Half Year 2026 Karoon Energy Ltd Earnings Call

August 27, 2026

Speaker #1: Good day, and thank you for standing by. Welcome to Karoon Energy's first half 2026 results. At this time, all participants are in listen-only mode.

Operator: Good day and thank you for standing by. Welcome to Karoon Energy H1 2026 results. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to our first speaker today, Carri Lockhart, the Chief Executive Officer and Managing Director of Karoon Energy. Please go ahead.

Operator: Good day and thank you for standing by. Welcome to Karoon Energy H1 2026 results. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to our first speaker today, Carri Lockhart, the Chief Executive Officer and Managing Director of Karoon Energy. Please go ahead.

Speaker #1: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you need to press *11 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker #1: To withdraw your question, please press *11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to our first speaker today, Carrie Lockhart, Chief Executive Officer and Managing Director of Karoon Energy.

Speaker #1: Please go ahead.

Speaker #2: Thank you. Good morning, everyone, and thank you for joining our 2026 half-year results webcast. My name is Carrie Lockhart, CEO and Managing Director of Karoon Energy.

Carri Lockhart: Thank you. Good morning, everyone, and thank you for joining our 2026 half year results webcast. My name is Carri Lockhart, CEO and Managing Director of Karoon Energy, and I have with me this morning, Eric Williams, our CFO, Ann Diamant, our Senior Vice President of Investor Relations, and also attending is Mark Mick, who is our Chief Commercial and Technical Officer. Earlier this morning, we released our 2026 half year results to the market. This presentation should be read in conjunction with the ASX announcement, and I draw your attention to the disclaimers on slide 2 and notes and definitions on slide 3. I will move straight to slide 5, which provides an overview of the H1 2026. Please keep in mind that all currency related numbers we share are in USD, except for the per share values.

Carri Lockhart: Thank you. Good morning, everyone, and thank you for joining our 2026 half year results webcast. My name is Carri Lockhart, CEO and Managing Director of Karoon Energy, and I have with me this morning, Eric Williams, our CFO, Ann Diamant, our Senior Vice President of Investor Relations, and also attending is Mark Mick, who is our Chief Commercial and Technical Officer. Earlier this morning, we released our 2026 half year results to the market. This presentation should be read in conjunction with the ASX announcement, and I draw your attention to the disclaimers on slide two and notes and definitions on slide three. I will move straight to slide five, which provides an overview of the H1 2026. Please keep in mind that all currency related numbers we share are in US dollars, except for the per share values.

Speaker #2: And I have with me this morning Eric Williams, our CFO, and Diamond, our Senior Vice President of Investor Relations. Also attending is Mark Mick, who is our Chief Commercial and Technical Officer.

Speaker #2: Earlier this morning, we released our 2026 half-year results to the market. This presentation should be read in conjunction with the ASX announcement, and I draw your attention to the disclaimers on slide 2 and the notes and definitions on slide 3.

Speaker #2: I will move straight to slide 5, which provides an overview of the first half of '26. Please keep in mind that all currency-related numbers we share are in US dollars, except for the per-share values.

Speaker #2: At the start of the reporting period, we communicated that the first half of 2026 would be a period of intensive investment and execution at Bionan Brazil.

Carri Lockhart: At the start of the reporting period, we communicated that the H1 2026 would be a period of intensive investment and execution at Baúna in Brazil. We delivered on those commitments, successfully completing the Baúna FPSO operatorship transition, the major FPSO revitalization and maintenance program, and restoration of production from SPS-92 and PRA-2. Completion of those activities have safeguarded the asset and enable higher production and asset performance and expected structurally lower cost in the H2 of the year. The focus is now on developing a comprehensive program of activities for the next 3 to 5 years, designed to optimize the performance of our existing assets and mature our growth opportunities both in Brazil and the US. These activities will be prioritized strictly with the lens of creating shareholder returns. I will share more about our operations and projects later in the presentation.

Speaker #2: We delivered on those commitments, successfully completing the Baúna FPSO operatorship transition, the major FPSO revitalization and maintenance program, and restoration of production from SPS-92 and PRA-2.

Speaker #2: Completion of those activities has safeguarded the asset and enabled higher production and asset performance, and is expected to result in structurally lower costs in the second half of the year.

Speaker #2: The focus is now on developing a comprehensive program of activities for the next three to five years, designed to optimize the performance of our existing assets and mature our growth opportunities both in Brazil and the USA.

Speaker #2: These activities will be prioritized strictly with the lens of creating shareholder returns. I will share more about our operations and projects later in the presentation.

Speaker #2: Slide 6 summarizes the 2026 first half operational and financial results. We produced 3.17 million BOEs on a net working interest basis and sold 3.08 million BOEs.

Carri Lockhart: Slide 6 summarizes the 2026 H1 operational and financial results. We produced 3.17 million BOE on a net working interest basis and sold 3.08 million BOE. Baúna FPSO efficiency was 97%, demonstrating the benefits of work completed over 2025 and the H1 of this year. We generated USD 244.9 million in revenue with absolute cost in line with expectations. This resulted in underlying net profit after tax of USD 29.2 million. The board has declared a fully franked interim dividend for the period ended 30 June 2026 of AUD 1.2 cents per share to be paid on 30 September. Moving to slide 7. Since paying our first dividend in 2024, Karoon has returned approximately USD 173 million to shareholders, comprising USD 75 million in dividends and USD 98 million through on-market buybacks.

Speaker #2: Bionan FPSO efficiency was 97%, demonstrating the benefits of work completed over 2025 and the first half of this year. We generated $244.9 million in revenue, with absolute costs in line with expectations. This resulted in an underlying net profit after tax of $29.2 million.

Speaker #2: The board has declared a fully franked interim dividend for the period ended 30 June 2026 of 1.2 Australian cents per share, to be paid on 30 September.

Speaker #2: Moving to slide 7, since paying our first dividend in 2024, Karoon has returned approximately $173 million to shareholders, comprising $75 million in dividends and $98 million through on-market buybacks since 2024 through to the 30th of June 2026.

Carri Lockhart: Since 2024 through to 30 June 2026, we have bought back and canceled more than 13% of Karoon's issued capital at an average price of AUD 1.57 per share, which we believe is an attractive investment, delivering material value to our shareholders. Over the same timeframe, we have invested more than $500 million to both optimize the base business and drive future growth. Base optimization has focused on Baúna FPSO acquisition, maintenance and revitalization work, and well interventions, while investments in the recent sanctioned Who Dat East project and Who Dat South discoveries are expected to deliver future growth. We are well-positioned to support both ongoing shareholder returns, evidenced by the continued on-market buyback into Q3, and invest in our other organic growth opportunities such as Neon and our exploration acreage prospects, as well as Who Dat.

Speaker #2: We have bought back and canceled more than 13% of Karoon's issued capital at an average price of A$1.57 per share, which we believe is an attractive investment delivering material value to our shareholders.

Speaker #2: Over the same timeframe, we have invested more than $500 million to both optimize the base business and drive future growth. Base optimization has focused on the Baúna FPSO acquisition, maintenance and revitalization work, and well interventions, while investments in the recently sanctioned Huda East project and Huda South discoveries are expected to deliver future growth.

Speaker #2: We are well positioned to support both ongoing shareholder returns, evidenced by the continued on-market buyback in Q3, and invest in our other organic growth opportunities such as Neon and our exploration acreage prospects, as well as HUDA.

Speaker #2: We will continue to balance capital returns with ongoing needs of the business to maximize shareholder returns. Moving on to our safety and environmental performance.

Carri Lockhart: We will continue to balance capital returns with ongoing needs of the business to maximize shareholder return. Moving on to our safety and environmental performance. We had zero recordable personal injuries across more than 1.1 million work hours in H1 2026, and no lost time injuries. Our total recordable injury rate was zero. We recorded 5 high-potential incidents during H1. These incidents reinforced the importance of maintaining our focus and safety leadership, risk management, and detailed planning. At 30 June 2026, Scope 1 and 2 absolute emission intensity was 14.6 kilograms of carbon dioxide equivalent per BOE. Overall, this is an impressive delivery by our operational team.

Speaker #2: We had zero recordable personal injuries across more than 1.1 million work hours in the first half of '26, and no lost time injuries. Our total recordable injury rate was zero.

Speaker #2: We recorded five high-potential incidents during the first half; these incidents reinforced the importance of maintaining our focus on safety leadership, risk management, and detailed planning.

Speaker #2: As of June 30, 2026, Scope 1 and 2 absolute emission intensity was 14.6 kilograms of carbon dioxide equivalent per BOE. Overall, this is an impressive delivery by our operational teams.

Speaker #2: We are fully committed to ensuring a safe work environment for all staff and contractors, minimizing environmental impact where practical, and being a positive supporter of the communities in which we work and operate.

Carri Lockhart: We are fully committed to ensuring a safe work environment for all staff and contractors, minimizing environmental impact where practical, and being a positive supporter of the communities in which we work and operate. I now would like to hand over to Eric, who will run through the financial highlights.

Speaker #2: I would now like to hand over to Eric, who will run through the financial highlights.

Speaker #3: Thanks, Carrie. Good morning, everyone. I'll start on slide 10 with the central financial message. The first half was deliberately investment-heavy. We funded the Baúna FPSO revitalization and operatorship transition, restored key wells, and continued returning capital to shareholders.

Eric Williams: Thanks, Carri. Good morning, everyone. I'll start on slide 10 with the central financial message. H1 was deliberately investment heavy. We funded the Baúna FPSO revitalization operatorship transition, restored key wells, and continued returning capital to shareholders. These investments strengthen the platform and position us for a stronger financial profile in H2 of the year. As I begin to discuss our half-year results with a focus on our underlying performance and its implications to cash, please note that we've included a reconciliation to our statutory results on slide 28. Revenue, underlying EBITDAX, and underlying impact reflected higher realized pricing, partially offset by lower sales volumes, with the average realized liquids price reaching $80.65 per BOE, while gearing was just 21% at the end of the period.

Speaker #3: These investments strengthened the platform and positioned us for a stronger financial profile in the second half of the year. As I begin to discuss our half-year results, with a focus on our underlying performance and its implications for cash, please note that we've included a reconciliation to our statutory results on slide 28.

Speaker #3: Revenue underlying EBITDAX and underlying impact reflected higher realized pricing, partially offset by lower sales volumes, with the average realized liquids price reaching $80.65 per BOE, while gearing was just 21% at the end of the period.

Speaker #3: Even during this peak investment period, we continued to return capital to our shareholders, including today's announced dividend and the ongoing share buybacks. Since the 30th of June, we have completed a further $15 million buyback tranche, purchasing approximately 12.6 million shares between the 23rd of July and the 7th of August, which increases our 2026 year-to-date buybacks to over $30 million and 24 million shares.

Eric Williams: Even during this peak investment period, we continued to return capital to our shareholders, including today's announced dividend and the ongoing share buybacks. Since 30 June, we have completed a further USD 15 million buyback tranche, purchasing approximately 12.6 million shares between 23 July and 7 August, which increases our 2026 year-to-date buybacks to over USD 30 million and 24 million shares. We ended the H1 with USD 363.6 million of liquidity and having substantially completed this year's major work programs, Baúna production restored, and the FPSO cost base moving lower, we expect the financial benefits of our investments to become increasingly visible in the H2 2026. Turning to slide 11, the revenue bridge is fundamentally a price-volume story where higher realized prices partially offset lower sales volume.

Speaker #3: We ended the half with $363.6 million of liquidity, and, having substantially completed this year's major work programs, Baúna production restored, and the FPSO cost base moving lower, we expect the financial benefits of our investments to become increasingly visible in the second half of 2026.

Speaker #3: Turning to slide 11, the revenue bridge is fundamentally a price-volume story, where higher realized prices partially offset lower sales volumes. Specifically, revenue declined by $63.4 million as the planned FPSO and well workover programs reduced Baúna's production, driving revenue lower by $66.5 million.

Eric Williams: Specifically, revenue declined by USD 63.4 million as the planned FPSO and well workover programs reduced Baúna's production, driving revenue lower by USD 66.5 million. While reduced Who Dat volumes, principally following the E manifold outage, lowered revenue by an additional USD 39 million. These volume-driven effects were partially offset by approximately USD 42 million of stronger realized pricing. Baúna's average realized oil price increased 18% to USD 80.66 per barrel, while Who Dat's average realized liquids price increased 20% to a nearly identical USD 80.60 per barrel, and realized gas prices rose to USD 6.35 per Mcf. The takeaway is straightforward. While H1 revenue declined primarily as planned workover programs reduced production, realized pricing was strong. Slide 12 shows why FPSO ownership is more than a change in operatorship. It changes the economics of Baúna. We now control the critical infrastructure supporting our largest asset, and we have eliminated lease payments, materials markups, and performance bonus payments.

Speaker #3: While reduced HUDA volumes, principally following the e-Manifold outage, lowered revenue by an additional $39 million, these volume-driven effects were partially offset by approximately $42 million of stronger realized pricing.

Speaker #3: Bionan’s average realized oil price increased 18% to $80.66 per barrel, while HUDA’s average realized liquids price increased 20% to a nearly identical $80.60 per barrel, and realized gas prices rose to $6.35 per MCF.

Speaker #3: The takeaway is straightforward: While first-half revenue declined primarily as planned workover programs reduced production, realized pricing was strong. Slide 12 shows why FPSO ownership is more than a change in operatorship.

Speaker #3: It changes the economics of Bionan. We now control the critical infrastructure supporting our largest asset, and we have eliminated lease payments, materials markups, and performance bonus payments.

Eric Williams: We now control the critical infrastructure supporting our largest asset, and we have eliminated lease payments, materials markups, and performance bonus payments. Because our H1 results included temporary transition service agreement and related transition costs, the financial benefit is not yet fully visible. As those arrangements roll off and current operatorship becomes fully embedded, we remain on track to reduce direct production costs by USD 30 to USD 40 million annually. We see further opportunity beyond these initial savings through logistics, procurement, maintenance cycle planning, and repair optimization. This is a structural reset of the cost base and not simply a one-period benefit. Slide 13 shows the cash consequences of the H1 investment phase, where operating cash flow was USD 58.4 million.

Speaker #3: Because our first-half results included temporary transition service agreement and related transition costs, the financial benefit is not yet fully visible. As those arrangements roll off and Karoon operatorship becomes fully embedded, we remain on track to reduce direct production costs by $30 to $40 million annually.

Eric Williams: Because our H1 results included temporary transition service agreement and related transition costs, the financial benefit is not yet fully visible. As those arrangements roll off and current operatorship becomes fully embedded, we remain on track to reduce direct production costs by USD 30 to USD 40 million annually. We see further opportunity beyond these initial savings through logistics, procurement, maintenance cycle planning, and repair optimization. This is a structural reset of the cost base and not simply a one-period benefit. Slide 13 shows the cash consequences of the H1 investment phase, where operating cash flow was USD 58.4 million. Against that, we had approximately USD 184 million of investing, financing, and foreign exchange outflows related principally to the FPSO and well program, exploration and equipment expenditures, the Petrobras contingent payment, and shareholder-related expenditures, including dividends and buybacks.

Speaker #3: We see further opportunity beyond these initial savings through logistics, procurement, maintenance cycle planning, and repair optimization. This is a structural reset of the cost base, and not simply a one-period benefit.

Speaker #3: Slide 13 shows the cash consequences of the first-half investment phase, where operating cash flow was $58.4 million. Against that, we had approximately $184 million of investing, financing, and foreign exchange outflows, related principally to the FPSO and well program, exploration and equipment expenditures, the Petrobras contingent payment, and shareholder-related expenditures, including dividends and buybacks.

Eric Williams: Against that, we had approximately USD 184 million of investing, financing, and foreign exchange outflows related principally to the FPSO and well program, exploration and equipment expenditures, the Petrobras contingent payment, and shareholder-related expenditures, including dividends and buybacks. The net result was USD 125.8 million reduction in our cash balance, though we remain undrawn on our RBL. Importantly, we deployed this cash into a program designed to strengthen the business. We expect the H2 investment expenditures to be materially less than the H1 and include the Who Dat G1 sidetrack well that we now expect to commence drilling in the Q4, as well as initial Who Dat East development costs following project sanction earlier this month. Lower capital and FPSO costs, along with higher expected produced volumes, will combine to support stronger free cash generation.

Speaker #3: The net result was a $125.8 million reduction in our cash balance, but we remain undrawn on our RBL. Importantly, we deployed this cash into a program designed to strengthen the business.

Eric Williams: The net result was USD 125.8 million reduction in our cash balance, though we remain undrawn on our RBL. Importantly, we deployed this cash into a program designed to strengthen the business. We expect the H2 investment expenditures to be materially less than the H1 and include the Who Dat G1 sidetrack well that we now expect to commence drilling in the Q4, as well as initial Who Dat East development costs following project sanction earlier this month. Lower capital and FPSO costs, along with higher expected produced volumes, will combine to support stronger free cash generation. Moving to slide 14. At 30 June, we had USD 80.3 million of cash and a fully undrawn USD 283.3 million RBL, providing the liquidity of USD 363.6 million that I mentioned earlier, allowing us the capacity to fund the next stage of growth while remaining focused on disciplined shareholder returns.

Speaker #3: We expect second-half investment expenditures to be materially less than in the first half, and to include the HUDA G1 sidetrack well, which we now expect to commence drilling in the fourth quarter, as well as initial HUDA East development costs following project sanction earlier this month.

Speaker #3: Lower capital and FPSO costs, along with higher expected produced volumes, will combine to support stronger free cash generation. Moving to slide 14. At 30 June, we had $80.3 million of cash and a fully undrawn $283.3 million RBL.

Eric Williams: Moving to slide 14. At 30 June, we had USD 80.3 million of cash and a fully undrawn USD 283.3 million RBL, providing the liquidity of USD 363.6 million that I mentioned earlier, allowing us the capacity to fund the next stage of growth while remaining focused on disciplined shareholder returns. We deliberately used our existing balance sheet capacity to fund the H1 transformation. With lower capital spending and the operating benefits of the Baúna work now beginning to flow through, we expect stronger cash generation to lower our leverage ratio and fund our projects as we move forward. Our priority is to preserve enough financial flexibility to fund high return growth without compromising the balance sheet. Slide 15 addresses the temporary Brazilian export tax.

Speaker #3: Providing the liquidity of $363.6 million that I mentioned earlier, allowing us the capacity to fund the next stage of growth while remaining focused on disciplined shareholder returns.

Speaker #3: We deliberately used our existing balance sheet capacity to fund the first-half transformation. With lower capital spending and the operating benefits of the Bionan work now beginning to flow through, we expect stronger cash generation to lower our leverage ratio and fund our projects as we move forward.

Eric Williams: We deliberately used our existing balance sheet capacity to fund the H1 transformation. With lower capital spending and the operating benefits of the Baúna work now beginning to flow through, we expect stronger cash generation to lower our leverage ratio and fund our projects as we move forward. Our priority is to preserve enough financial flexibility to fund high return growth without compromising the balance sheet. Slide 15 addresses the temporary Brazilian export tax. While it adds an incremental headwind, our crude quality and broad market access give us practical mitigation levers. The export tax, introduced in March at 12% before income tax, or 7.92% after tax, was extended in July for a further 60 days. Cargoes sold into eligible European Union destinations are expected to qualify for a lower 6% pretax, or approximately 3.97% after-tax rate.

Speaker #3: Our priority is to preserve enough financial flexibility to fund high-return growth without compromising the balance sheet. Slide 15 addresses the temporary Brazilian export tax.

Speaker #3: While it adds an incremental headwind, our crude quality and broad market access give us practical mitigation levers. The export tax, introduced in March at 12% before income tax, or 7.92% after tax, was extended in July for a further 60 days.

Eric Williams: While it adds an incremental headwind, our crude quality and broad market access give us practical mitigation levers. The export tax, introduced in March at 12% before income tax, or 7.92% after tax, was extended in July for a further 60 days. Cargoes sold into eligible European Union destinations are expected to qualify for a lower 6% pretax, or approximately 3.97% after-tax rate. We will continue to incorporate the export tax into our marketing decisions, directing cargoes to the markets that maximize realized net value. Slide 16 brings the financial story together. Our capital allocation framework is unchanged, but the H1 shows it operating in practice. Cash funds the base business and mandatory commitments, then protects a strong and flexible balance sheet. After those priorities, free cash flow competes for the highest risk-adjusted return.

Speaker #3: Cargoes sold into eligible European Union destinations are expected to qualify for a lower 6% pre-tax rate, or approximately 3.97% after tax. We will continue to incorporate the export tax into our marketing decisions, directing cargoes to the markets that maximize realized net value.

Eric Williams: We will continue to incorporate the export tax into our marketing decisions, directing cargoes to the markets that maximize realized net value. Slide 16 brings the financial story together. Our capital allocation framework is unchanged, but the H1 shows it operating in practice. Cash funds the base business and mandatory commitments, then protects a strong and flexible balance sheet. After those priorities, free cash flow competes for the highest risk-adjusted return. Our base dividend policy remains 20% to 40% of underlying impact, supplemented where appropriate by buybacks or special dividends. We invest in growth only when projects meet defined return thresholds designed to create meaningful value per share. This is not an either/or framework. It is designed to support reliable shareholder returns and self-funded growth while preserving the financial capacity to act when attractive opportunities emerge. With that, I will hand the call back to Carri.

Speaker #3: Slide 16 brings the financial story together. Our capital allocation framework is unchanged, but the first half shows it operating in practice. Cash funds the base business and mandatory commitments, then protects a strong and flexible balance sheet.

Speaker #3: After those priorities, free cash flow competes for the highest risk-adjusted return. Our base dividend policy remains 20% to 40% of underlying impact, supplemented where appropriate by buybacks or special dividends.

Eric Williams: Our base dividend policy remains 20% to 40% of underlying impact, supplemented where appropriate by buybacks or special dividends. We invest in growth only when projects meet defined return thresholds designed to create meaningful value per share. This is not an either/or framework. It is designed to support reliable shareholder returns and self-funded growth while preserving the financial capacity to act when attractive opportunities emerge. With that, I will hand the call back to Carri.

Speaker #3: We invest in growth only when projects meet defined return thresholds designed to create meaningful value per share. This is not an either-or framework; it is designed to support reliable shareholder returns and self-funded growth while preserving the financial capacity to act when attractive opportunities emerge.

Speaker #3: With that, I'll hand the call back to Carrie.

Speaker #2: Thank you, Eric. Moving on to slide 18. In May, we achieved a significant milestone by formally assuming operatorship of the Baúna FPSO, providing full operational control of the Baúna complex from the FPSO through the subsea infrastructure and reservoir management.

Carri Lockhart: Thank you, Eric. Moving on to slide 18. In May, we achieved a significant milestone of formally assuming operatorship of the Baúna FPSO, providing full operational control of the Baúna complex from the FPSO through to subsea infrastructure and reservoir management. Our focus for H2 2026 and beyond is to maintain asset integrity and support consistently high uptime through disciplined maintenance and operating processes. A key priority for the balance of the year is to optimize reservoir pressure support through restarting water injection. As Eric mentioned, we will also continue to pursue further operational cost reductions and mature potential near-field exploration opportunities that can add value. Slide 19 highlights the benefit of the 2026 FPSO revitalization and maintenance campaign.

Speaker #2: Our focus for the second half of '26 and beyond is to maintain asset integrity and support consistently high uptime through disciplined maintenance and operating practices.

Speaker #2: A key priority for the balance of the year is to optimize reservoir pressure support through restarting water injection. As Eric mentioned, we will also continue to pursue further operational cost reductions and mature potential near-field exploration opportunities that can add value.

Speaker #2: Slide 19 highlights the benefit of the 2026 FPSO revitalization and maintenance campaigns. The Baúna FPSO efficiency has exceeded our 90% to 95% target range in each of the last three quarters, reaching 96% in Q1 '26 and 97% in the second quarter of '26.

Carri Lockhart: The Baúna FPSO efficiency has exceeded our 90% to 95% target range in each of the last three quarters, reaching 96% in Q1 2026 and 97% in Q2 2026. We remain focused on achieving such levels of operational performance. As we move to slide 20, it goes without saying that the Who Dat E field riser issue experienced in February was disappointing. Given that the E manifold wells are the largest contributors to Who Dat production, and that there is considerable additional infill potential, the operator, Elog, has decided to replace both the E risers and associated flow lines, which will support the long-term production potential. This remediation work is expected to take place in 2027. Offsetting a portion of the production shut-in, we have seen excellent topside reliability of approximately 97% during the H1 2026.

Speaker #2: We remain focused on achieving such levels of operational performance. As we move to slide 20, it goes without saying that the HUDA E field riser issue experienced in February was disappointing.

Speaker #2: Given that the E manifold wells are the largest contributors to HUDA production, and that there is considerable additional infield potential, the operator ELOG has decided to replace both the E risers and associated flowlines, which will support the long-term production potential.

Speaker #2: This remediation work is expected to take place in 2027. Offsetting a portion of the production shut-in, we have seen excellent topside reliability of approximately 97% during the first half of ’26.

Speaker #2: The A1 sidetrack, which came online in July, is currently producing approximately 2,200 BOEs per day on an NRI basis, which is above expectations. As Eric mentioned, another sidetrack of the G1 well is planned to be drilled in Q4 '26, subject to joint venture and regulatory approval.

Carri Lockhart: The A1 sidetrack, which came online in July, is currently producing approximately 2,200 BOE per day on an NRI basis, which is above expectations. As Eric mentioned, another sidetrack of the G1 well is planned to be drilled in Q4 2026, subject to joint venture and regulatory approval. First production is targeted to commence in H1 2027, once the results of the drilling have been analyzed and the well completion design optimized. As well as the Who Dat East development, which I will cover in the next slide, the joint venture has done substantial work on reprocessing seismic data over the greater Who Dat area, including the Who Dat South discovery, where we are targeting an appraisal sidetrack in 2027. A major milestone was reached in August when the Who Dat East development was sanctioned.

Speaker #2: First production is targeted to commence in the first half of ’27, once the results of the drilling have been analyzed and the well completion design optimized.

Speaker #2: As well as the HUDA East development, which I'll cover in the next slide, the joint venture has been doing substantial work on reprocessing seismic data over the greater HUDA area, including the HUDA South discovery, where we are targeting an appraisal sidetrack in 2027.

Speaker #2: A major milestone was reached in August when the HUDA East development was sanctioned. The development comprises the completion of the HUDA East Discovery well, drilled in 2024, a 29-kilometer tie-back to the existing HUDA floating production system, and some minor modifications to the FPS.

Carri Lockhart: The development comprises the completion of the Who Dat East discovery well drilled in 2024, a 29-kilometer tieback to the existing Who Dat floating production system, and some minor modifications to the FPF. Karoon's working interest in Who Dat East is 40%, and our share of the estimated capital cost is USD 155 to 165 million. This is a high-return growth project leveraging existing infrastructure. At the mid case, the initial one well development is expected to deliver an internal post-tax rate of return above 20%, with first oil targeted for H2 2028. The initial production rate net to Karoon is expected to be approximately 6,000 BOE per day, so will be a material contributor to the overall Karoon production. On slide 22, over the past six months, our Neon team has conducted a detailed review of the development concept with a focus on optimizing and improving capital efficiency.

Speaker #2: Karoon's working interest in HUDA East is 40%, and our share of the estimated capital cost is $155–$165 million. This is a high-return growth project leveraging its infrastructure.

Speaker #2: At the mid case, the initial one-well development is expected to deliver an internal post-tax rate of return above 20%, with first oil in 2028.

Speaker #2: The initial production rate net to Karoon is expected to be approximately 6,000 BOE per day, so it will be a material contributor to the overall Karoon production.

Speaker #2: On slide 22, over the past six months, our NEON team has conducted a detailed review of the development concepts, with a focus on optimizing and improving capital efficiency.

Speaker #2: We are now planning a phased approach, which will allow us to assess reservoir and project performance prior to committing further capital. The initial development is expected to comprise three producers and one gas injector, with capacity for staged expansion.

Carri Lockhart: We are now planning a phased approach, which will now allow us to assess reservoir and project performance prior to committing further capital. The initial development is expected to comprise three producers and one gas injector with a capacity for a staged expansion. The H2 of the year will focus on validating and securing the concepts through pre-FEED and progressing execution planning. Subject to the verification of a principal technical and commercial scope in Q4 2026, we anticipate confirming the selected concepts and advancing the project into FEED. Subsequent to this decision, we will then intend to recommence the farm down process to secure a partner. As summarized on slide 23, we are mature in exploration and appraisal opportunities in Brazil and the Gulf of America. Our extensive exploration acreage positions complement our existing producing and development assets and create multiple pathways for long-term value accretive growth.

Speaker #2: The second half of the year will focus on validating and securing the concepts through pre-FEED and progressing execution planning. Subject to the verification of a principal technical and commercial scope in Q4 '26, we anticipate confirming the selected concepts and advancing the project into FEED.

Speaker #2: Subsequent to this decision, we will then intend to recommence the farm-down process to secure a partner. To summarize, on slide 23, we are mature in exploration and appraisal opportunities in Brazil and the Gulf of Mexico.

Speaker #2: Our extensive exploration acreage positions complement our existing producing and development assets and create multiple pathways for long-term, value-creative growth. In Brazil, our 100% owned Santos Basin portfolio of seven licenses near Baúna and Neon provide high-potential, longer-term optionality.

Carri Lockhart: In Brazil, our 100% owned Santos Basin portfolio of seven licenses near Baúna and Neon provide high potential longer-term optionality. With the Esmeralda pre-salt license now formally awarded, we have initiated the farm down process of our entire exploration portfolio. In the Gulf of America, Who Dat area discoveries and prospects are located near existing infrastructure, providing capital-efficient pathways to potential resource additions. Our final slide showcases our focus on leveraging our competitive advantages to optimize total shareholder returns. Both Baúna and Who Dat are high quality, low cost assets in tier 1 jurisdictions, and 97% of H1 production being oil and liquids based. Our strong balance sheet and disciplined capital allocation framework provide us with the flexibility to sustain the business and balance capital returns with value accretive growth investments.

Speaker #2: With the Esmeralda pre-salt license now formally awarded, we have initiated the farm-down process of our entire exploration portfolio. In the Gulf of America, HUDA area discoveries and prospects are located near existing infrastructure, providing capital-efficient pathways to potential resource additions.

Speaker #2: Our final slide showcases our focus on leveraging our competitive advantages to optimize total shareholder returns. Both Bionan and HUDA are high-quality, low-cost assets in Tier 1 jurisdictions, with 97% of first-half production being oil and liquids-based.

Speaker #2: Our strong balance sheet and disciplined capital allocation framework provide us with the flexibility to sustain the business and balance capital returns with value-creative growth investments.

Speaker #2: We have a compelling organic pipeline, including Huda East and Neon, while our infrastructure, base, and lead exploration and appraisal acreage provide multiple opportunities for future growth.

Carri Lockhart: We have a compelling organic pipeline, including Who Dat East and Neon, while our infrastructure and basin-led exploration and appraisal acreage provides multiple opportunities for future growth. We have great teams, great assets, financial discipline, and growth opportunities which drive our shareholder value. I would like to thank all of our staff and contractors for their hard work and dedication to Karoon, and thank our shareholders for their continued support of the company. Eric and Mark and I are now happy to take any questions. I now hand it back to the moderator.

Speaker #2: We have great teams, great assets, financial discipline, and growth opportunities which drive our shareholder value. I would like to thank all of our staff and contractors for their hard work and dedication to Karoon.

Speaker #2: And thank our shareholders for their continued support of the company. Eric, Mark, and I are now happy to take any questions. I now hand it back to the moderator.

Speaker #1: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To queue your question, please press star one one again.

Operator: Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by as we compile the Q&A roster. First question comes from Nik Burns from Jarden Australia. Please unmute and proceed with your question.

Speaker #1: Please stand by as we compile the Q&A roster. The first question comes from Nick Burns from Jardin, Australia. Please unmute and proceed with your question.

Speaker #3: I'll hand over to Carrie, Eric, and Mark. Thanks for the presentation today. Look, it's been a very busy six months for Karoon, in particular with the major maintenance campaign and the operatorship transition of the FPSO.

Nik Burns: Hi, Carri, Eric, and Mark, and thanks for the presentation today. Look, it has been a very busy six months for Karoon, in particular the major maintenance campaign and operatorship transition of the FPSO. Carri, now that you have completed the major maintenance campaign there, what is your current view of the FPSO? Is it now at the point where you are comfortable and happy with the current state of repairs and maintenance on board, or do you think there is needs to undertake another major campaign next year? Thanks.

Speaker #3: Carrie, now that you've completed the major maintenance campaign there, what's your current view of the FPSO? Is it now at the point where you're comfortable and happy with the current state of repairs and maintenance on board, or do you think there's a need to undertake another major campaign next year?

Speaker #3: Thanks.

Speaker #2: Hey Nick, thank you for the question. You know, a couple of things—I think we're happy with the performance of the FPSO over the recent months, since we've completed the campaign.

Carri Lockhart: Hey, Nik. Thank you for the question. A couple things. I think we are happy with the performance of the FPSO over the recent months since we have completed the campaign. Integrity management is always a very key task that any offshore operator has to contend with. At this point, I do not anticipate a maintenance campaign up at the scale of this year's and the following years. The goal is to have a turnaround or maintenance campaign every two to three years as a consistent measure, which is typical of an industry standard.

Speaker #2: Integrity management is always a very, very key task that any offshore operator has to contend with. At this point, I don't anticipate a maintenance campaign at the scale of this year’s or the following years.

Speaker #2: And the goal is to have a turnaround or maintenance campaign every two to three years as a consistent measure, which is typical of an industry standard.

Nik Burns: Got it. Thank you. On the 97% uptime achieved in the H1, it is obviously a great result versus the 90% to 95% uptime target. That target was set before you started at Karoon. Just wondering, from your perspective, is that too low? What would it take to lift that uptime range to something higher? Thanks.

Speaker #3: Got it. Thank you. And just on the 97% uptime achieved in the first half—that's obviously a great result versus the 90 to 95% uptime target.

Speaker #3: That target was set before you started at Karoon. Just wondering, from your perspective, is that too low? I mean, what would it take to lift that uptime range to something higher?

Speaker #3: Thanks.

Speaker #2: So the 90 to 95% target was set on best practice achievable targets, consistent with the age of the vessel. You know, lifting that, there's always a possibility to do that.

Carri Lockhart: The 90% to 95% target was set on a best practice, achievable targets consistent with the age of the vessel. Lifting that, there is always a possibility to do that. I think what we need to do is to continue to watch the performance over the next operating period and see. Certainly, the goal is to continue to exceed the 95%. There is a break-over point between value creation and that absolute value. If you wanted to go to 99% or 100%, of course, that would take a tremendous amount of money and does not always translate into value. The goal is to continue to achieve over 95%.

Speaker #2: I think what we need to do is continue to watch the performance over the next operating period and see. You know, certainly, the goal is to continue to exceed the 95%.

Speaker #2: There is a breakover point between value creation and that absolute value of, you know, if you wanted to go to 99% or 100%, of course, that would take a tremendous amount of money and doesn't always translate into value.

Speaker #2: So the goal is to continue to achieve over 95%.

Speaker #3: That's great. If I can just slip in one more—on slide 18, you had a bullet point there identifying near-field exploration opportunities in Brazil.

Nik Burns: That is great. If I can just slip in one more, just on slide 18, you had a bullet point there identifying near-field exploration opportunities in Brazil. Can you talk about what work has been done there? Are there any prospects or leads that have already been identified, or is more seismic required there before you can make any call on future exploration drilling? Thanks.

Speaker #3: Can you talk about what work has been done there? Are there any prospects or leads that have already been identified, or is it more seismic work and any call on future exploration drilling?

Speaker #3: Thanks.

Speaker #2: So our explorationists are constantly looking in the adjacent areas around Baúna. We will have more color on this in the coming quarter as we continue the work, but that's in conjunction with the other licenses that we currently have in our portfolio.

Carri Lockhart: Our explorationists are constantly looking in the adjacent areas around Baúna. We will have more color on this in the coming quarter as we continue the work that is in conjunction with the other licenses that we currently have in our portfolio. I do not have much to say specifically as it relates to right adjacent from Baúna, but I will come back in Q4 and share more.

Speaker #2: So I don't have much to say specifically as it relates to right adjacent from Bionan, but I will come back in the fourth quarter and share more.

Speaker #3: That's great. Thanks, Carrie.

Nik Burns: That's great. Thanks, Carrie.

Speaker #1: Thank you. Just a moment for our next question, please. Next, we have Rob Coe from Morgan Stanley. Please go ahead.

Operator: Thank you. Just a moment for our next question, please. Next we have Rob Koh from Morgan Stanley. Please go ahead.

Speaker #4: Good morning, and congratulations on all of the work you've achieved. I feel tired looking at your slide. Can I ask a question, just I guess, about unit production cost?

Rob Koh: Good morning, and congratulations on all of the work you've achieved. I feel tired looking at your slide. Can I ask a question just, I guess, about unit production cost? I guess you've got your full year guidance and with a little bit more production that should come down from the H1 run rate. Should we also be incorporating a little bit of your FPSO savings target in H2 2026?

Speaker #4: I guess you've got your full-year guidance, and with a little bit more production, that should come down from the first-half run rate.

Speaker #4: Should we also be incorporating a little bit of your FPSO savings target in the second half of '26?

Speaker #2: Thank you, Rob. So, our guidance—I think that holds firm on our unit cost. We are on target to deliver the $30 to $40 million cost savings that we announced earlier and made the commitment to.

Carri Lockhart: Thank you, Rob. Our guidance, I think that holds firm on our unit cost. We are on target to deliver the USD 30 to 40 million cost savings that we announced earlier and made the commitment to. Let me pass this on to Eric and if he has anything else to say in that regard.

Speaker #2: Let me pass this on to Eric, and he—if he has anything else to say in that regard.

Speaker #5: Yeah, I think just from what Carrie said, we do include in our guidance the expected step-down in operating costs. We have, as we said in the script, some residual transition services.

Eric Williams: Yeah, I think just to confirm what Carrie said, we do include in our guidance the expected step down in operating costs. We have, as we said in the script, some residual transition services and some other transition costs that are still in the H2 of this year that roll off into next year. So we certainly expect to see that trend down into full year 2027. But there are two ways to continue to improve on that. We are focused on, as Carrie talked about in her speech, increasing asset productivity. So if we can get some additional production from the wells, that will give us some benefit in unit cost. Then our teams are now turning the effort that we put into reducing the FPSO operating cost across the company and looking for opportunities to save and some of the costs that are more legacy oriented.

Speaker #5: And some other transition costs that are still in the second half of this year will roll off into next year. So we certainly expect to see that trend down into a full year ’27.

Speaker #5: But there are two ways to continue to improve on that. You know, we're focused on, as Carrie talked about in her speech, increasing asset productivity.

Speaker #5: So, if we can get some additional production from the wells, that will give us some benefit in unit cost. And then our teams are now turning the effort that we put into reducing the FPSO operating cost across the company and looking for opportunities to save on some of the costs that are more legacy-oriented.

Speaker #5: So, we feel good about the range, but we're going to stay hard at it, focusing on the production and the cost side.

Eric Williams: We feel good about the range, but we are going to stay hard at it both on the production and the cost side.

Speaker #2: And Rob, if you think about it, we just took over this FPSO, and so there's going to be a period of adjustment and a period where we're analyzing where we can take out additional costs.

Carri Lockhart: Rob, if you think about it, we just took over this FPSO, so there is going to be a period of adjustment and a period where we are analyzing where can we take out additional costs. How do we renegotiate contracts? How do we look towards further automation? How do we further use AI to optimize our workflows, predictive maintenance, and whatnot? So I do think we have some additional opportunities, but we are working on further definition of those.

Speaker #2: How do we renegotiate contracts? How do we look towards further automation? How do we further use AI to optimize our workflows and predictive maintenance, and whatnot?

Speaker #2: So, I do think we have some additional opportunities, but we're working on further definition of those.

Speaker #4: Okay, great. Sounds good. Yeah, I guess I'm just getting greedy and wanting it as soon as possible, but you're better off doing it properly, as I know that's your approach.

Rob Koh: Okay, great. Sounds good. Yeah, I guess I am just getting greedy and wanting it as soon as possible. But you are better off doing it properly, as I know that is your approach. Can I ask a couple of questions about the Who Dat East sanctioning, and congrats on that announcement. I guess on the numbers you have given us, we can get to the returns pretty easily, but it is very sensitive to royalty suspension. If that gets exhausted, are you able to share if there is a price cap or a volume limit before royalty suspension is exhausted? What can you share on that, please?

Speaker #4: So can I ask a couple of questions about the WHO East sanctioning? And congrats on that announcement. I guess with the numbers you've given us, we can get to the returns pretty easily, but it's very sensitive to royalty suspension.

Speaker #4: And if that gets exhausted, are you able to share if there's a price cap or a volume limit before royalty suspension is exhausted, or what can you share on that, please?

Speaker #2: Yeah, thank you. So, the royalty relief does have a cap and, you know, our current interest from an NRI on this whole East FID development is 40%.

Carri Lockhart: Yeah. Thank you. The royalty relief does have a cap and our current interest from an NRI on this Who Dat East FID development is 40%. Once the royalty relief is exhausted, then that will revert to 32%.

Speaker #2: And once the royalty relief is exhausted, then that will revert to 32%.

Rob Koh: Yeah. Are you able to give us a steer on if and when that might happen?

Speaker #4: Yeah, are you able to give us a steer on if and when that might happen, or...?

Speaker #2: Yeah, it’ll be roughly on a three-year basis.

Carri Lockhart: Yeah. It will be roughly on a three-year basis.

Speaker #4: Okay, great. Thank you very much.

Rob Koh: Okay, great. Thank you very much.

Carri Lockhart: Does that answer your question?

Speaker #2: Does that answer your question?

Speaker #4: Yeah, that's a good start. And, yeah, it really helps to calibrate our numbers. Thank you so much.

Rob Koh: Yeah, that is a good start. It really helps calibrate our numbers. Thank you so much.

Speaker #1: Thank you. Just a moment for our next one, please. Next, we have Gordy Ramsey from RBC Capital Markets. Please go ahead.

Operator: Thank you. Just a moment for our next one, please. Next, we have Gordon Ramsay from RBC Capital Markets. Please go ahead.

Speaker #6: Oh, thank you. Thanks for the presentation today. What happens when the Brazil export tax, I guess, expires next month, or is that going to go on indefinitely?

Gordon Ramsay: Thank you. Thanks for the presentation today. What happens when the Brazil export tax, I guess, it expires next month, or is that going to go on indefinitely? You mentioned there has been a 60-day extension from 9 July.

Speaker #6: You mentioned there's been a 60-day extension from the 9th of July.

Speaker #2: So, thank you, Gordon. You know, that's yet to be defined. We do hear speculation in the market as it relates to the continuation of that tax.

Carri Lockhart: Thank you, Gordon. That's yet to be defined. We do hear speculation in the market as it relates to continuation of that tax. I guess in early September, that will, once something's announced, whether or not it expires or whether or not they continue to extend that, of course, we'll make further announcements. Nonetheless, I think our marketing is well-positioned to have flexibility in where we have our deliveries to minimize the exposure to the tax. Certainly, our focus remains on getting the highest realized price that we can for our cargoes when considering the taxes, the transportation, and the pricing offered.

Speaker #2: I guess, you know, in early September, and, you know, once something's announced—whether or not it expires, or whether or not they continue to extend that—of course, we will make further announcements.

Speaker #2: Nonetheless, I think our marketing is well positioned to have flexibility on where we have our deliveries, to minimize the exposure to the tax. And certainly, our focus remains on getting the highest realized price that we can for our cargoes when considering the taxes, the transportation, and the pricing offered.

Speaker #6: Michelle, still marketing your food. Is that right?

Gordon Ramsay: Is Shell still marketing your crudes, is that right?

Speaker #2: That is correct.

Carri Lockhart: That is correct.

Speaker #6: Just a couple more for me, really quickly. I'm going to stay on Brazil. You mentioned you're going to recommence water injection in the reservoir.

Gordon Ramsay: Just a couple more from me really quickly. I'm going to stay on Brazil. You mentioned you're going to recommence water injection in the reservoir in H2 this year. Are you expecting any production benefits from that?

Speaker #6: In the second half of this year, are you expecting any production benefits from that?

Speaker #2: So, we are actually— we just commenced water injection here within the past hour. So, you know, the team's been focused quite hard on it.

Carri Lockhart: We are actually, we just commenced water injection here within the past hour, so the team's been focused quite hard on it. We've had water injection in the past, and that's been the beauty of taking over this FPSO. We have much more control over this. These reservoirs are world-class, very high quality, so you do see fairly quick pressure response. How that translates into crude production will, to be determined as we get consistent performance on the injection and see what comes out on the other side with the producer. That is something to watch, and it's certainly a measure that we're going to be very focused in on over the next operating period.

Speaker #2: With hot water injection in the past—and that's been the beauty of taking over this FPSO—we have much more control over this. These reservoirs are world-class, very high quality.

Speaker #2: So you do see fairly quick pressure response. Now, how that translates into crude production will, you know, be determined as we get consistent performance on the injection and see what comes out on the other side with the producers.

Speaker #2: So that is something to watch, and it's certainly a measure that we're going to be very focused on over the next operating period.

Speaker #6: Okay, just one more from me. I'm still on Brazil. You mentioned I might have misunderstood you, but it sounded like you were saying you're going to farm down your entire exploration portfolio in Brazil.

Gordon Ramsay: Okay, just one more from me. Still on Brazil. You mentioned, I might have misunderstood you, but it sounded like you were saying you're going to farm down your entire exploration portfolio in Brazil. Is that correct? You intend to?

Speaker #6: Is that correct? You intend to?

Carri Lockhart: That is correct. We have packaged that. We have done a great job. The explorationists have done a great job with defining multiple prospects, and we do intend to farm down those blocks. How that gets segmented will depend on the outcome of the data room and the interest that companies have on one block versus all blocks, and where we're going to get the highest return.

Speaker #2: That is correct. We have packaged that. We have done a great job. The exploration team has done a great job with defining multiple prospects, and so we do intend to farm down those blocks.

Speaker #2: And how that gets segmented will depend on the outcome of the data room and, you know, the interest that companies have in one block versus all blocks.

Speaker #2: And where we're going to get the, you know, the highest returns.

Speaker #6: Yeah, you just pre-empted my question. I was going to say, are you targeting one partner or multiple ones? And it's obviously block dependent.

Gordon Ramsay: Yeah, you just preempted my question. I was going to say you're targeting one partner or multiple ones, and it's obviously block dependent.

Speaker #2: Sorry, Gordon. Was that okay? Sorry.

Carri Lockhart: Sorry, Gordon, was that. Okay, sorry.

Speaker #6: Thank you.

Operator: Thank you. Just a moment for our next question, please. Next, we have Tom Wallington from Citi. Please go ahead.

Speaker #1: Thank you. Just a moment for our next question, please. Next, we have Tom Wellington from Citi. Please go ahead.

Speaker #7: Hi Carrie, Eric, and the team. Thanks for the update today. I love the new presentation format. Just a question on Bayuna. Noting the strong efficiency—I think you called it this time around—at the project.

Tom Wallington: Hi, Carri, Eric, and the team. Thanks for the update today. Love the new presentation format. Just a question on Baúna. Noting the strong efficiency, I think you call it this time around, at the project, I was curious to understand why production guidance wasn't upgraded at the midpoint, this time around. Obviously, the H1 was disruptive with the turnaround program. But we have seen a reinstatement of SPS-92 and PRA-2, and you have identified those opportunities to enhance reservoir performance. Just wondering what level of conservatism do you have baked into CY 2026 full year production. Thanks.

Speaker #7: I was curious to understand why production guidance wasn't upgraded at the midpoint this time around. Obviously, the first half was disruptive with the turnaround program.

Speaker #7: But we have seen a reinstatement of SPS-92 and PRA-2, and you have identified those opportunities to enhance reservoir performance. Just wondering, what level of conservatism do you have baked into CY26 for your production?

Speaker #7: Thanks.

Speaker #2: Yeah, thanks for the question, Tom. So, a couple of things. SPS 92 with respect to our plans was a little bit late as it relates to our planning, but certainly, you know, our guidance holds true at this point.

Carri Lockhart: Yeah, thanks for the question, Tom. A couple things. SPS-92, with respect to our plans, was a little bit late as it relates to our planning, but certainly, our guidance holds true at this point. I think what we need, these wells, both SPS-92 and PRA-2, had been shut in for a good part of a year. Watching that performance, I think is important over the next coming months. Then certainly the overperformance on the operating efficiency is strong. Why didn't we increase our guidance or change our guidance? This is a wait and see to how the reservoir both responds to the wells being online, the water injection, and our ability as an operator to continue on with the strong performance. I will say we are within range.

Speaker #2: I think what we need is—these wells, both SPS-92 and PRA-2, had been shut in for a good part of a year. And so, watching that performance I think is important over the next coming months.

Speaker #2: And then certainly, the overperformance on the operating efficiency is strong. So why didn't we increase our guidance or change our guidance? This is a wait and see to how the reservoir will respond to the wells being online, the water injection, and our ability as an operator to continue on with the strong performance.

Speaker #2: I would say we are within range. We're probably on the lower half of the range when it comes to production from Baúna, but that was largely due to a bit of tardiness on SPS-92 as it relates to our exact plan for the year.

Carri Lockhart: We're probably on the lower half of the range when it comes to production from Baúna, but that was largely due to a bit tardiness on SPS-92 as it relates to our exact plan for the year.

Speaker #7: Great, that makes sense. Thanks. And maybe just another question—also in Brazil, Neon—you've talked about optimizing the development concept here. Can you just confirm if the data room is open?

Tom Wallington: Great. That makes sense. Thanks. Maybe just another question. Also in Brazil, Neon, you've talked about optimizing the development concept here. Can you just confirm if the data room is open as we speak, or is that more of a Q4 target? Then just any broad comments around the FPSO market and any further commentary around optimizing for peak production and extending that plateau of production, any sort of developments in your thinking there? Thanks.

Speaker #7: As we speak, or is that more of a fourth-quarter target? And then, just any broad comments around the FPSO market, and any further commentary around optimizing for peak production and extending that plateau of production?

Speaker #7: Any sort of developments in your thinking there? Thanks.

Speaker #2: So thank you for that question, Tom. You know, Neon, I think, is progressing quite well. Recall that we did, you know, pull this back and re-look at the total project with the lens of maximizing capital efficiency and minimizing any downside exposure.

Carri Lockhart: Thank you for that question, Tom. Neon, I think is progressing quite well. Recall that we did pull this back and re-look at the total project with the lens of maximizing the capital efficiency and minimizing any downside exposure. We do have our eyes and we are commercially working towards the top five solution. We have good line of sight there. In terms of a data room, no, that's not open yet. We don't intend to open that until we have the concept fully baked because we believe we will get much more value as we approach a data room once we've entered in a FEED, because it's very hard for another third party to value a project without a defined concept.

Speaker #2: We do have our eyes, and we are, you know, commercially working towards the topside solution. And so we have good line of sight there.

Speaker #2: In terms of a data room, no, that's not open yet. And we don't intend to open that until we have the concept fully baked, because we believe we will get much more value as we approach a data room once we've landed an end user and feed. It's very hard for another third party to value a project without a defined concept.

Speaker #2: And so once that's defined and we have all those numbers in, then we will go back to the market for a partner, which I believe we will have success doing.

Carri Lockhart: Once that's defined and we have all those numbers in, then we will go back to the market for a partner, which I believe we will have success doing.

Speaker #7: Great, thanks, Carrie. And any comments around the FPSO market at all, and the level of capex intensity? Thanks.

Tom Wallington: Great. Thanks, Carri. Any comments around the FPSO market at all and level of CapEx intensity? Thanks.

Speaker #2: Yeah, so the FPSO market—you know, we've been working on this for a while, but like I said, we do have line of sight of several solutions. We are working towards securing one in particular.

Carri Lockhart: Yeah. The FPSO markets, we have been working on this for a while, but like I said, we do have line of sight of several solutions, but we are working towards securing one in particular. Again, we do have alternatives. I am going to turn this over to Mark because Mark has been the one that has been very influential in moving this project forward. Mark.

Speaker #2: But again, we do have alternatives. I'm going to turn this over to Mark, because Mark has been the one who's been very influential in moving this project forward.

Speaker #2: So, Mark, thank you for the question. As Carrie said, you know, our team has put a lot of work into Neon, and we have really good intel into the FPSO market.

Mark Mick: Hi, Tom. Good morning, and thanks for the question. As Carri said, our team has put a lot of work into Neon. We have really good intel into the FPSO market, so we are in constant contact with other vendors and FPSO market experts to understand options for Neon. We are, as Carri mentioned, working with one particular option, and we will speak to that more in the future. One of the targets that we are focused on is securing the concept select and ensuring we know which facility will underpin that concept select. We are in a really good place with that. We are in discussions with the host facilities owner as we speak. At the conclusion of that, once those are confirmed, as Carri mentioned, that will be the point at which we will go to recommence the farm out.

Speaker #2: So, we are in constant contact with other vendors and FPSO market experts to understand options for Neon. We are, as Carrie mentioned, working with one particular option, and then we'll speak to that more in the future.

Speaker #2: But one of the targets that we're focused on is securing the concept select and ensuring we know which facility will underpin that concept select, and we're in a really good place with that.

Speaker #2: We're in discussions with the host facilities owner as we speak. And then, at the conclusion of that, once those are confirmed—as Carrie mentioned—that will be the point at which we will go to recommence the farm-in.

Speaker #2: We are in contact with companies about Neon, but we are intentionally waiting until we've confirmed the concept and secured the facility. From an optionality perspective, for Karoon's benefit, this is not a commitment but an option for us.

Mark Mick: We are in contact with companies about Neon, but we are intentionally waiting until we have confirmed the concept, secured the facility from an optionality perspective for Karoon's benefit, and not a commitment, but an option for us, after which we will go to seek for a partner to join us in the project.

Speaker #2: And after that, we'll seek to partner with others to join us in the project.

Speaker #7: Thanks, that's very helpful. Thanks, Mark. Thanks, Carrie.

Tom Wallington: Thanks. That is very helpful. Thanks, Mark. Thanks, Carri.

Speaker #1: Thank you. I see no further questions at this time. I will now pass back to Carrie for closing remarks.

Operator: Thank you. I see no further questions at this time. I will now pass back to Carri for closing remarks.

Speaker #2: Thank you. Thank you, everyone, for your continued support. I do hope you have a nice rest of your day.

Carri Lockhart: Thank you. Thank you everyone for your continued support. I do hope you have a nice rest of your day.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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