Karoon eyeing ‘hundreds of millions of barrels of oil’ in new offshore block

Brazilian oil and gas regulator ANP last week held a licensing round, offering 287 offshore and onshore exploration blocks for oil companies to bid for.

Out of the 287 blocks, it offered 76 offshore blocks in the Santos basin, the second largest producer of oil and the first of natural gas in Brazil.

Only one bid was submitted for the Santos Basin acreage, coming from the Australian oil and gas minnow Karoon Oil and Gas, for a prospective 171 square km offshore block in the Santos Basin in the state of Santa Catarina, Brazil, just south of Rio de Janeiro with a water depth of approximately 400m.

Explaining the rationale behind the bid for the not much sought after acreage, Karoon highlighted the fact that the block was located in an existing oil and gas producing province in close proximity to several oil and gas producing fields, including Bauna and Piracaba to the north. Other nearby discoveries include the Caravela and Coral oil fields to the west, Karoon said.

“Karoon believes the Block provides exciting low risk exploration, which has the potential for hundreds of millions of barrels of oil. The Block contains one main prospect with the reservoir  comprising Oligocene turbidite sands with very high porosity and permeability as seen in the producing Bauna and Piracaba fields. Seismic analysis shows an excellent Amplitude versus Offset anomaly supportive of the presence of trapped oil. The mapped area of the prospect covers a large portion of the Block and is over 100 square km.”

“Karoon leveraged off its expertise and knowledge of the southern Santos Basin through the evaluation of the Kangaroo and Echidna discoveries and nearby fields to identify this Block as the best high value potential in the southern Santos Basin With future success, there are many synergies to be had with a potential joint development at the Kangaroo and Echidna discoveries,” the company said.

Karoon has this year approved the development concept for the Echidna prospect offshore Brazil following a year and a half of work on subsurface evaluation.

The project, planned to be developed using an FPSO unit, and located in the Santos Basin, will progress to the next phase of the development, Front-End Engineering and Design (‘FEED’).  A final investment decision (‘FID’) is targeted for the June quarter 2018. The company is working to farm down equity in the the project prior to FID.

As for the new Santos Basin block awarded to Karoon, the company complete the acquisition of the Block during December 2017 upon execution of a concession agreement in Brazil, at which time Karoon will pay a total of $A8 million in a non-refundable bid bonus and will provide a refundable Work Program guarantee bond to ANP of $A2.5 million.

The work program Karoon will undertake consists of seismic acquisition and geological studies.