Karoon Contracts Olinda Star Semisub to Drill at Kangaroo Field Off Brazil

Karoon Gas Australia Ltd. announced Monday that the Company has executed final agreements with members of the QGOG Constellation S.A. group for contracting the Olinda Star (mid-water semisub) for drilling offshore Brazil.

The Olinda Star has been contracted to complete up to four wells in Karoon's 65 percent owned and operated Santos Basin blocks, S-M-1037, 1101, 1102, 1165 and 1165. The rig contract consists of two firm wells (the Kangaroo-2 appraisal well and the Kangaroo West-1 exploration well) and two option wells. The drilling campaign is expected to commence during September with the Kangaroo-2 appraisal well.

Executive Chairman, Robert Hosking comments: "The primary objective of the drilling campaign is the appraisal of the Kangaroo oil discovery. The Kangaroo-2 appraisal well is designed to confirm the size of the oil column, reservoir continuity and properties, and flow rates for the Kangaroo oil discovery. This information will be crucial for assessing the commerciality of the Kangaroo field, and on success, will be the basis for the Front End Engineering and Design phase.

The rig contract provides Karoon with two firm wells plus two options allowing maximum flexibility for further appraisal of the Kangaroo discovery, including testing and appraisal of the Kangaroo West prospect in the event of successful drilling.

The discovered Kangaroo net contingent resource estimate to be appraised along with the Kangaroo West net unrisked prospective resource to be tested in the pending two well program is outlined below:

  • Kangaroo (Discovery)
    • Interest: 65 percent
    • Net Contingent Resource (Discovered): 1C (7 million barrels of oil); 2C (88 million barrels of oil); 3C (317 million barrels of oil)
    • Net Un-risked Prospective Resource (Undiscovered): 1C ( - ); 2C ( - ); 3C ( - )
  • Kangaroo West (Prospect)
    • Interest: 65 percent
    • Net Contingent Resource (Discovered): 1C ( - ); 2C (- ); 3C ( - )
    • Net Un-risked Prospective Resource (Undiscovered): 1C (15 million barrels of oil); 2C (330 million barrels of oil); 3C (1,193 million barrels of oil)

The Kangaroo contingent resource and Kangaroo West prospective resource estimates have been disclosed by Karoon in the June 2014 Corporate Review, June 2. Karoon is not aware of any new information or data that may materially affect the resource estimates and all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed.

The estimated quantities of petroleum that may potentially be recovered by the application of a futures development project relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. There is not certainty that any portion of the prospective resource estimated on behalf of Karoon will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the prospective resource evaluated.


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