Santos Basin

Blocks S-M-1037, S-M-1101, S-M-1102, S-M-1165, S-M-1166 and S-M-1537

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 resulted in an update to the contingent resources announced in April 2018.  In addition, Karoon has submitted final documentation to proceed to the Brazilian ANP ‘Declaration of Commerciality’ stage on areas covering the Echidna and Kangaroo oil discoveries.

S-M-1537 was acquired in ANP Bid Round 14 in 2017 after a lengthy evaluation of the southern Santos Basin blocks on offer. The block was acquired for a low capital commitment consisting of seismic acquisition and geological studies. Block S-M-1537 provides an exciting low risk exploration opportunity, with the potential for hundreds of millions of barrels of oil. The main lead is targeting Oligocene turbidite sands with excellent reservoir porosity and permeability as seen in the producing Oligocene reservoirs of the Bauna and Piracaba oil fields. Seismic analysis shows an excellent Amplitude versus Offset anomaly supportive of the presence of trapped oil.

Karoon has leveraged off its expertise and knowledge of the basin through the evaluation of Kangaroo and Echidna and nearby fields to high-grade it as the best prospect in the southern Santos Basin. With success there are many synergies to be had with the potential joint development at Kangaroo and Echidna.

Interest

Equity interest of the participant in S-M-1037, S-M-1101, S-M-1102, S-M-1165, S-M-1166 and S-M-1537 is:

Karoon Petróleo & Gas Ltda (Operator) 100%

 

Exploration History

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 kilometers.

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.

Karoon was awarded a southern Santos Basin exploration Block, S-M-1537, located in the state of Santa Catarina, offshore Brazil, as part of ANP Bid Round 14 in September 2017.