Tullow has farmed into Karoon Gas' 35% of Block Z-38 in Peru. This reduces Karoon Gas' interest to 40% with Pitkin Petroleum being a 25% partner.
Tullow has acquired the 35% interest in return for:
- Funding 43.75% of the cost of the first exploration well, capped at US$27.5m (for 100% cost of well) after which Tullow will pay its 35% share; and
- US$2m payable upon completion with US$7million payable upon declaration of commercial discovery and submission of a development plan to Perupetro.
Karoon has identified two prospects, Marina and Bonito, with a net unrisked prospective resources of 1.7bnbbl. Tullow will now drill the Marina prospect. Karoon Gas' 75% interest is still subject to completion of farm-in obligations which includes funding of two exploration wells.
The block has been in force majeure since 2014 and once lifted, Karoon Gas will have 22 months to complete its drilling commitment. Although the timing of drilling remains uncertain, the block is covered by high-quality 3D seismic and Marina is a potential candidate for drilling in 2019.
Separately, Tullow has concluded negotiations with Perupetro to acquire a 100% stake in offshore Blocks Z-64, Z-65, Z-66, Z-67 and Z-68.
