Karoon Gas Increases Size of Oil Discovery Offshore Brazil

SYDNEY - Karoon Gas Australia Ltd. Friday raised the size estimate of its Bilby-1 oil discovery off the coast of Brazil, increasing the likelihood of a commercial development.

Further testing has indicated the well has a proven gross oil column of 320 meters and a potential column of 560 meters, up from an initial estimate of 200 meters, Karoon said in a statement.

The net oil-bearing reservoir, or the parts of the column that contain oil, is estimated around 70 meters, with porosity levels, which indicate the oil's ability to flow from rock, up to 23%, Karoon said.

The Australian company has discovered oil in two out of three wells drilled in the Santos Basin, located south of Rio de Janeiro, with joint venture partner Pacific Rubiales Energy Corp. Karoon owns 65% of the venture and analysts expect it to sell more of its interest if there is enough oil to underpin a multibillion dollar development.

The Bilby-1 discovery follows the success of the Kangaroo-1 well offshore Brazil. However, the Emu-1 well was a dry hole.

Karoon is planning to test the Kangaroo and Bilby discoveries with appraisal wells.

Copyright (c) 2012 Dow Jones & Company, Inc.

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