KAR – Morgans rates the stock as Add

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Karoon Energy released quarterly results showing production from Bauna of 15.6kbopd, which was around 5% ahead of Morgans estimate.

The company finished the first quarter with $399m in cash, which was in-line with the broker’s estimate.

The analyst notes the key market focus remains timing of deal completion on the Bauna transaction. First quarter commentary is considered to points to the company having worked through the conditions attached to the ANP’s approval, with the company now working to finalise the FPSO charter and transaction close in the next week. ANP is the oil sector regulator in Brazil and FSPO is a floating production, storage and offloading facility.

There is still some chance that the transaction is finalised on the 30 October target date, says the broker.

The Add rating and target price of $1.56 are unchanged.

Sector: Energy.

Target price is $1.56.Current Price is $0.80. Difference: $0.76 – (brackets indicate current price is over target). If KAR meets the Morgans target it will return approximately 49% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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