KAROON STRIKES OIL OFFSHORE BRAZIL, PLANS TO DRILL SECOND WELL NEARBY

(WO) — Karoon, an international oil and gas exploration and production company, has reached a final total depth of 2,382 m at its Neon-1 control well offshore Brazil. The well spudded on Jan. 23; wireline logging of the target sections is currently underway.

Neon-1 was drilled into the down-dip southern flank of the Neon discovery, to better constrain lithologies and reservoir quality and reduce the range of uncertainty on the oil-water contact. The goal was to better understand the range of potentially recoverable volumes in Neon and assist in delineating pathways of potential future production wells.

Although evaluation is ongoing, preliminary analysis of the logging-while-drilling (LWD) and wireline log data available to date, including preliminary inspection of whole core samples, confirms that the Paleocene sandstone primary target zones are present and oil bearing at this location.

The Paleocene intervals, representing an extension of reservoirs tested at Echidna-1,were found to be present over a gross 113 m MD interval. A probable oil-water contact has been identified, which is within the range of pre-drill expectations and closely aligned with predictions based on seismic analyses.

The net pay thickness above the identified oil-water contact at this down-dip location is estimated at 25 m MD. The deeper secondary target Maastrichtian sandstone section was confirmed to be water-bearing, consistent with pre-drill expectations.

Analysis of pressure tests through the Paleocene section indicates that the oil in this section lies on the same pressure gradient as the oil at Echidna-1, suggesting that the two wells are likely in communication.

Based on these preliminary results from Neon-1, Karoon has decided to proceed with drilling Neon-2.

The forward plan is to plug and abandon Neon-1 and mobilize the rig to the Neon-2 location. Neon-2 will be drilled directionally to intersect a crestal location in the north of the Neon field.

The objectives of Neon-2 are to determine the quality and continuity of the Paleocene units and to determine Paleocene pressure connectivity with the two wells drilled to date. Additionally, it is planned that Neon-2 will test a deeper zone below the existing Paleocene discovery.

The resource estimates for the Neon field are 1C, 2C and 3C contingent resources of 30 MMbbl, 55 MMbbl and 92 MMbbl. A revised resource assessment will take place once the results from both Neon control wells are known and, together with development engineering studies, will contribute to an updated integrated asset evaluation, which could potentially enable a decision to enter a Neon concept select phase.

Neon-1 and Neon-2 are both located within Karoon’s 100% owned S-M-1037 license, approximately 210 km offshore Brazil in the southern Santos basin. Neon-1 is in 343 mm water depth and is 2.1 km south of the Echidna-1 discovery well, while Neon-2 is planned to be located 1.3 km NNE of Echidna-1, in 305 m water depth.