• Neon development opportunity achieves key Decision Gate 2 milestone and moves into the Define phase
• Neon Contingent Resource estimates materially improved, with 1C up 59%, 2C up 44% and 3C up 21%
• Neon Prospective Resources of 6.7 MMbbl on a 2U basis recognised for the first time

Karoon Energy has announced that the Neon development opportunity has achieved the key Decision Gate 2 milestone and will now proceed into the Define phase, including Front End Engineering and Design (FEED). Over the past year, extensive technical and commercial work has been undertaken on the Neon field, located in Block S-M-1037 offshore Brazil. This work has resulted in a material improvement in the estimated Neon Contingent Resources, with 1C up 59% to 59.8 MMbbl, 2C up 44% to 86.5 MMbbl and 3C up 21% to 108.0 MMbbl. Additionally, Neon Prospective Resources of 6.7 MMbbl on a 2U basis have been recognised for the first time. The Define phase will involve further work to mature the Neon opportunity towards a possible Final Investment Decision, including confirming well numbers and phasing, securing an FPSO, defining subsea infrastructure, and engaging with the market for key supply and service contracts. Given current market volatility, the Define phase activities have been divided into three stages, with progression to the next stage dependent on technical, commercial and market conditions. The initial stage capital commitment is expected to be US$7-10 million, to be funded from Karoon's existing cash reserves. Karoon also plans to commence a farm-down process during the third quarter of 2025 to secure a partner, which is a prerequisite to taking a Final Investment Decision. The revised Phase 1 concept capital costs (100%) are currently estimated at US$0.9-1.2 billion, with first oil targeted for early 2029 and an estimated peak production rate of 40-50,000 bopd. Based on a long-term Brent oil price of US$65/bbl, the mid-case pay-back period is approximately two years, and the IRR is expected to be above 20%.

The initial stage capital commitment for the Neon Define phase is expected to be US$7-10 million, to be spent over the next six months. Total Define phase costs up to a Final Investment Decision are expected to be approximately US$25-30 million. 2025 capital expenditure relating to Neon, including US$1 million spent on Concept Select this year, is expected to be US$22-25 million.

Subject to a farm-down being achieved by late 2025 and supportive project economics and market conditions, Karoon aims to make a Final Investment Decision on the Neon development in mid-2026, with first oil targeted for the first half of 2029.