Origin acquires Karoon’s Browse basin permits

August 12, 2014

Origin Energy Ltd. completed the acquisition of Karoon Gas's 40% interest in the two offshore exploration permits WA-315-P and WA-398-P in Western Australia's Browse basin for an estimated US$800 million.

Map of the Browse basin, from Origin.

Western Australia’s Browse basin contains large and prospective offshore gas fields such as the Poseidon discovery.

Under the terms of the agreement, Origin paid Karoon a $600 million cash consideration with additional payments of $75 million payable upon a project final investment decision (FID) and $75 million payable on first production. An additional payment of up to $50 million will be payable on first production if 2P reserves at the time of FID reach certain thresholds.

In addition, Origin will be responsible for all costs associated with the current Pharos-1 exploration well, located in permit WA-398-P.

The agreement remains subject to normal joint venture pre-emptive rights and regulatory approval. It is expected to complete in 3Q 2014.

Karoon says this is the culmination of approximately 12 months of negotiations with a number of international oil and gas companies.

“The subsequent balance sheet flexibility allows Karoon to pursue the planned near term high impact oil appraisal and exploration programs in the Santos, Carnarvon and Tumbes Basin,” says Robert Hosking, Karoon executive chairman. “Upon receipt of proceeds, Karoon will be in a position to advance the Kangaroo oil discovery toward development, pending a successful outcome from the Kangaroo-2 appraisal well.”

Origin's acquisition of the permits allows the company to establish a strategic position in one of Australia's largest recent offshore gas discoveries.

The acquisition complements Origin's recent farm-ins in the Cooper and Beetaloo basins and the awarding of new exploration acreage to the company in the Bonaparte basin.

Just recently in July, ConocoPhillips and Karoon encountered hydrocarbon pay in the Browse basin in the Pharos-1 well that is located in the WA-398-P permit.

The exploration well is the sixth and final well in the Browse basin Phase 2 exploration drilling campaign and adds considerable resource to any future Poseidon development. 

Karoon says the Browse basin is an undeveloped condensate rich gas basin with a discovered resource in excess of 30Tcf with additional highly prospective exploration opportunities remaining.

According to Karoon, the Browse basin is set to become a significant source of global LNG supply with Inpex’s Ichthys project and Shell’s Prelude project currently under construction and Woodside’s Browse LNG project in the FEED stage.

Other notable discoveries include the Argus and Crux fields and the Crown discovery.

ConocoPhillips is the operator of the WA-315-P and WA-398-P permits with a 40% interest. Chinese National Petroleum Corp holds the remaining 20%.Read more:

Karoon releases Pharos-1 progress report

ConocoPhillips, PetroChina enter pact



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