Karoon Energy (ASX:KAR) is moving from a capital expenditure-intensive period in the first half of the year back into positive free cash flow in the second half, driven by higher oil output in Brazil, Jarden said in a Wednesday note.

Karoon Energy lowered its aggregate production guidance for the year to between 7.2 million barrels of oil equivalent (MMboe) and 8.2 MMboe from a previous range of 8.1 to 9.2 MMboe. The downgrade is a result of operational issues at the company's Who Dat joint venture, which operates a namesake oil and gas field in the Gulf of Mexico.

Karoon also said that the company is currently revising and optimizing the overall investment expenditure commitment across the Baúna, Who Dat, and other projects for the year. The analysts interpret this to mean the firm will seek to maintain full-year cost guidance at the current capital expenditure range of $150 million to $183 million.

It increased Karoon's forecast capital expenditure towards the upper end of the range at $181 million.

The investment firm retained its buy rating on Karoon and decreased the price target to AU$2.30 per share from AU$2.55 per share.