Karoon Acquires Z38 Block Offshore Peru

Karoon Gas Australia Ltd. has signed a Farmin Agreement with Vietnam American Exploration Company (Vamex) for the exploration of Block Z38 located in the offshore Tumbes Basin in Northern Peru.

Subject to the receipt of regulatory approvals, Karoon will earn an initial 20% interest in the block by funding a new 2,000 kilometer 2D seismic survey with the option of earning an additional 40% interest in the block by acquiring 670 square kilometers of new 3D seismic data.

The acquisition of the required permits and approvals for conducting of the 2D seismic survey is nearing finalization. Tendering for the survey vessel is well advanced with the expectation that the seismic acquisition will commence later in 2008.

The current geotechnical analysis of the existing data indicates that the block is prospective for both oil and gas. Preliminary economic evaluation by Karoon indicates that any offshore development could be rapidly brought to production due to the close proximity of existing oil and gas infrastructure.

The farmin further represents Karoon’s strategy of diversifying its asset base by securing large equity interests in prospective exploration areas.