This report does not constitute a rating action. Production disruption: Karoon Energy Ltd. has lowered production guidance by up to 15% for its key Bauna asset for 2026 to 5.4 million barrels (mmbl)-5.7 mmbl. This follows an equipment failure at the SPS-92 well at Bauna, the cause of which remains under investigation. The lower production combined with a fixed cost base will drive up unit production costs this year. Reserve replacement critical: Karoon needs to replenish its productive reserves to extend its operating life beyond the next five years, in our view. We assume an annual production rate of 8 million barrels of oil equivalent (mmboe)-9 mmboe, versus proved reserves of about 47.8 mmboe as of Dec. 31, 2025. Karoon
