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## 2010-2011 OPERATIOnS COnTInUEd fOR THE fInAnCIAL YEAR EndEd 30 jUnE 2011 

## Peru Block Z-38 

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During January 2008, Karoon signed a farm-in agreement to acquire a 20% participating interest in Block Z-38, an offshore block of 4,750 square kilometres located in the Tumbes Basin, 10 kilometres from the northwest coast of Peru. This region has historically been very productive with the first discoveries late in the 1800s, however, much of the offshore portion of the basin remains relatively underexplored. The Talara Basin, to the south of the block continues to produce oil and gas and the Talara Basin has to date produced more than 1.6 billion barrels of oil. 

In October 2009, Karoon was approved by the regulator as Operator of the block and negotiated to increase its participating interest in Block Z-38 to 75%. This new participating equity has received further regulatory approval and planning is now underway for a two well drilling campaign to satisfy the third year work commitments. 

## 3D Seismic Interpretation 

Interpretation of the new 1,500 square kilometre 3D seismic program was completed during the financial year, fulfilling the second year work program commitments. Detailed prospect oriented interpretation indicates the presence of fifteen prospects and leads. The new prospects vary significantly in size with each of the four largest having an estimate of mean unrisked prospective resource of over 250 million barrels of oil plus significant volumes of gas. 

Block Z-38 is interpreted to contain thicker sections of Miocene rocks, of which the two main regional reservoir depositional cycles are interpreted to be well developed. These depositional cycles are in the Zoritos and Tumbes sequences. Reservoirs at both these levels in Block Z-38 are interpreted to be turbidite sands, likely to offer better reservoir quality than the sands seen in the Corvina field which are poorer quality, poorly sorted deltaic sands. 

