Karoon entered Brazil during 2008 through Bid Round 9 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 located approximately 200 kilometres off the coast in the State of Sáo Paulo, Brazil. 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 signed agreements during September 2012 to farm-out a 35% interest to Pacific Exploration and Production Corp. (‘Pacific’), formerly, Pacific Rubiales Energy Corp. Following Pacific applying for insolvency protection during April 2016 during 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.
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.
During September 2015, the revised appraisal plan for the Blocks was approved by the ANP which 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. The firm commitments are to be completed by 31 December 2018. In addition, a further contingent work commitment consists of up to four additional wells.
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%|
During 2010, Karoon conducted the first ever wide azimuth 3D seismic survey in Brazil. The results of this 3D seismic survey were integral to planning Karoon’s Phase 1 exploration drilling campaign completed during 2013.
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 during 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.