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- Oil and gas company Karoon Energy (KAR) is edging closer to finalising the purchase of the major Baúna oil field in the Santos Basin offshore from Brazil
- The company is finalising some administrative issues relating to landing approval from the Brazilian National Agency of Petroleum, Natural Gas and Biofuels
- Once this government approval is received, Karoon will finalise a floating production storage and offloading (FPSO) charter contract
- With all this in mind, Karoon said it expects the purchase to be finalised in the second half of this month
- The company told shareholders it’s already planning to market its first Baúna cargo once the transaction is completed
- Shares in Karoon are trading 2.39 per cent higher this afternoon, currently worth 73 cents each
Oil and gas company Karoon Energy (KAR) is edging closer to finalising the purchase of the major Baúna oil field in the Santos Basin offshore from Brazil.
The company told shareholders this morning the purchase, which was initially announced in July 2019, should be completed in the second half of this month.
Karoon said the conditions outlined in the purchase agreement are progressing steadily, particularly in regard to approval from the Brazilian National Agency of Petroleum, Natural Gas and Biofuels, known as the ANP.
Karoon is buying up the asset through its subsidiary, Karoon Petróleo e Gás, and is now addressing what it called ‘minor’ administrative issues relating to its parent company guarantee in favour of the ANP.
Once Karoon lands ANP approval for the purchase, it will finalise a floating production storage and offloading (FPSO) charter contract.
Importantly, the company told shareholders it’s already planning to market its first Baúna cargo once the transaction is completed — a sign of confidence from Karoon management.
The Baúna purchase
The purchase initially came with a US$665 million (roughly A$925 million) price tag, but this was set to be offset by operating cash flows from the effective transaction date, which is officially recorded as January 1, 2019.
At the time, Karoon was expecting to land all necessary approvals in the first half of 2020, but then COVID-19 hit. As such, the company told shareholders in March it was still planning to go ahead with the purchase, but it was likely some key indicated timeframes would need to be pushed back.
In July this year, Karoon outlined amended terms to the purchase, with some slight adjustments to the purchase price.
The amended deal split the headline US$665 million price tag into a US$380 million (roughly A$529 million) firm payment and a US$285 million (roughly A$397 million) conditional payment based on the price of Platts Dated Brent oil from 2022 to 2026.
Today, the company said though the completion of the deal is later than planned, the official transaction effective date is still January 1, 2019 — meaning operating costs and revenues from Baúna will still adjust the final purchase price from this date.
Shares in Karoon are trading 2.39 per cent higher this afternoon, currently worth 73 cents each at 12:59 pm AEDT.
