Karoon Energy : December 2021 Quarterly Report and Appendix 5B

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DECEMBER 2021 QUARTERLY ACTIVITIES REPORT & APPENDIX 5B* Issued 31 January 2022

Highlights:

• During the quarter ended 31 December 2021, oil production from the Baúna Field in the Santos Basin, Brazil, totalled 1.23 million barrels (MMbbl), produced at an average rate of 13,360 barrels of oil per day (bopd). This took total production for the first half of Financial Year (FY) 2022 to 2.51 MMbbl. The strong production rates achieved during the quarter reflected good reservoir performance combined with facilities uptime of nearly 100%.
• Oil sales for the quarter were 1.53 MMbbl, with three cargos lifted during the quarter, compared to two cargos lifted in the September 2021 quarter. The average net realised oil price was US$75.44/bbl, up from US$68.00/bbl in the prior quarter, due to stronger global oil prices and good demand for Baúna crude.
• Oil revenue from the three cargoes lifted was US$115.8 million, while cash receipts from oil sales were US$79.1 million (proceeds from the December 2021 cargo were received in January 2022). This resulted in total revenue for the first half of FY2022 of US$186.5 million.
• Work advanced on the Baúna intervention program and the Patola development, which presently are progressing on time and within budget. The window for commencement of operations by the drilling rig, the Maersk Developer, has been narrowed to between 15 April and 15 May 2022. The rig has concluded its work for the previous Operator and is currently in Trinidad and Tobago undergoing maintenance and inspection.
• There was one Lost Time Incident (LTI) recorded in the quarter, relating to a slip onboard the FPSO. There were no significant environmental incidents or impacts from COVID-19.
• In November 2021, Karoon closed its inaugural US$160 million debt facility and made an initial draw down of US$30 million in preparation for investments in the Baúna intervention campaign and Patola development. To support the facility, the Company also established hedges to partially protect against oil price downside risk.
• Cash and cash equivalents at 31 December 2021 were US$204.1 million and undrawn and available debt was US$130.0 million, providing total available liquidity of US$334.1 million.
• Karoon will be releasing its results for the six months to 31 December 2021 on Wednesday 23 February 2022. Due to higher forecast oil prices, which are driving an increase in Karoon's oil revenues, the Company expects to recognise a material upwards revaluation in the fair value of the contingent consideration payable to Petrobras for the Baúna asset in the half year. Updated guidance on other key metrics is shown on page 8.

Comments from Chief Executive Officer/Managing Director, Dr Julian Fowles:

"During the December 2021 quarter, Karoon celebrated its first full year as an oil operator. Since taking control of Baúna in November 2020, we have produced more than 5.5 MMbbl of oil, safely and without any serious

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incidents. Given the significant challenges of 2021, with many of our staff under lockdown from COVID-19 for part of the year, this is a substantial achievement.

The safe and reliable operating performance seen during the first nine months of 2021 continued through the December quarter. Our team in Brazil achieved facilities uptime of 99.8%, an outstanding performance, resulting in total oil production of 1.23 MMbbl, down just 4% on the record September quarter despite the maturity of the Baúna field. Three cargoes were lifted during the quarter which were sold to customers in North and South America. Strong bids were received for all three cargoes, demonstrating good recognition in the market of the high quality of Baúna crude. The Company realised an average oil price of US$75.44/bbl, 11% higher than the previous quarter, which resulted in quarterly revenue of US$115.8 million.

Disappointingly, we recorded one LTI during the period, involving a slip onboard the FPSO, the first LTI on the Cidade de Itajai FPSO in more than 3.5 years. We are re-energising our focus on slips, trips and falls with a targeted safety campaign, to improve awareness of this important issue. Although there were no instances of COVID-19 onboard the FPSO through the whole of 2021, with 98% of the FPSO crew in Brazil double vaccinated by year-end, several cases, largely asymptomatic, were detected in January 2022, highlighting the importance of continued adherence to our strict COVID-19 protocols.

In November 2021, a major milestone was achieved when we reached financial close on our new US$160 million debt facility, with a high-quality lending group. This marked Karoon's first time as a corporate borrower and broadens the Company's access to capital sources. In line with the facility agreement, we drew down US$30 million from the facility, which was used to meet initial fees for the facility and supplement our cash position ahead of an expected ramp-up in expenditures on the Baúna intervention campaign and Patola development. At the end of December 2021, Karoon had cash and cash equivalents of US$204.1 million, up from US$175.0 million at 30 September 2021, and US$130 million of undrawn available debt, providing strong liquidity. Hedges, comprising a combination of bought puts and sold calls that mitigate oil price downside risk while retaining substantial exposure to the upside, were also established in November, providing greater operating cash flow certainty to support Karoon's investment plans and the debt facility.

We are continuing to prepare for the Baúna intervention campaign and the Patola development, which together are expected to more than double Karoon's production by early calendar 2023. Maersk Drilling has narrowed the window for when the Maersk Developer rig will be ready to commence operations, to between 15 April - 15 May 2022. Evaluation work is also progressing on the Neon discovery, which has the potential to be a valuable production asset that could take advantage of our existing infrastructure and resources in Brazil.

Karoon is committed to meaningful action to achieve its emissions reduction and mitigation targets. During the quarter we commenced implementing our Carbon Management Action Plan, with two carbon reduction projects undertaken and work ongoing to ensure we meet our carbon neutral1 and net zero commitments2.

2022 promises to be an exciting year. Following the Strategic Refresh, which was completed in the December 2021 quarter, we have a clear strategy and objectives. I look forward to reporting our FY2022 half year results and updating the market on progress of our growth plans in February."