Australian oil and gas company Karoon Energy has terminated the exclusivity agreement previously entered into with the Brazilian oil firm Enauta, for the potential acquisition of a 50% interest in Enauta's Atlanta oil field, offshore Brazil, after the latter opted not to extend the exclusivity period.
The exclusivity agreement was entered into for Karoon to undertake due diligence and negotiations in connection with potentially acquiring a 50% non-operated stake in the offshore oil field.
However, the agreement has now been terminated, and Karoon has also withdrawn its conditional, non-binding, and incomplete offer regarding the potential transaction.
"Karoon was unable to complete the necessary due diligence and conclude negotiation of acceptable terms in respect of the potential transaction during the agreed exclusivity period. Given the material scale of the Atlanta project, undertaking and completing satisfactory due diligence and maintaining acceptable terms and risk levels were considered vital by Karoon. Karoon will continue to evaluate opportunities in line with its announced strategy of seeking value accretive, inorganic growth opportunities in the normal course of business,“ Karoon said.
Enauta is the operator of the field located in the Santos Basin, and holds a 100% stake.
The company last week received approval from the Brazilian authorities for the new development plan for the Atlanta field. The authorities have also approved an 11-year extension of the Atlanta Field concession term. The concession term, originally valid until 2033, has now been extended to 2044.
Enauta has been producing oil from the field using the FPSO Petrojarl I as an Early Production System, and has been looking to deploy another FPSO at the field for full-field development. For this, the company in February signed a contract with Malaysia's FPSO specialist Yinson. Read More.
Atlanta's value potential increased
Enauta has also issued a separate statement confirming that Karoon had terminated the exclusivity agreement.
According to Enauta, Karoon had requested to extend the exclusivity period for the sale of 50% interest in the Atlanta Field, which would end on May 31, 2022, but Enauta decided not to extend the exclusive negotiations. Karoon then, on May 21, 2022, Karoon sent a notice of early termination of this period.
“With the execution of all major contracts, there was a reduction in the risks of implementing the Full Development System (FDS) in Atlanta Field. In addition, activities to extend the Early Production System (EPS) by 2024 have advanced.
"The company understands that these movements, coupled with oil price appreciation, increased the value creation potential of the project. Therefore, the sale of interest, under the proposed terms, would not create value for the shareholders. The FDS currently shows the best growth and profitability opportunity in Enauta’s project portfolio,” Enauta said.
Output resumes from 7-ATL-2HP-RJS well
Last Tuesday, Enauta said that production from the 7-ATL-2HP-RJS well at the Atlanta field was temporarily interrupted to a minor repair in a production line on the surface. Before the interruption, the well had been producing around 3,300 barrels per day.
At the moment, of the announcement, the Atlanta Field was operating with the production of around 8,500 barrels of oil per day.
The company said at the time that the repair would be completed "in the next few days, which will allow the well's production to resume."
In a statement on Tuesday, May 24, Enauta announced the return of production from well 7-ATL-2HP-RJS at the Atlanta field.
"After the repair in a production line on the surface, the field returned to producing around 11,500 barrels of oil per day,
contributing to the company's total production of around 20,100 boe per day," Enauta said.
Subscribe
