Latest Sandon letter to Holders.

Dear fellow Karoon Energy Shareholder, I am writing to provide you with an update on our campaign to convince the Board of Karoon Energy Ltd (Karoon) to return capital (including dividends) to shareholders. We’ve been speaking with a wide range of shareholders, from large institutions all the way through to small individual shareholders. I note that we’ve not engaged any third-party company to call on our behalf. I’d also like to thank those shareholders who’ve indicated their support for our voting intentions and those who’ve appointed either me or Samuel Terry founder, Fred Woollard, as their proxies. The Latest from Karoon Karoon recently released a letter on the ASX from the Chairman, Mr Peter Botten. You can read that letter here. In our opinion, Mr Botten’s letter continues Karoon’s behaviour of teasing shareholders that capital returns (and indeed shareholder returns) are just over the horizon. The main points of contention between us and the Board are the timing and size of capital returns (including dividends). In his letter, Mr Botton makes the following statement about capital management: “As stated consistently since the results of our strategic refresh announced in October 2021 and again at our 2023 AGM, it has always been our intention to consider capital returns to shareholders, including possible dividends and share buy backs, once we had achieved a stable and diversified production base [emphasis added]”1 He also adds later that “work is being finalised” on developing a robust and sustainable dividend policy. If the work has been in train since 2021, why are we still waiting for Karoon to state its “shareholder returns approach”? Can we surmise that work on returning capital to shareholders has only commenced in earnest following pressure from the largest associated shareholder? We are not the only ones asking for dividends. Mr Bob Hosking, Karoon’s founder, was quoted recently as saying “the company needs to pay a dividend. You can read the full interview with Mr Hosking here. Karoon has been dangling the tantalising prospect of paying dividends to shareholders for almost three years now. It’s no wonder shareholders feel like the poor donkey in the picture below. We ask the Board, if not now, when?

Discipline: Really? Mr Botten also writes about Karoon’s “long term growth focus, while maintaining discipline.” We consider the Who Dat acquisition, and in particular the capital raising that accompanied it, demonstrated a distinct lack of discipline. When considering acquisition opportunities, there are many moving parts. For a listed company, the price at which it can issue new shares to fund an acquisition is a key determinant to the value creation (or destruction) outcome for existing shareholders. For example, all the evidence to date suggests to us that Karoon has issued its shares too cheaply to buy, what appears to be, an overpriced asset in Who Dat. Yes, Who Dat delivered a second producing asset, greater reserves and increased production, but at what cost to shareholders?

Motive, means and opportunity We don’t for a moment doubt that the Karoon board believes their goals will deliver shareholder value. No one sets out to destroy shareholder value. To paraphrase the old adage: the road to shareholder value destruction is paved with good intentions (and misaligned incentives). For shareholder value destruction to occur, three things are needed: mis-guided and mis-aligned motives, the financial means and opportunity. At Karoon, the “motive” of the Board is clear – to deliver on the company’s mantra of long-term reserve and production growth that it believes will create shareholder value. It does not shy away from this objective. We consider the motive of the board, while well-intentioned, to be mis-guided and mis-aligned. We consider returning meaningful amounts of capital to shareholders as a better, less risky means of creating shareholder value. Growing, as the Board would like to do, involves shareholders facing significant risks. We simply need to look at the share price since the Who Dat acquisition was announced. Karoon recently completed an issue of new debt instruments, raising a total of USD350 million. We note that the investors who bought those bonds are being rewarded with a 10.5% per annum interest rate, paid every six months. When including the existing reserves-based lending facility, we estimate Karoon has the capacity to borrow up to ~USD700 million. Now, with a freshly-minted bond issue combined with the existing unutilised debt capacity, Karoon has the “means” to execute its growth strategy. All that is now required is the “opportunity” to make an acquisition. Shareholders are now being told acquisitions are unlikely until at least next year, which is only a little over 6 months away. Karoon is clearly keen to make an acquisition to meet its target production of 50,000 barrels of oil per day. The CEO made that clear in a press interview during the week. You can read that interview here. The poor performance of both the Who Dat acquisition and the share price means that shareholders should oppose any new acquisition until both have improved substantially. Further, if these criteria can be satisfied, then in our view only exceptional acquisitions that are accretive to shareholder distributions (not just a vague shareholder value criterium) should be considered. Increased debt means greater risks to shareholders While Karoon’s share price languishes well below the issue price of last year’s widely-criticised capital raising, any new equity issuances will be challenging. This means Karoon will need to rely almost entirely on debt funding for any acquisition it might make. As noted above, that debt is now available. We consider that any debt funded acquisitions will substantially increase the risks to Karoon’s shareholders. The unexpected production issues at both Bauna and Who Dat serve to remind us all that drilling for oil is a risky endeavour. Even with the most competent teams, unexpected, unforeseen events can occur, particularly in a technically complex and highly cyclical industry such as oil and gas. Adding large amounts of debt into the mix adds substantial financial risks; risks that are ultimately borne by shareholders. Whatever Mr Botten and his fellow directors might like you to believe, the market’s verdict on Karoon’s strategy appears clear.

The New Directors have been too busy to meet us On 1 May 2024, we requested an opportunity to meet with the new directors sometime before the AGM next week. We even wrote directly to both of the new directors on 3 May 2024. We’ve had no response from either of them. We asked the Chairman to help arrange meetings. He explained they were very busy. We are disappointed. Perhaps the new directors feel that meeting with a shareholder is unnecessary given they have been given the tick of approval by all three leading proxy advisory firms. On 15 May 2024, the company offered the possibility of a meeting on 17 May 2024. Unfortunately, in our view the offer of a meeting has come too late. Previously, we had advised that we had abstained from voting on their elections, pending a possible meeting. Given the delay in their response and the views of the Board (including the newest directors) as set out in the most recent letter from Karoon, we’re left with no choice than to vote AGAINST their elections. You can see our revised voting intentions below. How Sandon and Samuel Terry have currently voted We encourage you to vote how Sandon and Samuel Terry have voted:

Your vote must be received by 10.00am (Melbourne time) on Tuesday, 21 May 2024. You can submit your vote in the following ways: Online at www.investorvote.com.au (control number 133729) and follow the prompts. You will need your SRN/HIN. Post your proxy form to Computershare Investor Services Pty Ltd, GPO Box 242, Melbourne, Victoria 3001. Fax your proxy form to 1800 783 447 (within Australia), or +61 3 9473 2555 (outside Australia) If you are a Karoon shareholder and would like to discuss our AGM voting position, please get in touch via return email. Sincerely, **riel Radzyminski Director Sandon Capital Pty Ltd 115 May 2024, ASX announcement Important Information This email contains the current views and opinions of Sandon Capital Pty Ltd (Sandon Capital) only and is based on publicly available information with respect to Karoon at the date it is sent to you. Sandon Capital is under no obligation to update the information in this email. This email does not constitute or contain financial, legal or tax advice. Nothing in this email takes into account any person’s investment objectives, financial situation or particular needs. You should not rely on the information or views contained in this email to make investment decisions. Nothing in it should be taken to construe a recommendation or statement of opinion that is intended to influence a person in making an investment decision. The recipient should seek their own advice as to how to vote at the Karoon AGM.