Karoon farms out to Apache

Karoon Gas has farmed out a 50 per cent stake in an oil and gas exploration permit in the Carnarvon Basin to Apache Corporation for an initial cost of $US9 million.

Apache will become operator of the permit and commit to drill an exploration well in the first half of 2015.

It will reimburse Karoon with $US9 million in seismic acquisition costs and fund 90 per cent of the drilling costs for one exploration well, capped at a value of $US63 million.

Karoon executive chairman Robert Hosking said Apache was an established and significant operator in the Carnarvon Basin, with drilling active in 13 wells offshore Western Australia in 2014.

"Apache brings to the table an excellent track record of bringing projects into production in Australia and they are one of the largest suppliers of gas into the heavy industrial-based Western Australian domestic gas market," he said.

"The transaction is a significant milestone for Karoon, and a further endorsement of Karoon's ability to identify exciting, very large early stage exploration opportunities."