Entry into BM-S-40, Santos Basin, offshore Brazil
In November 2020, Karoon completed the acquisition of 100% of Concession BM-S-40, comprising the Baúna and Piracaba producing oil fields and the Patola discovered resource (collectively known as the Baúna Project) from Petrobras.
The acquisition price was US$380 million plus a tiered contingent consideration of up to US$285 million (plus accrued interest), dependent on future realised oil prices over the period 2022 – 2026.
Petrobras discovered the Baúna and Piracaba fields, located approximately 210 kilometres offshore Brazil in the southern Santos Basin, in 2008. Production commenced in 2013, with rates peaking at approximately 70,000 bopd before the field entered its natural decline phase. In 2019, Baúna was listed for sale, as production rates were no longer considered material to Petrobras. At the time of completion of Karoon’s acquisition in November 2020, production was averaging 14,800 bopd and 39.2MMbbl 2P reserves 1 . The transfer of operatorship of the field in 2020 from Petrobras to Karoon occurred with no material safety incidents or interruption to production.
1Independent reserves report as of July 1, 2020, prepared by AGR Petroleum Services Reservoir Management Division.
Baúna Production
The Baúna Project consists of 12 sub-sea wells. This includes two Patola wells which were bought online in CY23. The wells are connected through sea-bed flowlines to the Cidade de Itajaí, a floating production, storage and offloading facility (FPSO). The FPSO has a nameplate fluid handling capacity of approximately 80,000 bpd and storage capacity of approximately 631,000 bbl of oil. The FPSO was previously owned and operated by Altera&Ocyan and leased back to Karoon. In April 2025 Karoon acquired the FPSO for US$115 million plus transaction costs. The FPSO acquisition, together with other activities, is aimed at improving the Baúna Project production reliability.
Baúna crude is a high-quality oil with an API between 33 and 38 degrees and is low in impurities. Oil from the field is sold under a marketing arrangement with Shell Western Supply and Trading Limited (a member of the Royal Dutch Shell Plc group) and realises a price related to Brent crude.
Karoon’s highest priority is on maintaining safe, reliable and responsible operations.
Development Activities
Since taking operatorship of the Baúna Project in November 2020, Karoon has sought to identify opportunities to increase production and reserves. In FY23, Karoon completed the Baúna intervention campaign and Patola development.
After more than 18 months of detailed planning, the Baúna intervention campaign commenced in May 2022. The program involved replacing down-hole electric submersible pumps on two wells (PRA-2 and SPS-92) and installing gas-lift on a third well (SPS-56). The Baúna intervention campaign was completed successfully in the second half of CY22 and added more than 11,000 bopd to production prior to the resumption of natural decline (compared to a target of 5,000-10,000 bopd).
Following the Baúna interventions, Karoon commenced the development of the Patola field. The field, which was discovered by Petrobras in 2011 but not developed, is located within the BM-S-40 production license, adjacent to the Baúna and Piracaba reservoirs. The Patola development comprised drilling two production wells and installing sub-sea production infrastructure which was tied back to the Baúna FPSO. The field came onstream development in March 2023, with initial production rates from each well of approximately 12,000 bopd, compared to an expected total rate of more than 10,000 bopd.
The Baúna intervention program and Patola development were completed safely, on time and within the budgets.
Neon
In March 2008 Karoon was awarded 100% participation in five offshore exploration blocks in the Santos Basin, located approximately 200 kilometres off the coast of the State of Santa Catarina, Brazil. One of these blocks was S-M-1037 (Neon formerly known as Echidna).
The Neon oil field is located 75 kilometres north-east of Baúna Project. It was discovered in 2015 by the Echidna-1 exploration well, which was part of Karoon’s then appraisal and exploration drilling campaign. The exploration well encountered 100 metres of oil-bearing reservoir and on test, flowed 4,650 bopd of high quality, 39 deg API oil.
Substantial analysis, engineering and technical work has subsequently taken place on the potential development of the Neon resource, aimed at establishing how to maximise recovery rates and assessing the commercial potential of the discovery.
In January and March 2023, Karoon drilled two control wells on the Neon oil discovery following the conclusion of the Patola drilling campaign. The two control wells were completed for US$45 million, compared to the initial budget of US$65-75 million. Both wells intersected hydrocarbon bearing reservoirs consistent with pre-drill expectations. This has reduced the uncertainty around key reservoir parameters.
In March 2024, the Neon Development Opportunity (which comprises the proposed
development of the Neon field) entered ‘Concept Select’ (Decision Gate 1). During this phase, work was focused on identifying the preferred concept as well as further studies to address key economic and technical challenges for the project.
Extensive technical and commercial work on the Neon Development Opportunity occurred during 2024 and early 2025 which materially improved the economics of the opportunity. Following a comprehensive review of seismic and subsurface data, updated integrated reservoir modelling and a revised reservoir development plan Karoon reassessed the Contingent Resources for the Neon field. There was a material increase in the Neon Contingent Resource and Neon Prospective Resource was recognised for the first time (refer ASX release dated 16.4.25 “Neon enters Define phase”).
In April 2025, the Neon Development Opportunity entered the first stage of the ‘Define’ phase, including Front End Engineering and Design (FEED). The ‘Define’ phase will take place in three stages to allow Karoon to reassess the Neon Project fundamentals and mitigate capital exposure. The ‘Define’ phase will involve undertaking further work to mature the Neon opportunity towards a possible Final Investment Decision in mid-2026.
The preferred concept for the Neon Development Opportunity is a standalone development using a redeployed FPSO with a capacity of approximately 50,000 bopd. Phase 1 will include four subsea production wells and one gas disposal well. It will also include the necessary in-field subsea infrastructure. This phase aims to target 60 – 70 MMbbl of the total Contingent Resource. Subsequent phases will focus on developing the remaining Resources in the Neon Field and nearby discoveries.
Final Investment Decision on Neon will depend on the Neon development exceeding internal technical and commercial hurdles and successful farm down of the development. A farm down is a prerequisite to Karoon taking a Final Investment Decision.
Goiá is located 52 kilometres north-east of Baúna FPSO in S-M-1101. The oil accumulation was discovered by the Kangaroo-1 exploration well in 2013 and appraised with an additional well (Kangaroo-2) which spudded in November 2014. Similar to Echidna, the Kangaroo wells encountered high quality oil in reservoirs capable of producing at high rates. Details of the results of the two wells are set out in our ASX announcement on 1 August 2013 and 15 February 2015. The Goiá oil discovery, together with nearby opportunities, such as Neon West, will be evaluated to assess the full resource potential of the area and feasibility of a Neon hub-style development plan, which could bring significant production to Karoon.
S-M-1356, S-M-1482
In December 2023, Karoon was successful in securing 100% interests in two deepwater blocks (S-M-1536 and S-M-1482) in the ANP 4th Permanent Offer Bid Round for Concession Contracts. These blocks are located approximately 80 kilometres south-east of the Baúna Project in the Santos Basin.
While the two blocks were awarded to Karoon in late 2023 they were formerly granted on 25 June and 26 June 2024, respectively, and gazetted in early July 2024. The forward plan is to continue studies to assess the prospectivity of these two blocks.
