Slide 52: Underwriting Agreement termination Events
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Appendix C Underwriting Agreement termination Events
Slide 53: Underwriting Agreement Termination Events
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Underwriting Agreement Termination Events Termination Below is a summary of the termination events set out in the Underwriting Agreement. events a statement contained in the offer materials prepared in connection with the Equit
Slide 54: Underwriting Agreement Termination Events
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Underwriting Agreement Termination Events Termination any one of the following events occur, and the occurrence of such event has or is likely to have a material adverse effect on the success, settlement or marketing of the Equ
Slide 55: International offer jurisdictions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Appendix D International offer jurisdictions
Slide 56: International offer jurisdictions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES International offer jurisdictions Bermuda No offer or invitation to subscribe for New Shares may be made to the public in Bermuda or in any manner that would constitut e engaging in business in or from within Bermuda. In additi
Slide 57: International offer jurisdictions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES International offer jurisdictions Canada (British Any financial information contained in this document has been prepared in accordance with Australian Accounting Standards and also comply with International Financial Reporting
Slide 58: International offer jurisdictions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES International offer jurisdictions Malaysia This document may not be distributed or made available in Malaysia. No approval from, or recognition by, the Securities Commi ssion of Malaysia has been or will be obtained in relation
Slide 59: International offer jurisdictions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES International offer jurisdictions Switzerland The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange or on any other st ock exchange or regulated trading facility in Switzerla
Slide 60: International offer jurisdictions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES International offer jurisdictions United States This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. Th e New Shares have not been, and will not be, register
Slide 61: Glossary
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Appendix E Glossary
Slide 62: Glossary
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Glossary Term Definition Term Definition A$ or AUD Australian Dollars Concession The geographic area in which the government allows a company to operate. Those quantities of hydrocarbons estimated, as of a given date, to be pot
Slide 63: Glossary (cont.)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Glossary (cont.) Term Definition Term Definition A business entity created by two or more parties, generally characterised by shared ownership, shared returns and risks, and Joint venture Petrobras Petróleo Brasileiro S.A. shar
Slide 64: Karoon Energy
KAROON ENERGY
Karoon Energy — Merger or Acquisition (November 2023) on 6ix