Karoon's Downgrade Doesn't Point to Who Dat Reservoir Issues -- Market Talk

Dow Jones04-19

0200 GMT - Karoon Energy's production downgrade unsettles Citi, although it thinks issues at the Who Dat field in the U.S. Gulf of Mexico appear mostly temporary. "If the Who Dat issues become more permanent, it would suggest Karoon has overpaid for the asset," analyst James Byrne says in a note. "Perhaps more worryingly, it could significantly undermine the equity market's confidence on the company's ability to create value from future acquisitions, and lender confidence to expand the borrowing base." Still, Citi says most of the downgrade at Who Dat appears to be a temporary curtailment of gas production due to low Henry Hub prices, and bottlenecks in the subsea infrastructure, as opposed to reservoir issues. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

April 18, 2024 22:00 ET (02:00 GMT)

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