Pacific Acquires 35% in the Karoon Blocks

Source: www.gulfoilandgas.com 9/18/2012, Location: South America

Pacific Rubiales Energy Corp announced that it has reached an agreement with Karoon Gas Australia Ltd to acquire a 35% net working interest in the following exploration blocks: S-M-1101, S-M-1102, S-M-1037 and S-M-1165, and also has as an option to acquire a 35% interest in SM- 1166 (collectively, the “Karoon Blocks”). In consideration for acquiring the interests in the Karoon Blocks, the Company will pay Karoon U.S.$40 million in cash as consideration for the assignment and fund up to U.S.$210 million in carried well costs.

Ronald Pantin, Chief Executive Officer of the Company, commented: “This acquisition will represent a significant step forward in our plans to transform the Company for the future. It is an exciting exploration opportunity, is an excellent fit with the Company’s strategy to target large resource capture in high potential basins and positions us well to expand further into Brazil. With these new assets, Pacific Rubiales will increase its presence in South America and enter into one of the most prolific oil rich hydrocarbon basins in the western hemisphere, building on our successful technical and project management record.”

The Acquisition
The Karoon Blocks are located 220 kilometers off the coast of Santa Catarina state, just south of Rio de Janeiro, in the Santos basin. The blocks lie in 300 - 400 m water depth, in an area with a number of existing or discovered oil and gas fields. The transaction is subject to the approval of the Agência Nacional do Petroleo, Gas Natural e Biocombustiveis (“ANP”), Brazil’s oil and gas regulatory authority. The transaction agreement consists of a U.S.$40 million payment to Karoon as consideration for the assignment, plus a carry of well costs of up to U.S.$70 million for each of the Kangaroo and Cassowary/Emu exploration wells for a total well carry cost of up to U.S.$140 million. After meeting up to the first U.S.$70 million costs for each of the first two wells, the Company will fund 35% of all costs thereafter.

The Company may elect to participate in the third well of the three well exploration commitment program, the Bilby well. If the option is exercised, Pacific Rubiales must carry up to the first U.S.$70 million in costs for the Bilby well and contribute 35% of all costs thereafter. All three wells are expected to be drilled during 2013. Karoon will remain the operator of the Karoon Blocks until the completion of the three well exploration program and then Pacific Rubiales will be entitled to request the operatorship, subject to the Company meeting all regulatory and other legal requirements to the satisfaction of the ANP.


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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