Pacific Rubiales to join Karoon on Santos basin blocks

Pacific Rubiales Energy Corp., Toronto, will acquire from Karoon Gas Australia Ltd. a 35% net working interest in four exploratory blocks in the Santos basin offshore Brazil and an option on a fifth exploratory block. The blocks are in 300-400 m of water 220 km off Santa Catarina state.

Pacific Rubiales will pay $40 million for interests in the S-M-1101, S-M-1102, S-M-1037, and S-M-1165 blocks and the option on S-M-1166 and will fund up to $210 million in carried costs of three wells to be drilled in 2013, subject to ANP approval.

Pacific Rubiales will carry as much as $70 million of well costs for each of the Kangaroo and Cassowary/Emu exploratory wells and will fund 35% of all costs thereafter. It may elect to participate in Bilby, the third well of the three-well commitment program. If it exercises the option, it must carry up to the first $70 million in costs for the Bilby well and contribute 35% of all costs thereafter.

Karoon will remain operator of the blocks until the completion of the three-well program, and then Pacific Rubiales will be entitled to request the operatorship subject to meeting all regulatory and other legal requirements to ANP’s satisfaction.

Pacific Rubiales has identified several multilevel postsalt and two presalt prospects on the blocks. All prospects contain direct hydrocarbon indicators from seismic data. Management estimation of the midrange recoverable resource reached 1.8 billion bbl of oil equivalent excluding the presalt prospects.

The blocks lie along trend with Piracuca and Caravela oil fields and Merluza gas field. Petrobras-Repsol declared the BM-S-7 Piracuca light oil field commercial in April 2009. Repsol reported that Piracuca, 5 km northeast of the Karoon acreage, has 550 million boe in place. Late Santonian reservoirs produced 3,476 b/d of oil and liquids with 4.4 MMcfd of gas on preliminary tests.

Petrobras is considering an aggregate FPSO development for Piracuca and nearby fields. PanAtlantic Energy Group recently disclosed that its Sabia-1X wildcat drilled on Block BM-S-72 just west of the Karoon blocks has penetrated multiple hydrocarbon bearing zones of interest, providing additional indications of the area’s prospectivity (OGJ Online, Sept. 13, 2012).

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