Since opening the Karoon Energy (KAR) position there have been two important events that have both benefited the company’s share price.
The Brazilian election for a new president has been held and won by the left-leaning Lula. Normally a left-leaning political leader in South America could be a cause for concern. But this is Lula’s second term as president with him previously being in the position from 2003 to 2010. So the new president is the old president and a known quantity so no radical change is expected.
The second event was the release of KAR’s September 2022 quarterly activities report on the 27th October. The important information from the report was:-
- Oil production in the September 2022 quarter from Bauna filed was 1.29 million barrels (MMbbl)
- Average rate of 13,997 barrels of oil per day
- Oil sales for the quarter 1.46 Mbbl, with three cargoes lifted during the period
- Average net realised oil price of US$96.02/bbl
- Oils sales revenue from the lifted revenue was US$140.2 million
The quarterly report showed a strong process from the company. Of more importance in the quarterly report was the change in guidance. With better-than-expected results from the intervention campaign, the lower end of guidance has been revised upwards. Previous FY2023 production was in the range of 7.0 – 9.0 MMbbl. The guidance is now 7.5 – 9.0 MMbbl. With the lower end of guidance increase, the market has become more confident of the company hitting full year targets.
The resolution of the presidential election and the strong quarterly report combined with the increasing oil price has seen the share price increase to $2.30. So, we will now increase the stop loss level so if the share price falls back we can exit for a small profit.
TRADE ACTION
Stop Loss: – Increase stop loss level from $1.70 to $2.05
Profit Target: – No change left in place at $2.70
