- Oil and gas explorer Carnarvon Energy (CVN) announces it is on track to reach a final investment decision (FID) for its jointly-owned Dorado project in WA by mid-2022
- Carnarvon says facilities engineering and subsurface studies for Dorado have confirmed the project will initially produce between 75,000 barrels and 100,000 barrels of oil per day
- Carnarvon has appointed Azure Capital as its financial advisor as it begins the process of sourcing funding for the Dorado project
- Carnarvon owns 20 per cent of the Dorado project in a joint venture deal with listed energy giant Santos (STO), which acts as the operator of the well
- Shares in Carnarvon Energy are up 1.85 per cent to 27.5 cents each at 12:45 pm AEDT, while Santos shares are down 1.53 per cent at the same time to $7.73
Oil and gas explorer Carnarvon Energy (CVN) today announced it was on track to reach a final investment decision (FID) for its jointly-owned Dorado project in WA by mid-2022.
The company said it had commenced the process of landing funding for the project, which is currently in the front-end engineering and design (FEED) stage of development.
Carnarvon owns 20 per cent of the Dorado project in a joint venture deal with listed energy giant Santos (STO), which acts as the operator of the well.
Carnarvon said facilities engineering and subsurface studies for Dorado have confirmed the project will initially produce between 75,000 barrels and 100,000 barrels of oil per day. What’s more, the liquids from the project are an “extra light, sweet product”, according to Carnarvon, which means they are likely to achieve a premium to Brent crude.
According to Carnarvon, studies had also shown that the associated gas from the project can be re-injected back into the Dorado reservoirs to maintain pressure, keeping production rates from the project strong. The company said this gas would be available for production as part of a subsequent second-phase development at the project.
All this means final capital costs are busy being defined for the project as part of the FEED process, to be finalised before the final investment decision. Carnarvon said given Dorado’s proximity to existing infrastructure and the fact that it lies in shallow water, the project is expected to be a low unit cost operation.
While Carnarvon has submitted applications for necessary regulatory approvals, the company has also appointed Azure Capital as its financial advisor to source funds for the development of Dorado ahead of the FID.
Carnarvon Managing Director and CEO Adrian Cook said the company was pleased the FEED work completed so far had progressed to plan, meaning FID was on track for around the middle of this year.
“Various sources of capital are being pursued to optimise the company’s balance sheet and extract the most value from this high-quality asset,” Mr Cook said.
“I look forward to sharing further progress updates in the coming months.”
As far as financing goes, Carnarvon outlined three potential options: traditional reserve-based debt facilities, alternative options like junior or subordinated debt, or even the divestment of a portion of its share of the Dorado project and associated exploration acreage.
While a capital raise was not listed as one of the funding scenarios, Carnarvon lef tthe door for a raise open by confirming it would consider all funding options available to deliver the optimal balance of capital management and shareholder value.
Shares in Carnarvon Energy were up 1.85 per cent to 27.5 cents each at 12:45 am AEDT. Santos shares were down 1.66 per cent at the same time to $7.71.