Karoon acquired a 100% interest in Browse Basin exploration permits WA-314-P and WA-315-P during 2004. Consistent with the corporate strategy, Karoon signed agreements during 2006 to farm-out a 60% interest to ConocoPhillips who also assumed operatorship of the permits as part of the transaction.
The Karoon / ConocoPhillips joint venture (the ‘Joint Venture’) was awarded exploration permit WA-398-P during 2007.
The Joint Venture drilled the initial exploration drilling campaign between July 2009 and June 2010, making the multi tcf Greater Poseidon gas discovery at the first well, Poseidon-1 in WA-315-P. Follow-up discoveries were made at Poseidon-2 and Kronos-1.
Following the successful first phase drilling campaign, the second phase, 6 well exploration drilling campaign was drilled between April 2012 and August 2014. Additional gas discoveries were made in permits WA-315-P and WA-398-P at the Boreas-1, Zephyros-1, Proteus-1, Poseidon North-1 and Pharos-1 well locations.
Permits WA-315-P and WA-398-P
During June 2014, Karoon announced the sale of its 40% equity interest in exploration permits WA-315-P and WA-398-P to Origin Energy (Origin) for up to US$800 million. As per the terms of the Sale and Purchase Agreement a US$600 million upfront cash payment was received during August 2014 followed by reimbursement for all costs associated with the Pharos-1 exploration well (located in WA-398-P).
Contingent milestone payments that remain outstanding are as follows:
- A deferred cash payment of US$75 million payable on Final Investment Decision (“FID”);
- A deferred cash payment of US$75 million payable on First Production; and
- A deferred resource cash payment of up to US$50 million payable on First Production. Origin will pay US$5 million for every 100 BCFe of Independently Certified 2P reserves exceeding 3.25 Tcfe across the permits at the time of FID up to a maximum of US$50 million.
Karoon has no remaining interest in exploration permit WA-315-P or WA-398-P.
Exploration permit WA-314-P is located approximately 350 kilometres offshore from the north-Western Australian coast and has an area of 998 square kilometres. During 2011, Karoon assumed a further 50% interest in the permit from ConocoPhillips for $nil consideration, followed by ConocoPhillips’ residual 10% interest during 2014.
Equity interest of the participant in WA-314-P is:
|Karoon Gas Browse Basin Pty Ltd (Operator)||100%|
The Kontiki-1 exploration was drilled during 2009 followed by the Grace-1 exploration well during 2014. Both wells failed to find any meaningful hydrocarbons.
During August 2013, Karoon contracted the CGGVeritas vessel the ‘Geo Caspian’ to conduct the 318 square kilometre Kraken marine 3D seismic data acquisition over the Elvie lead.
The Elvie lead is located on an outer basin high trend with distinctly different geology and prospectively to that of the Buffon-Kontiki- Grace high trend. The Elvie high trend is characterised by a much thinner volcanic sequence resulting in better trap definition from seismic and lower potential for volcanic thief zones inside prospects. Also the hydrocarbon maturation and migration setting is consistent with the trapping of oil or liquid rich gas. Montara and Plover formation reservoirs are predicted.
During September 2015 Karoon renewed the Petroleum Exploration Permit over WA-314-P. The permit renewal consists of an initial 3 year term minimum work program commitment of seismic reprocessing and geological and geophysical studies. This will ensure the results of the Kraken 3D seismic data can be fully evaluated before any further drilling decision is made.
Following the receipt of the final reprocessed Kraken data and consistent with the Company’s corporate strategy, Karoon expects to farm-out an interest in WA-314-P prior to committing to any further exploration drilling in the permit.
The Browse Basin is an undeveloped condensate rich gas basin with a discovered resource in excess of 30Tcf with additional highly prospective exploration opportunities remaining.
The Basin is set to become a new, significant source of global LNG supply later this decade with Inpex’s Ichthys project and Shell’s Prelude project currently under construction and Woodside’s Browse LNG Project in the FEED stage. Other notable accumulations and discoveries are the Argus and Crux fields and more recent Crown discovery.
Large volumes of gas and condensate charge are proven in the Browse Basin through the discoveries of Poseidon, Ichthys, Torosa, Crown, Burnside, Prelude along with Echuca Shoals and the Crux gas condensate fields and the Cornea oil field on the basin margin. Geotechnical work predicts that Karoon’s permit is well placed to receive wet gas or oil charge into large structures during the Late Cretaceous and Tertiary time period. Known source rocks in the basin include the Echuca Shoals Formation, Vulcan Formation and Plover Formation.
Good quality top sealing capacity is proven by the Torosa, Scott Reef accumulation (500m+ gas column), Brecknock, Brecknock South and the Ichthys field (200m+ gas column). The same seal intervals are proven and present over Karoon’s acreage, with results to date in offset acreage confirming gross gas columns over 400 metres in some wells. In the Poseidon field wells, additional good quality Plover Formation intraformational seals are now proven, as are weathered volcanic seals above the Plover Formation.