Karoon entered Brazil during 2008 acquiring 5 off-shore blocks S-M-1037, S-M-1101, S-M-1102, S-M-1165 and S-M-1166 (the ‘Blocks’) in the Santos Basin. Strategically the Blocks broadened Karoon’s geographical footprint and added significant oil prospectivity in an emerging basin with proven petroleum systems, favourable geology, hydrocarbon potential from a variety of play types (both pre and post salt) and manageable exploration costs.
Karoon has operated 2 drilling campaigns in the Blocks to date, drilling a total of 6 vertical wells, along with 2 side-tracks
Exploration success resulted in the Kangaroo and Bilby light oil discoveries in 2013 which were followed by the Echidna light oil discovery in 2015. Both the Kangaroo and Echidna oil discoveries were flow tested during 2015 producing encouraging results.
Following the last drilling campaign completed in May 2015, evaluation is ongoing and Karoon expects to provide an updated contingent resource on Kangaroo and a preliminary contingent resource for Echidna once the evaluation process is completed.
While the results to date have been encouraging and Karoon has a good data set over the discoveries, further field appraisal is required for Kangaroo and Echidna. Follow on appraisal drilling is planned to commence during calendar year 2017 on the Echidna discovery to address uncertainties, following which geologic models and the development concepts will be refined before considering any future development.
Equity interest of the participant in S-M-1037, S-M-1101, S-M-1102, S-M-1165 and S-M-1166 is:
|Karoon Petróleo & Gas Ltda (Operator)||100%|
|*The Group’s 100% ownership interest remains subject to ANP approval|
Following Brazil’s Bid Round 9 results in March 2008, Karoon was awarded 100% equity in the 5 offshore exploration Blocks in the Santos Basin, located approximately 200 kilometres off the coast of the State of Santa Catarina, Brazil. The Blocks covered a total of 865 square kilometres, with an average water depth of approximately 400 metres.
In 2010, Karoon conducted the first ever wide azimuth 3D seismic survey in Brazil. The results of this 3D seismic survey, was integral to planning Karoon’s Phase 1 exploration drilling campaign completed during 2013.
Karoon signed agreements in September 2012 to farm-out a 35% interest to Pacific Exploration and Production Corp. (‘Pacific’), formerly, Pacific Rubiales Energy Corp. In April 2016, Pacific applied for insolvency protection with the Superior Court of Justice Ontario, Canada. Following this, in September 2016 Karoon acquired Pacific’s 35% interest in the Blocks for an upfront cash payment of US$15.5 million and a contingent US$5 million payable on the production of a minimum of 1 mmboe.
During 2013, Karoon successfully completed its Phase 1 exploration drilling campaign comprising 3 wells which delivered significant early exploration success with oil discoveries at Kangaroo-1 and Bilby-1. The results at Emu-1 were also encouraging with good quality sands encountered with oil shows.
Following the successful initial phase of the Concession Agreements, a Discovery Appraisal Plan (Plano de Avaliação de Descobertas or “PAD”), which governs the next stage of the Concession Agreements was approved in December 2013 by the Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (‘ANP’). The revised area of the Blocks under the PAD is approximately 549 square kilometres.
The follow-on phase 2 exploration and appraisal drilling campaign commenced during November 2014 and drilled the Kangaroo-2 appraisal well (December 2014), followed by the Kangaroo West-1 (March 2015) and the Echidna-1 (April 2015) exploration wells. This drilling campaign, was designed to better define the Kangaroo discovery contingent resource size and quality, obtain a production test and drill proximate exploration targets.
The well results were as follows:
The well was located approximately 300 metres up-dip and 4 kilometres south of Kangaroo-1 and designed to appraise the Kangaroo light oil field discovery. The vertical well confirmed a 250 metre gross (135 metre net) oil column in Paleocene and Maastrichtian aged reservoirs. A production test over the oil bearing reservoir sections flowed at a maximum facility constrained rate of 3,700 stb/d across both the Paleocene (33 degree API oil gravity) and Maastrichtian (38 degree API oil gravity) aged reservoir sections. Following the production testing of the intersected reservoir sections in the vertical well, a down-dip and up-dip side track was also undertaken.
The Kangaroo West-1
The exploration well followed Kangaroo-2. While the well intersected a good thick sealing unit before penetrating a sequence of interbedded sands and shales of Paleocene, Maastrichtian and Campanian age, no hydrocarbons were intersected. The lack of hydrocarbons was attributed to a lack of oil migration into the structure.
The Echidna-1 exploration well was the third and final well in the phase 2 drilling campaign. The well intersected a 213 metre gross (104 metre net) oil column in Paleocene and Maastrichtian aged reservoirs. A production test was conducted over Paleocene reservoirs and flowed at a facility constrained rate of 4,650 stb/d (38.6 degree API oil gravity).
During September 2015, the revised appraisal plan for Karoon's Santos Basin Blocks was approved by the ANP. The revised PAD comprises firm commitments including drilling 2 wells, the acquisition and processing of a 3D seismic survey over the full PAD acreage and further geological and geophysical studies, which are required to be completed by 31 December 2018. In addition, a further contingent work commitment consists of up to four additional wells.