Australia’s oil and gas company Karoon Energy is expected to make up its mind around April 2025 about moving forward with the next stage of development, which represents the entry into front-end engineering design (FEED), for an oil field discovery in the Santos Basin off the coast of Brazil.

While Karoon hired a rig in April 2021 to perform well intervention on four wells at the Baúna field, once the Maersk Developer rig, which is now called Noble Developer, was done with this campaign, it was expected to drill two development wells on the Patola field, thanks to addition in June 2021, and one or potentially two control wells on the Neon oil discovery, which was added in May 2022.

Since then, the firm has continued with the exploration, appraisal, and development activities in the pre-salt Santos Basin. According to the operator, the Neon project team made good progress in the fourth quarter of 2024 on phase 2, also called the select stage, including updating the Neon reservoir models based on reprocessed seismic datasets, seismic inversion reservoir characterization products, and finalized core studies.

The Australian player claims these reservoir models will form the basis for updated reservoir development studies, aimed at optimizing the development plan and capex requirements, generating production profiles, and estimating the recoverable resource range. Karoon also continued to screen potential production units to identify the optimal candidate for redeployment on Neon.

Moreover, the company underlines that the redeployment and modification of a floating production, storage, and offloading (FPSO) unit is expected to provide both project cost and schedule benefits, improving value. In addition, other studies focused on optimizing the costs and economics of a potential development were ongoing.

However, the next milestone for the Neon project is expected to come in or around April 2025, when Karoon will decide whether to progress the project into the ‘define’ phase, marking the FEED entry. This phase would include developing detailed project execution plans, the basis for design specifications, procurement planning, commercial agreement negotiation, funding, and detailed cost estimates.

Aside from these, the firm added that a data room would be opened and a farm-down process put in motion to secure a partner before any final investment decision (FID) is made. The Neon oil field is located 50–60 kilometers northeast of Karoon’s Baúna oil field, which produces hydrocarbons through the FPSO Cidade de Itajaí.

Currently, the company is engaged in negotiations with Altera & Ocyan (A&O) to take possession of this FPSO, which will be offline for a month during the replacement of a faulty gas lift valve next quarter.

Brazil is not the only region where Karoon is participating in hydrocarbon development, as the firm also holds a stake in LLOG’s assets, where development studies for two hydrocarbon-bearing wells are ongoing in the U.S. Gulf of Mexico, which is being renamed the Gulf of America.