Why is this ASX 200 energy share sinking 5% today?

This energy company is ending the week deep in the red.

| More on:
A man holds his head in his hands, despairing at the bad result he's reading on his computer.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Karoon Energy Ltd (ASX: KAR) share price is on course to end the week in a disappointing fashion.

At the time of writing, the ASX 200 energy producer's shares are down 5.5% to $2.26.

This compares unfavourably to the 0.2% gain by the benchmark S&P/ASX 200 index (ASX: XJO).

Why is this ASX 200 energy share sinking?

Investors have been hitting the sell button on Friday after Karoon Energy released an update on its Baúna operations in Brazil.

These operations were shut-in at the end of March due to a loss of containment incident associated with the high pressure flare on the FPSO, Cidade de Itajaí.

At the time, the company's FPSO operator, Altera&Ocyan (A&O) was sent in to identify the source of the leak and undertake repairs. And while these repairs were completed a couple of days after the incident, things weren't quite right with its flow rates.

As a result, management decided to keep the operation shut down to undertake a full inspection and to bring forward planned maintenance. This was expected to be completed by mid-April, allowing for production to restart.

Mid-April has arrived

Unfortunately, we have now reached the middle of April and things are not looking good.

According to the release, the suspension of Baúna production, including from the Patola field, is expected to be extended into the month of May. This follows a decision to undertake both essential and proactive works.

Management advised that the timing of when production will restart is dependent on the completion of the inspections and the final scope of works undertaken.

But as things stand, if all goes to plan, the company is expected to achieve FY 2023 production at the low end of its current guidance range (7.5 – 9.0 MMbbl). Management is still assessing the impact of these activities on its unit production costs guidance. However, it currently expects costs to be at the upper end of its guidance range (US$13-17/bbl).

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Energy Shares

Focused man entrepreneur with glasses working, looking at laptop screen thinking about something intently while sitting in the office.
Energy Shares

Are Santos shares a screaming buy?

Goldman Sachs thinks now could be a good time to buy this energy stock.

Read more »

A young woman lifts her red glasses with one hand as she takes a closer look at news about interest rates rising and one expert's surprising recommendation as to which ASX shares to buy
Energy Shares

What is getting investors excited about this ASX 200 uranium stock today?

There's a good reason why this share is charging higher on Wednesday.

Read more »

Businessman studying a high technology holographic stock market chart.
Energy Shares

Is this stock the 'best placed' of the ASX uranium shares?

This fund manager thinks so.

Read more »

Worker on a laptop at an oil and gas pipeline.
Energy Shares

Why today is a big day for Santos shares

Why is everyone talking about Santos shares today?

Read more »

A man has a surprised and relieved expression on his face. as he raises his hands up to his face in response to the high fluctuations in the Galileo share price today
Energy Shares

This ASX 200 mining stock just reported a 40% earnings jump

Investors appear pleased with this miner's performance during the first quarter.

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Energy Shares

Are beaten down Paladin Energy shares a bargain buy?

Bell Potter thinks this beaten down uranium stock could be worth picking up.

Read more »

Worker inspecting oil and gas pipeline.
Energy Shares

3 headwinds facing ASX 200 energy stocks in 2025

After a tough 12 months, what’s ahead for ASX 200 energy stocks in 2025?

Read more »

Man holding Australian dollar notes, symbolising dividends.
Energy Shares

Dividend investors: Top ASX energy shares for November

These are the energy stocks I would buy for dividend income.

Read more »