Karoon Energy to acquire 30% interest in Who Dat and Dome Patrol fields for $720mn

SYDNEY, AUSTRALIA: Karoon Energy Limited has entered into binding arrangements to acquire a 30% interest in the Who Dat and Dome Patrol fields and associated infrastructure, including the Who Dat Floating Production System (FPS), plus a 16% interest in the Abilene field, from LLOG Exploration Offshore, L.L.C. and LLOG Omega Holdings, L.L.C. (collectively, LLOG).

In addition, Karoon Energy will acquire various interests in adjacent acreage which containsthe Who Dat East (40%), Who Dat West (35%) and Who Dat South (30% interest) exploration and appraisal opportunities. The total acquisition consideration is US$720 million (A$1,152 million).

The acquisition remains subject to customary conditions for a transaction of this nature.

Who Dat is a high quality, low cost, conventional deepwater oil and gas operation located in ~800 metres of water, offshore Louisiana within federal waters of the US Gulf of Mexico.

The assets are expected to add approximately 4.0 – 4.5 MMboe to Karoon’s CY24 production on a Net Revenue Interest (NRI) basis, taking the Company’s total proforma CY24 production to 12.0 – 14.5 MMboe.

Post-acquisition, Karoon will have a diversified production base in two prolific hydrocarbon basins and material near term organic growth potential.

Dr Julian Fowles, Karoon’s Managing Director and CEO said: “This transaction meets our strategic objectives to acquire a material, value and earnings accretive, producing asset with expansion opportunities in either Brazil or the Gulf of Mexico (GoM).

The GoM is a Tier 1 jurisdiction with a stable and well understood regulatory and fiscal regime. The Who Dat assets provide Karoon with both geographical and asset diversification, complementing our existing Brazilian business with a second high quality operation.

Production from Who Dat will help offset the natural decline from Baúna and, with a unit operating  cost of less than US$6 per boe in FY23, will add a high margin, long term cash flow stream to Karoon.

There are significant development and exploration opportunities in our view analogous to Who Dat within the associated acreage. These provide the potential for future infrastructure-led developments, to increase production and extend the Who Dat field life. Importantly, sustaining capital requirements are low, and development and exploration activities are expected to be funded from Who Dat cash flows.

The Who Dat development, operated by LLOG, an experienced and well respected GoM operator with a strong track record, came onstream in 2011. Oil and gas production (which is currently 42,000 boepd, comprising approximately 60% oil and 40% gas from nine wells) is processed through an FPS facility, then transported to markets through common carrier pipelines.

Since first commercial production began in 2011, the facilities have achieved high reliability, with an average uptime of 94%.  

Karoon is acquiring a 30% interest in Who Dat and Dome Patrol from LLOG. The transaction will reduce LLOG’s interest to 45%. Westlawn Group (Westlawn) owns the remaining 25% of Who Dat and Dome Patrol.

LLOG was founded in 1977 and is a leading private pure-play deepwater US GoM operator. LLOG has drilled 308 wells in the GoM since 2002, including 116 wells in deep water, and is the 7th largest producer in the region by production volume15 with 25 currently producing wells.

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