Karoon drills dry hole at Kangaroo West (Brazil)

Karoon Gas Australia has reported that the Kangaroo West-1 exploration well, located in exploration block S-M-1165, off Brazil, had reached its planned total depth of 3,170 mRT. Based on mudlog and LWD petrophysical data, no hydrocarbons were intersected.

The well intersected a good thick sealing unit before penetrating a thick sequence of Paleocene to Campanian interbedded sands and shales. The lack of hydrocarbons is attributed to a lack of oil migration charge into the structure, previously recognised as the main risk with this prospect.

Current operations are completing a wireline logging program. The rig will then move to the next well location in the coming days.

The Kangaroo West-1 exploration well is estimated to cost approximately US$34 million net to Karoon.

Forward Program

Based on the integration of well results, interpretation of new higher resolution 2 millisecond seismic data and the material prospective resource size, the Joint Venture has elected to take up the first option well to drill the Echidna-1 exploration well.

The Echidna prospect is located in exploration block S-M-1102, approximately 20 kilometres northeast of Kangaroo on the eastern flank of a salt diapir in a similar geological setting to the Kangaroo oil field.

According to Karoon, the 3D seismic at Echidna shows excellent seismic anomalies similar to that seen in Kangaroo-2 where in some reservoirs the oil water contact (flat spot) has been imaged, boosting confidence in the presence of oil.

Based on the new higher resolution seismic data, the faulting density in the Echidna prospect appears to be less than that seen in surrounding fields and prospects, reducing the complexity of any potential oil accumulation. The Paleocene and Maastrichtian reservoirs in the Echidna prospect were deposited in shallower marine settings relative to other Karoon wells, resulting in an increased likelihood that cleaner and better reservoirs are present.

The Echidna prospect has been risked with a chance of success calculated at 43%. The estimated quantities of petroleum that may potentially be recovered by the application of a future development project relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development, Karoon said. Further exploration, appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. There is no certainty that any portion of the prospective resource estimated on behalf of Karoon will be discovered, the company noted in the press release. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resources evaluated.

The Echidna net un-risked prospective resource estimates were assessed by Karoon’s Engineering
Manager, Lino Barro on March 15, 2015.

Kangaroo field evaluation status

Work is progressing with the interpretation of the new data received following the drilling of Kangaroo-2 and its two sidetracks. More data is still to be received from contractors including core and fluid sampling data. In the coming months, the remapping with this new higher resolution 2 millisecond seismic data will also be integrated into the field model, said Karoon.

In addition, the rig contract provides Karoon with one additional option well providing flexibility for
further appraisal of Kangaroo or Echidna upon success. In the event the Joint Venture elects to take
up the second well option, Karoon said that a further update on the Kangaroo resource is not expected until the completion of any further appraisal drilling on the field.

The current exploration and appraisal drilling campaign, operated by Karoon, is using the ’Olinda
Star’ semi-submersible drilling rig for the entire campaign.

Karoon holds a 65% interest in and is operator of the jointly held exploration blocks S-M-1037, S-M-
1101, S-M-1102, S-M-1165 and S-M-1166, Santos Basin, Brazil.

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