Karoon Gas Australia Ltd., Melbourne, has sealed a deal to bring Tullow Oil PLC, London, into its exploration venture offshore Peru.
Tullow Oil will take a 35% interest in Karoon’s Block Z-38 in the Tumbes basin in exchange for funding about 44% of a wildcat well on the Marina prospect up to a cap of $27.5 million, plus as much as $9 million in cash. The cash component will comprise $2 million on completion of the farmout and the balance if and when a commercial discovery is declared. This makes the overall deal worth as much as $36.5 million.
Karoon’s stake in the permit will drop to 40% while private company Pitkin Petroleum PLC holds the remaining 25% interest.
Karoon describes the permit as being at the heart of the Tumbes basin, which in turn is adjacent to the onshore Talara basin that has produced 1.7 billion bbl of oil since the 1880s.
The company has identified two prospects—Marina and Bonito—which together have the potential to hold close to 2 billion bbl of oil. It says the Tumbes basin has a proven working petroleum system and the work so far suggests the two prospects are accessing the same source rocks as the producing onshore Talara basin fields.
Block Z-38 has been in force majeure since 2014 because Karoon was not able to secure a drilling rig. The Tullow deal seems set to lift the impasse and give the joint venture 22 months to complete the required two wells.