Karoon’s assessments of the Neon field in Block S-M-1037 indicate improved economic prospects, positioning a standalone development as a valuable growth opportunity. The project has progressed to the ‘Define’ phase after passing Decision Gate 2, focusing on finalizing well numbers, securing a redeployable floating production storage and offloading (FPSO) unit, defining subsea infrastructure, and engaging suppliers for key contracts, such as drilling rigs. The company is also initiating a farm-down process to share risks and costs.
Karoon’s CEO, Dr. Julian Fowles, stated: “Over the past year, the team has progressed Neon through a number of important steps. This has involved fully reprocessing the existing 3D seismic data, recalibrated with the Neon-1 and 2 well data, and rebuilding the geological models with these data and updated petrophysical evaluations. The result is a full bottoms-up reevaluation of the Neon resource, certified by independent experts Miller and Lents Ltd. We have also validated the preferred concept as a standalone development, enabling a better constrained and more robust Neon development.”
The development targets 60-70 million barrels (MMbbl) in its first phase, with subsequent phases to unlock additional resources. The Neon and Neon West areas offer low-risk exploration potential. To manage capital exposure, the ‘Rosy phase is structured in three stages, with an initial $7–10 million investment over the next six months. Total ‘Define’ phase costs are estimated at $25–30 million, with board approvals required at each stage.
Fowles added: “A number of infill opportunities have been identified as part of DG-2, and further development phases could extend the economic life of a potential Neon development well into the 2040s. Neon could also become a hub for developing the existing discovered 27 MMbbl of 2U contingent resources at Goiá and prospective resources in the nearby Neon West prospect.”
The farm-down process, set to begin in the second quarter of 2025, aims to divest a 30–50% interest. The first phase’s capital costs are estimated at $0.9–$1.2 billion, targeting first oil in early 2029 with peak production of 40,000–50,000 barrels of oil per day. The project’s mid-case payback period is approximately two years, with an internal rate of return above 20% at $65 per barrel.
Fowles concluded: “Development of additional infield and nearby resources could enhance these preliminary economics further. Our funding plan assumes the farm-down of a 30–50% interest in the potential development. While marketing has not yet commenced, several potential farminees have already indicated interest.”
The Neon field’s contingent resources have increased significantly, with 1C at 59.8 MMbbl (up 59%), 2C at 86.5 MMbbl (up 44%), and 3C at 108.0 MMbbl (up 21%), alongside 6.7 MMbbl of prospective resources.
