Farm-in set to fund Santos Basin exploration well

CANADIAN-based Pacific Rubiales has elected to acquire a 35 per cent interest in a fifth block owned by Karoon Gas in the Santos Basin offshore Brazil through the funding of an exploration well.
Last October, the two companies signed final agreements for Pacific Rubiales to purchase a stake in four of Karoon’s wholly owned Santos Basin blocks, with the choice to invest in a fifth: S-M-1166.
In return for its interest in the new block, Pacific Rubiales will carry the first US$70 million in costs relating to the drilling of the Bilby-1 exploration well, and 35 per cent of expenses thereafter. Bilby-1 will be the third well in Karoon’s Santos Basin drilling program in
which Pacific Rubiales has participated.
In December last year, the Kangaroo-1 well was drilled in the neighbouring S-M-1101 and S-M-1165 blocks, and was confirmed to contain a 25m gross oil column. The second well, Emu-1, was drilled last month in S-M-1037 and S-M-1102 and was reported by Karoon to have encountered “good quality reservoir sands and seals at several target intervals.”
Pacific Rubiales carried the first US$70 million in costs for each well.
In a statement, Karoon Gas executive chairman Robert Hosking said Pacific Rubiales had proven to be a “great” partner in the Santos Basin drilling program.
“Our companies have worked well together in our Brazilian partnership, having made the Kangaroo discovery, and we look forward to further success in the future.”
Once drilling operations at Bilby-1 are completed, Pacific Rubiales – which is Colombia’s largest independent oil and gas explorer and producer – will be entitled to request operatorship of the project.
“Although we are in early exploration phases, we are pleased with the results to date and our partnership with Karoon,” Pacific Rubiales chief executive Ronald Pantin said in a statement.
“Our first well, Kangaroo-1, discovered oil in an Eocene structure and we are looking forward to following up with an appraisal well as soon as a suitabledrilling rig can be sourced and mobilised to the Kangaroo-2 location.”
The five Santos Basin blocks cover a total area of 865 square kilometres.

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