Karoon Energy (ASX:KAR) said Brazil's government has extended a 12% temporary tax on crude oil exports for 60 days beyond its July 9 expiry, according to a Friday filing with the Australian bourse.

As a result, the company will continue to be selective on the end markets for its production based on destinations that yield the highest realized net price.

It noted that oil exports to the European Union are expected to qualify for a 6% export tax treatment under the Mercosur-EU trade framework.

Karoon Energy also said the industry continues to pursue legal challenges to the Brazilian export tax, seeking the refund of payments related to the tax since its inception in March.

The company's shares fell 5% in recent Friday trade.