The Karoon Energy Ltd [ASX:KAR] share price hiked up by over 5% yesterday, after the company issued an update this morning confirming press rumours. The stock is now trading at $1.17 a share at time of writing.
Karoon Energy is an Australian oil and gas exploration company, operating in Australia, Brazil and Peru.
What were the media speculations?
On 12 July 2019, news published by Upstream alluded to the possibility that Karoon might be in the process of acquiring a 100% operating interest in the Santos Basin offshore Brazil concession (BM-S-40). This contains the producing Bauna light oil project.
This morning, Karoon published a response to the report, confirming that it has presented a high bid for the stake. The final transaction will need to be approved by Petrobas’ board and governance bodies.
Why shareholders are excited
In the company’s own words:
‘This bid is in line with Karoon’s stated strategy to create value for shareholders by acquiring a high quality, transformational production asset.’
Karoon has long had a strong growth strategy with a focus on large targets in proven markets. If the company manages to acquire a foundational production asset, there’s little reason why it won’t be able to achieve long-term sustainable growth.
Peace of mind, and potential higher profits for shareholders.
In the update, Karoon restated its vision to evolve into a global E&P company ‘with material production to underpin growth through a highly prospective exploration portfolio and entrepreneurial spirit.’
The fact remains, energy can be a tricky and highly competitive sector to navigate. But this up-and-comer might just be worth the investment.
For Money Morning
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