Tumbes basin

During 2008, Karoon acquired a 20% equity interest in Block Z38 in the Tumbes Basin, located offshore in Peru, which subsequently increased to 75%. Block Z-38 lies 10 kilometers offshore from the coast of northern Peru, 56 kilometers west of the City of Tumbes and 39 kilometers west of Caleta Cruz. The block is in water depths ranging from 300 meters along its eastern boundary to over 3,000 meters in the west, and covers an area of 4,875 square kilometers.

In block Z-38, the barrels of potential prospective oil resources* are estimated to be 549 million within Karoon’s exploration portfolio, in an under-explored, highly prospective part of the Tumbes Basin. This pull-apart basin has a structure similar to the prolific San Joaquín Basin of southern California, and exhibits various types of structures. The work done by Karoon, including 3D seismic, the analysis of the sea floor drop cores and the AVO analysis, supports the presence of an active petroleum system, with oil with the same characteristics as the source rock in the adjacent Talara Basin, where over 1.7 trillion barrels of oil have been produced to date.

Karoon’s objectives are strategically located along the basin axis and adjacent to the Talara Basin onshore fields.

Preparations are currently being made for the drilling of the prospective well of Marina-1 at the beginning of 2020, with estimated prospective resources of 256 million barrels (102 mmbbl liquids for Karoon) *.

A technical study agreement was executed for an area adjacent to the block Z-38, Area 73 (see map). The agreement was signed on December 12, 2018 and it is effective for 18 months computed as from January 1, 2019. The obligations in the agreement include seismic reprocessing, interpretation and geological studies. The agreement set forth the right to negotiate a licensing agreement with Perupetro in relation to the entire zone or a part of the area for a minimum work program. The area shows a continuation of the Tumbes Basin and various prospects have already been identified. A successful drilling of block Z-38 will provide additional space for similar plays in Area 73.

*Best case estimate of the net prospective resources in the completion of the farm-in / farm-out obligations (Karoon obtained 40%) as announced in the ASX release dated May 8, 2018.


KEI (Peru Z38) Pty Ltd, Sucursal del Perú (Operator): 40%*

Tullow Peru Limited:  35%**

Pitkin Petroleum Peru Z-38 SRL:  25%

*40% of Karoon’s interest is subject to the performance of the farm-in obligations.

** Tullow’s 35% equity interest is subject to conditions including regulatory approvals.

Exploration History

During 2008, Karoon executed a farm-in agreement to acquire a 20% interest in Block Z-38. Karoon was approved as Operator during October 2009 and, subsequently, increased its interest to 75%, subject to performance of the obligations to the shareholders.

Following the acquisition and interpretation of 2D and 3D seismic surveys in 2009 and 2010, various prospects have been identified and mapped within the block in water depths of between 300 and 1,000 water table meters.

In June 2013, the Environmental Impact Assessment (EIA) for the exploration drilling of 20 wells was approved by the Peruvian regulatory agencies.

During January 2018, Karoon assigned a 35% interest in the block to Tullow Perú Limited, a subsidiary of Tullow Oil plc.

Work Program

The work program is aimed at the exploration of hydrocarbon reservoirs trapped in Tertiary rocks (Miocene) and other younger shallow reservoirs (Pleistocene), in moderate water depths within Karoon’s block. These younger formations are interpreted to have superior reservoir characteristics compared with the Zorritos reservoir (Miocene) which is the reservoir currently exploited in the Basin and which has historically been the focus of exploration in the last four decades.

Oil extracts recovered from the seabed cores acquired by Karoon in Block Z-38 in 2010 show characteristics similar to oils from wells of both the Tumbes basin and support the model of a common and prolific Tertiary source rock (hydrocarbon source rock).

Since acquisition, Karoon’s geological and geophysical work has helped outline and quantify the risk perspectives.

During 2010, Karoon acquired and processed a 1,500 square kilometers 3D seismic survey; it is important to highlight that this is the first 3D seismic performed in the offshore basins of Peru. The seismic interpretation and the prospect assessment were completed and the preliminary exploration locations have been selected.

Tumbes Basic Background

Block Z-38 lies to the northwest of the large, oil producing fields of the Talara Basin. These fields have been producing oil for over 150 years and have produced over 1.7 trillion barrels to date.

Exploration in the Tumbes sea basin, associated with the Neogene period, commenced in 1969 with the discovery of dry gas at the Amistad field in the Ecuadorian Gulf of Guayaquil, approximately 60 kilometers north of Block Z-38. Exploration in the Peruvian Tumbes sea basin started in 1972, when oil, gas and condensate were discovered at the Albacora field near the maritime border with Ecuador. Other four exploration wells were drilled between 1972 and 1974, out of which two encountered 37°API oil in Miocene formations. Six wells were drilled between 1977 and 1984, out of which two wells were gas, condensate and oil discoveries (Piedra Redonda and Corvina).

Following a 22-year hiatus, drilling resumed in 2006 when BPZ Energy commenced an appraisal of the Corvina structure, encountering hydrocarbon in the Middle Miocene Zorritos sandstones. The Corvina field, which is located 35 kilometers from Block Z-38, started producing oil in 2007.

Block Z-38, which is located in the Tumbes Basin, shows a sequence of Neogene sediments of more than 5 kilometers of thickness constituting an untested extension of the Tumbes Basin petroleum system. The Block hosts a wide variety of play types, including faulted blocks, wrench and ramp anticlines, and pinch-out plays.

The oil extracts recovered from the sea bed, acquired by Karoon in Block Z-38, in 2010, show characteristics similar to oils from Talara and Tumbes Basins, thus supporting the model of a common and prolific Tertiary source.

The main reservoirs in the Tumbes Basin date from the Miocene age and they correspond to the Zorritos, Tumbes and Mal Pelo formations and those from the Pliocene age, to the La Cruz formation. In the Albacora and Corvina fields, the producing reservoirs are from the Lower Miocene of Zorritos. Meanwhile, at Amistad, younger sandstones also produce gas. The potential reservoirs of Tumbes and Mal Pelo show superior reservoir characteristics compared to the Zorritos formation, and they are the primary target in Karoon’s Z-38 Block.