Page 13 - LatAmOil Week 22 2021

LatAmOil PERU LatAmOil

Karoon, Pitkin at odds over

drilling plans for Block Z-38

AUSTRALIA’S Karoon Energy is at odds with Marina-1 exploration shaft in the first quarter of
one of its partners in a Peruvian exploration pro- 2020 but “encountered thin water-bearing sands
ject with respect to exploration drilling plans. with no oil and only minor gas shows,” accord-
According to a company statement, KEI ing to the Australian firm’s website.
(Peru Z-38), a wholly owned subsidiary of Subsequently, Peru’s national oil and gas reg-
Karoon, has received a notice of dispute from ulator Perupetro agreed to extend the licence for
Pitkin Petroleum Peru Z-38, an affiliate of Block Z-38 by six months, thereby green-light-
UK-registered Pitkin Petroleum. The document ing a third phase of exploration. This phase
alleges that KEI (Peru Z-38) has not upheld its ended on December 31, 2020, and the partners
obligation to proceed to the fourth phase of were due to notify Perupetro of their intent to
exploration under its contract for Block Z-38, proceed to the fourth phase of exploration by
located in Peru’s offshore Tumbes basin, and November 30, 2020. ™
drill a second well within the licence area, the
statement explained.
The notice also asserts that Pitkin has sus-
tained more than $100mn in damages as a result
of these alleged failures, Karoon said. It did not
provide a breakdown of this figure, but it did say
that KEI rejected these claims and would “vig-
orously defend” itself in the event that Pitkin
initiated any form of legal action.
The Australian company was responding to
its partner’s remarks on the possibility of legal
action. “Whilst the notice requests that KEI Peru
and Pitkin seek to resolve the dispute by negoti-
ation between senior executives, the notice also
refers to Pitkin potentially commencing legal
proceedings comprising claims for damages
that are currently being assessed by Pitkin,” it
commented.
Karoon began working at Block Z-38 in
2008, when it acquired a 20% stake in the pro-
ject. It later increased its holdings to 75% but
trimmed its stake to 40% in 2018, when it suc-
cessfully farmed out a 35% interest to Tullow Oil
(UK/Ireland).
To date, Karoon, Tullow and Pitkin have
only drilled one well at the block. They sank the Block Z-38 lies offshore Peru in the Tumbes basin (Image: Karoon Energy)

NEWS IN BRIEF

UPSTREAM To provide immediate production and cash flow, The Saffron-2 appraisal well is a follow-up to
as a successful Saffron-2 could produce 200-300 the successful Saffron-1 exploration well drilled
Challenger Energy Group bpd of oil, resulting in $1.8-2.6mn per annum of in March 2020 that resulted in discoveries in
net cash flow to the company; and to inform the both the Middle Cruse and Lower Cruse reser-
commences drilling of most efficient way to develop the Saffron field. voirs. Significant lessons were learnt during the
(Internal estimates are that in a success case, the drilling of Saffron-1 to inform the drill plan for
Saffron-2 well Saffron field is capable of producing 1,000-1,500 Saffron-2.
bpd of oil by end-2021, providing a cash flow run
Saffron-2 is a low cost onshore well with a
Drilling of the Saffron-2 appraisal well rate of $8-12mn per annum. A full field develop- budget, inclusive of production completion, of
in Trinidad and Tobago has commenced as ment could achieve peak production rates of up approximately US$3 million, and expected to
scheduled. to 4,000 bpd of oil and yield cash flow in excess take between 25 and30 days to complete.
The Saffron-2 well has two primary objectives: of $25mn per annum. Challenger Energy Group, May 26 2021

Week 22 03•June•2021 www. NEWSBASE .com P13