Chairman & CEO’s Report The 2021 financialyear was one of the most significant years in Karoon’s 17-year history. Following the acquisition of the Baúna oil field in Brazil in November 2020,the Company has now entered a new era as a material oil producer and operator. As well as a high-quality production asset, the purchase has provided Karoon with value-accretive brownfield production growth opportunities, with the Baúna intervention program and Bruce Phillips Patola field development both sanctioned during the year. Chairman It was also a year of substantial change in the Board and management team, including the retirement of our Founder and Managing Director, Robert (Bob) Hosking and the appointment of new Chief Executive Officer and Managing Director, Dr Julian Fowles. Together with an organisational restructure and several highly experienced senior management appointments,we are confident we have the necessary skills and capabilities to support our production, development and growth aspirations. Karoon’s transformation has been delivered against a backdrop of the unprecedented global COVID-19 pandemic, which continues to cause significant hardship for many of our staff and contractors, as well as disruption to normal operational practices. By adopting a high degree of flexibility in work arrangements and active management of the associated risk to personnel and operations, our team has been successful in mitigating the potential impacts of Julian Fowles COVID-19. While Karoon managed a number of COVID-19 cases Chief Executive Officer in the Baúna operations and among our administrative staff in and Managing Director Brazil during the reporting period, our employees and contractors were kept safe and production was not impacted. On a more positive note, the macro-oil environment has been very supportive. The oil price increased from approximately US$45/bbl at the beginning of the year to more than US$75/bbl by the end of June 2021, reflecting a recovery in oil demand as the global impacts of COVID-19 eased, combined with supply Our team has been constraints implemented by OPEC+. This has had a positive impact on cash flows generated from operations, leading to a material successful in mitigating strengthening in our balance sheet over the period. the impacts of COVID-19 Delivery of core strategic goals In last year’s Annual Report, we outlined our three-pillar strategy by adopting flexible work to build a global exploration and production company, with long term production and a prospective exploration portfolio to provide arrangements and actively a platform for growth. managing risks. The first pillar was to secure a quality production asset.November 2020, after successfully agreeing adjusted considerationOn 6 terms, we completed the acquisition of the BM-S-40 Concession in the Santos Basin, offshore Brazil, from Petrobras S.A. This purchase, which includes the producing Baúna oil field and nearby Patola discovery, has transformed Karoon from a pure exploration company into one of the largest oil producers on the ASX, with material cash flows from operations. The second pillar of Karoon’s strategy was to realise value from development projects. Within five months of gaining control of the Baúna assets, the Karoon Board endorsed plans to conduct Karoon Energy Ltd 08 Annual Report 2021