Though most of the people look for growth stocks to invest in, seasoned investors look for value, mostly hunting for undervalued stocks among ASX listed companies. Generally having low valuation ratios, like P/E, P/B, such stocks have more value than reflected in their share price, thus becoming potential growth companies.
Karoon Energy Limited (ASX: KAR)
Karoon Energy Limited (ASX: KAR) reported robust 3Q24 operational results, highlighted by a 25% quarter-on-quarter increase in net revenue interest (NRI) production to 2.68 MMboe. This was driven by a 44% rise in Bauna Project output following the resolution of prior maintenance issues. However, Who Dat production declined 10% due to planned maintenance and hurricane-related shutdowns. Sales volumes fell 24% to 2.06 MMboe, reflecting the timing of shipments, with a 0.5 MMbbl cargo in transit at quarter-end. Sales revenue declined 32% to $144.9 million, impacted by reduced volumes and an 8% drop in realized oil prices amid softer global demand.
Operationally, Bauna demonstrated improved FPSO efficiency, increasing to 82.9%, albeit below the target range of 90–95%. The field is expected to deliver FY24 production of 7.5–7.7 MMbbl, supported by stable post-maintenance output of 24,000–25,000 bopd. Discussions on extending Bauna’s FPSO life to 2032+ are ongoing, with further maintenance planned into 2025. At Who Dat, gross production averaged 30,543 boepd, down 12% due to compressor maintenance and hurricane impacts. October production has rebounded to ~40,000 boepd. Full-year NRI production guidance has been tightened to 3.0–3.1 MMboe. Meanwhile, the Who Dat South well is advancing, with results expected in late October. Positive appraisal data from Who Dat East supports the area’s growth potential, with a resource update due in 4Q24.
Financially, Karoon remains disciplined. An inaugural dividend of 4.496 AUD cents per share and a $25 million share buyback were completed, with a further $25 million buyback planned through June 2025. Net debt stood at $41.8 million, providing flexibility to fund upcoming commitments, including capex and Petrobras payments. The company has narrowed FY24 production guidance to 10.5–10.8 MMboe and reduced capex guidance to $144–156 million. Strategic review outcomes, including the potential Neon FEED decision, are expected in 1Q25. Despite near-term challenges, Karoon's production growth and capital returns underscore its commitment to shareholder value.
Iluka Resources Limited (ASX: ILU)
Iluka Resources Limited (ASX: ILU) has made significant strides in expanding its rare earths portfolio. On December 19, 2024, the company entered into an Exploration Agreement with PURE Exploration (USA) LLC, a subsidiary of Iluka, for the North Fork Rare Earth Project in Idaho, USA. The agreement outlines a three-stage transaction. In the first stage, Iluka will pay A$500k and reimburse Megado up to US$110k for claim maintenance fees, granting an exclusive two-year exploration right. The second stage allows Iluka to acquire 100% of the project for A$1m. The final tranche includes a potential A$2m payment after Iluka achieves US$10m in revenues from the project, with the option to convert this to a 2% gross revenue royalty.
On December 6, 2024, Iluka also announced a positive outcome for the Eneabba rare earths refinery project, securing a A$1.65 billion non-recourse loan from the Australian government. The refinery, located on a brownfield site, is set to begin commissioning in 2027 and will produce separated light and heavy rare earths, with a capacity of approximately 5.5ktpa for Neodymium-Praseodymium (NdPr) and 0.75ktpa for Dysprosium-Terbium (DyTb). Iluka's long-term commitment to the project is underpinned by strong industry fundamentals, with forecasts indicating a significant increase in demand for NdPr and DyTb in the coming years, driven by the global electrification trend.
In its quarterly update for the period ending September 30, 2024, Iluka reported solid production and sales figures. It produced 138kt of zircon/rutile/synthetic rutile (Z/R/SR), including 43kt of zircon sand and 59kt of synthetic rutile, reflecting full capacity at SR2. Sales for zircon sand were stable at 97kt, with synthetic rutile sales slightly delayed. Unit cash production costs were reported at A$1,302/t, partly due to lower finished goods production during the quarter. Despite seasonal impacts expected in Q4, the company remains on track to meet its guidance for zircon-in-concentrate (ZIC) sales and synthetic rutile take-or-pay contracts for 2024.
Source: Company’s Reports
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