During 2008 Karoon acquired a 20% equity interest in Block Z-38 in the Tumbes Basin offshore Peru. This was subsequently increased to 75% before a successful farm-out of 35% to Tullow Peru Limited in January 2018, leaving Karoon with a 40% interest. Block Z-38 lies 10 kilometres offshore from the coast of northern Peru, 56 kilometres west of the city of Tumbes and 39 kilometres west of Caleta Cruz. The block is in water depths ranging from 300 metres along its eastern boundary to over 3,000 metres in the west and covers an area of 4,875 square kilometres.
The addition of Block Z-38 into Karoon’s exploration portfolio provides hundreds of millions of barrels of oil potential in an under-explored, highly prospective part of the Tumbes Basin. This pull-apart basin is similar in style to the prolific San Joaquin Basin of Southern California and exhibits a variety of play types. Work done by Karoon including 3D seismic, sea floor drop cores and AVO analysis supports the presence of an active Petroleum System with oil from the same source rocks as seen in the adjacent Talara Basin where over 1.7 billion barrels of oil have been produced to date.
Karoon’s acreage is strategically located across the basin axis and adjacent to the Talara Basin onshore fields
|Equity interests in Block Z-38 are:|
|KEI (Peru Z38) Pty Ltd, Sucursal del Peru (Operator)||40%*|
|Tullow Peru Limited||35%**|
|Pitkin Petroleum Peru Z-38 SRL||25%|
*Karoon’s 40% equity interest is subject to completion of farm-in obligations.
**Tullow’s 35% equity interest remains subject to conditions including regulatory approvals.
During 2008 Karoon executed a farm-in agreement to acquire a 20% equity interest in Block Z-38. Karoon was approved as Operator during October 2009 and subsequently increased its equity interest to 75% subject to completion of farm-in obligations.
Following the acquisition and interpretation of 2D and 3D seismic surveys in 2009 and 2010, numerous multi-level prospects and leads were mapped within the block in water depths of between 300 to 1,000 metres.
In June 2013 the Environmental Plan (EIA) for an exploration drilling campaign was approved by the Peruvian regulators.
During January 2018 Karoon farmed out a 35% equity interest in the block to Tullow Peru Limited, a wholly owned subsidiary of Tullow Oil plc.
The work program is targeting younger shallow Tertiary reservoirs in moderate water depths of Karoon’s block. These younger formations are interpreted to have superior reservoir characteristics compared with the older producing Zorritos Formation which has historically been the focus of limited exploration over the last 3-4 decades.
Oil extracts recovered from seabed cores acquired by Karoon during Block Z-38 in 2010 show characteristics similar to oils from wells in both the Talara and Tumbes Basins and support the model of a common and prolific Tertiary source.
Since acquisition, Karoon’s geotechnical work has helped delineate, and materially de-risk prospects.
During 2010, Karoon acquired and processed a 1,500 square kilometres 3D seismic survey. The seismic interpretation mapping and prospect evaluation is complete and the preliminary exploration well locations have been selected.
Tumbes Basin Background
Block Z-38 lies to the northwest of the large, producing onshore fields of the Talara Basin. These fields have been producing oil for over 100 years and have produced over 1.7 billion barrels to date.
Exploration in the offshore Neogene Tumbes Basin commenced in 1969 with the discovery of dry gas at the Amistad field in the Ecuadorian Gulf of Guayaquil, approximately 60 kilometres north of Block Z-38. Exploration in the offshore Peruvian Tumbes Basin began in 1972 when oil, gas and condensate were discovered at the Albacora field near the maritime border with Ecuador. A further four exploration wells were drilled between 1972 and 1974, two of which encountered 37oAPI oil in Miocene formations. Six wells were drilled between 1977 and 1984 of which, two wells were gas condensate and oil discoveries (Piedra Redonda and Corvina).
Following a 22 year hiatus, drilling resumed in 2006 when BPZ Energy commenced an appraisal of the Corvina structure, encountering an oil leg in Middle Miocene Zorritos sandstones. The Corvina field, located 35 kilometres from Block Z-38, began producing oil in 2007 and is currently undergoing major refurbishment including the installation of a second platform. The Albacora field is also undergoing reappraisal.
No exploration wells have been drilled in the offshore Tumbes-Progresso Basin since 1984.
Block Z-38 is in the Tumbes Basin where 7 to 10 kilometres of Cenozoic sediments constitute an untested extension of the Tumbes Basin petroleum system. The Block hosts a wide variety of play types including Neogene aged tilted faulted blocks, wrench and ramp anticlines and pinch-out plays.
The principal source rocks are Lower Miocene Heath Formation and older Pro Delta Shales. Oil extracts recovered from seabed cores acquired by Karoon during Block Z-38 in 2010 show characteristics similar to oils from wells in both the Talara and Tumbes Basins and support the model of a common and prolific Tertiary source.
Reservoir targets extend from the Pliocene La Cruz Formation to the Oligocene Mancora Formation. At Albacora and Corvina, the producing reservoirs are Middle Miocene in age, however, at Amistad, younger sandstones also produce gas. These younger formations have superior reservoir characteristics compared with the older Zorritos Formation and are the primary target in Karoon’s Z-38 block.