Ocean America Mobilizing to Drill Levitt-1 Prospect in WA's Carnarvon Basin

Karoon Gas Australia Ltd. revealed Wednesday that the Company received a Change of Control Notice (the Notice) from its joint venture partner, Apache Northwest Pty Ltd. (Apache Northwest) May 15 relating to Carnarvon Basin exploration permit WA-482-P (the Permit) offshore Western Australia pursuant to the terms under the Joint Operating Agreement (the JOA).

The Notice was a result of the sale of Apache Corp.’s Australian subsidiary, Apache Energy Ltd . (renamed Quadrant Energy Australia Ltd., including its wholly owned subsidiary Apache Northwest to MacQuarie Capital Group Ltd. and Brookfield Asset Management Inc. for $2.1 billion, announced April 8. The transaction closed June 5.

As a result of the Change of Control provisions in the JOA, Karoon held pre-emptive rights over Apache Northwest’s 50 percent interest in the Permit which it has subsequently waived.

Apache Northwest advised Karoon that the cash value for its 50 percent interest in the Permit is $241 million as at Oct. 1, 2014.

Operations Update – Levitt-1 Exploration Well

The Ocean America (DW semisub) is currently mobilizing to location, with the Levitt-1 exploration well expected to spud during the first week of July.

The Levitt-1 exploration well is a high impact exploration well in which Karoon has a material 50 percent equity interest and is carried for 90 percent of the cost of the well. The well is targeting a net unrisked prospective resource best estimate of 110 million barrels (gross 220 million barrels).

Levitt-1 is designed to test the presence of a working petroleum system generating from the oil mature early Jurassic Wigmore sub-basin source kitchen. A successful result would open up a new exploration play in the Carnarvon Basin. The sub-basin contains a significant thickness of Jurassic source rocks of the same age and nature known to charge accumulations elsewhere in the Basin.

Levitt-1 is located to receive migrating hydrocarbons from the oil mature source kitchen, testing the North Rankin and the Legendre formations.

The North Rankin and shallower Legendre formations are established highly productive reservoir units which have been mapped into the Levitt structure.

The North Rankin formation is present in a large titled fault block which is interpreted to be seated by thick marine shales. The Legendre formation is present in a 4-way dip and fault trapping structure, interpreted with stacked pay potential.

The prospect is well defined at all levels and has been mapped on a recently reprocessed 3D seismic data set.

The presence of hydrocarbons in Levitt-1 would be a very significant event as it would prove the presence of a working petroleum system in the permit which covers an enormous area, 5,227 square miles (13,539 square kilometers). The permit has multi-billion barrel oil potential with numerous follow-up targets identified. These prospects are well defined on 3D seismic and considered to be “drill-ready” by the joint venture.

Prospective Resources Statement

WA-482-P prospective resource volume estimates disclosed in Karoon’s April 30 ASX announcement and presented in the table below have been independently assessed by DeGolyer and MacNaughton on a probabilistic basis.

  • Levitt Permit; 50 percent interest
    • Oil (million barrels)
      • Prospective Category: Low -36; Best - 110; High - 275
  • WA-482-P Prospect; 50 percent interest
    • Oil (million barrels)
      • Prospective Category: Low -375; Best - 1,117; High - 2,837

Karoon is not aware of any new information or data that materially affects 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 future 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 no 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 resources evaluated.


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