Karoon has signed a letter of intent (LOI) with Dolphin Drilling for a Blackford Dolphin semi-submersible drilling rig.

The rig will be used to drill three wells in Karoon’s Santos Basin Blocks, which are located 280km off the coast of the state of Sao Paulo, Brazil, at about 400m deep.

Drilling is expected to commence in the first half of 2012, targeting several prospects within Karoon’s Santos Basin Blocks.

Attainment of all the necessary regulatory approvals is underway and the final drilling agreement is expected to be completed by the end of June 2011.

Karoon’s subsidiary Karoon Petroleo & Gas signed the LOI and currently owns 100% of the Santos Basin Blocks 1037, 1101, 1102, 1165 and 1166.