Karoon Energy amends, commits to Bauna acquisition

Karoon Energy Ltd., Melbourne, has executed a binding agreement to amend its deal to acquire 100% operating interest in Bauna oil field in concession BM-S-40 in the Santos basin offshore Brazil.

Karoon entered the $665-million deal with Petrobras in July 2019 (OGJ Online, July 25, 2019).

Under the amended agreement, Karoon will pay $150 million upon closing—expected in this year’s third quarter—along with a deferred firm consideration payable 18 months thereafter of $230 million minus a closing adjustment offset for cash flows from the effective transaction date and the closing date. This will be followed by a contingent payment of $285 million based on the average annual daily Brent marker oil price for calendar years 2022-2026, plus interest at 2%/year. An additional $50 million will be paid if the average Brent oil price exceeds $100/bbl in 2020.

In addition to simplifying and derisking the transaction, the deal preserves the company’s financial position, enabling it to begin the immediate workover of Bauna’s underutilized production infrastructure, boosting production unencumbered by debt or onerous payment terms, Karoon said.

Bauna field comprises two producing oil reservoirs with a total 2P reserves of 46.8 million bbl produced via a leased floating production, storage, and offtake facility (Cidade de Itajai). There is also a 2C contingent resource of 15.6 million bbl in the undeveloped Patola discovery.

Karoon expects to deliver considerable production upside from the proposed workover of field infrastructure along with infill drilling and new pool development operations.

Current field production is around 16,000 b/d.