PERTH (miningweekly.com) – Melbourne-based oil and gas explorer Karoon Gas Australia will spend up to $20.5-million to gain a 35% equity interest in the Santos Basin exploration blocks, offshore Brazil.
Karoon has entered an agreement with Pacific Exploration and Production Corporation to acquire an interest in the five blocks, after Pacific’s application for insolvency protection with the Superior Court of Justice in Ontario, in April this year.
Under the terms of the agreement, Karoon will make an up-front cash payment of $15.5-million on the completion of the transaction. A deferred contingent payment of $5-million will also be payable on first production reaching a minimum of one-million barrels of oil equivalent from the blocks.
“The acquisition of Pacific’s interest in the blocks maps a clear path forward for Karoon to introduce a new funding partner to progress the Enchida discovery appraisal drilling campaign,” said MD Robert Hosking.
Karoon already holds five blocks in the Santos basin, which it acquired in 2008. The company operates two drilling campaigns, drilling a total of six vertical wells, along with two 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.