Asset/portfolio management

Karoon Energy Enters US GOM With $720 Million Deal

Australian explorer purchases minority stakes in Who Dat and Dome Patrol deepwater fields.

A map of the GOM assets being acquired by Karoon Energy.
SOURCE: Karoon Energy

Karoon Energy has entered binding arrangements to acquire a 30% stake in the Who Dat and Dome Patrol fields and associated infrastructure, including the Who Dat floating production system, plus a 16% interest in the Abilene field, from LLOG Exploration.

In addition, the Australia-headquartered Karoon will acquire interests in adjacent acreage which contains the Who Dat East (40%), Who Dat West (35%), and Who Dat South (30%) exploration and appraisal opportunities.

The acquisition totals $720 million. Karoon plans to fund the transaction through an equity raise, a credit facility draw, and existing cash.

“This transaction meets our strategic objectives to acquire a material, value and earnings accretive, producing asset with expansion opportunities in either Brazil or the Gulf of Mexico,” said Julian Fowles, Karoon’s managing direction and chief executive. “The GOM is a Tier 1 jurisdiction with a stable and well understood regulatory and fiscal regime. The Who Dat assets provide Karoon with both geographical and asset diversification, complementing our existing Brazilian business with a second high-quality operation.”

Who Dat is in about 800 m of water and is expected to add up to 4.5 million BOE to Karoon’s 2024 production on a net revenue interest basis, taking the company’s total pro forma 2024 production to between 12 and 14.5 million BOE.

“Production from Who Dat will help offset the natural decline from Baúna (in Brazil), with an operating cost of less than $6.00 per BOE in 2023, will add a high margin, long-term cash flow stream to Karoon,” added Fowles.

Who Dat came on stream in 2011 and is currently producing around 42,000 BOE/D, comprising 60% oil and 40% natural gas, from nine wells. Natural decline has been largely offset by an active in-field development program. Most recently, two wells and a subsea pump were brought on line adding approximately 10,000 BOE/D gross to production, with an additional 6,000 to 8,000 BOE/D gross expected to be added in 2024 from two additional wells.

Plans for an appraisal well on Who Dat East, also discovered in 2011, are in place for 2024, subject to partner approvals. The field could add another 17 million BOE in reserves to the development. Who Dat South and Who Dat West are estimated to hold combined unrisked gross prospective resource of 108 million BOE.

Exploration wells on both prospects are slated for late 2024. Drilling costs for the prospects are estimated at $60 million per well.

Following the transaction, Karoon will hold a 30% stake in both Who Dat and Dome Patrol. LLOG will continue as operator of both fields with a 45% interest. Westlawn Group owns the remaining one quarter stake in both fields.