Karoon Gas Australia Ltd. announced Wednesday that it has entered into a binding Sales and Purchase Agreement for Pacific Exploration and Production Corp.’s (PEPC) 35 percent interest in their jointly held Santos Basin exploration blocks S-M-1037, S-M-1101, S-M-1102, S-M-1165 and S-M-1166 off Brazil for as much as $20.5 million.

The firm will make an upfront cash payment of $15.5 million on completion of the deal and a $5.5 million deferred contingent payment upon first production reaching a minimum of 1 million barrels of oil equivalents from the blocks.

Karoon’s acquisition — subject to approval from the regulator, the Agencia Nacional do Petroleo (ANP), Gas Natural e Biocombustiveis and an approval order from the Superior Court of Justice in Ontario, Canada — follows PEPC’s application for insolvency protection with the Canadian Court in April.

“The acquisition of PEPC’s interest in the Blocks maps a clear path forward for Karoon to introduce a new funding partner to progress the Echidna discovery appraisal drilling campaign,” Karoon’s Managing Director Robert Hosking said in the press release.

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