Karoon eyeing new assets in Brazil

July 25, 2019

In an interview, the company’s CEO Tim Hosking details plans for Bauna, Neon and Goia and confirms intention to expand presence in the country.

Almost three years after the injunction that suspended Karoon’s purchase of the Baúna field, the Australian oil company was finally able to acquire its first production asset in the world.

In an interview with Petróleohoje, the company’s CEO for Latin America, Tim Hosking, says he expects to expand production in the area by more than 50% and confirms the intention to increase the portfolio in the country. “Our focus today is the Campos, Santos and Espírito Santo basins,” he says.

The executive also reveals that the company will deliver the development plan of Neon and Goia in August to the ANP. “The forecast today is that the first oil will be produced in 2023,” he anticipates.

Interest in Baúna

We acquired the first concessions in the country in 2008 [S-M-1037, S-M-1101, S-M-1102, S-M-1165, S-M-1166], located about 50 km northeast of Bauna. We made two discoveries in these blocks: Echidna and Kangaroo. Then we got S-M-1537 in Round 14. So from an exploratory standpoint, we have a good understanding of that part of the basin. As Bauna is a field in production and right in the middle, there was great interest because it has great synergies with our exploratory areas in the country.

Judicialization

We see no risk of this happening again as the rules have been well defined by the TCU and other transactions have already taken place. In addition, Karoon has been a strong player in oil exploration in Brazil for ten years, with a robust Brazilian team and good reputation. So I think all will be well.

Focus Brazil

Bauna will be our first oil produced in the world. Brazil has been a central region for the company for years and so on. There are many opportunities with the ANP rounds and Petrobras divestments. We already have a great team here, which is running Echidna’s (Neon and Goia) development plan and we will expand the group to become a producing operator.

Plans for the field

Bauna’s FPSO is chartered with Teekay and its service with Ocyan. We will negotiate a contract. The plan, when we become operators – which I believe will happen in nine months – will do some intervention work to replace subsea production systems to increase extracted volumes. Petrobras has a discovery 3 km from the FPSO, called Patola, and we would like to put a production well in the area. With this, we expect to reach the mark of 33,000 b / d by 2022 [currently, the volume extracted in the field is around 20,000 b / d]. Today, we estimate that the field would have seven more years, but we expect to extend it to at least ten years.

Eyes to the southeast

Our focus today is the Campos, Santos and Espírito Santo basins. We believe Petrobras will divest more areas in the region, and we are also looking closely at the ANP’s 16th round and subsequent auctions. We have to prepare the company to take over the Baúna operation, but we still have an open eye to expand our presence in Brazil via acquisitions. The permanent offering, for example, is a great system that allows companies like Karoon to evaluate new areas to grow their portfolio and use infrastructure we don’t have, and develop a strategy over time.

Neon and Goia

Our plan is to deliver the field development plan in August. The forecast is to drill two horizontal wells and one gas injection well, and our intention is to use an existing FPSO capable of producing about 30,000 b / d. We opened the data room for these assets at the end of the first quarter and had several interested companies. We still have two or three more to evaluate the data, and we are expected to start receiving proposals later this year. And there are discussions with service providers. We are looking for ways to postpone payments to the first oil to manage cash flow, as has been done in projects abroad and even in Brazil.

New well

We intend to drill a control well in Neon. One reason is that we have very long horizontal wells, so if we drill a well at the end, we can optimize the location of the horizontal well. This will be done when the development plan was approved by the ANP, which should happen between the end of this year and the beginning of 2020. We are trying to anticipate the schedule, but the forecast today is that the first oil will be produced in 2023 [ the initial forecast was 2021]. The gas produced will be reinjected and used to supply the platform. In the second phase, we will basically drain what the two horizontal wells failed to extract. In the third, we focus on the Mastrichian [geological time division], and in the fourth, connect Kangaroo, which is in Goia, to the production system.

Sales

Ideally, we would like to partner with major IOCs such as Shell, Petrochina, Total, which have the ability to sell oil from other companies. We do not have, for the moment, the goal of becoming an integrated company.

Downstream Opening

There is a strong government message that Brazil wants to attract foreign investment and new players to the sector, from upstream to downstream. And these measures [opening up, like the New Gas Market] will accelerate this process.

Source: BE Petroleo

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