Sign up Australia
Proactive Investors - Run By Investors For Investors

Carnarvon Petroleum’s oil exploration strategy continues to generate significant shareholder value

The Dorado is a remarkable discovery and Carnarvon is expected to report on the volumetric estimates soon.
drill rig
Shares are trading about 15% higher intra-day

Carnarvon Petroleum Limited (ASX:CVN) is witnessing significant interest from media, shareholders and the broader market in its recent drilling and operational activities.

The company’s share price has surged to 46 cents, an increase of 156% since July 13, 2018.


In 2013, Carnarvon refined its strategic focus, making a decision to divest its onshore Thailand oil production assets and other Asian interests to concentrate on Australian investments.

In two transactions, Carnarvon divested its interest in these assets, realising in excess of $100 million in proceeds before the drop in oil prices at the end of 2014.

In refining its strategic focus, the company decided Australia’s North West Shelf represented a logical, manageable and compelling area of focus.

Fortuitously, the significant drop in the oil price from 2014 to 2017 caused discretionary exploration to be largely curtailed by most upstream companies.

Oil price chart 

With a strong cash position and an industry in retreat, Carnarvon secured and progressed new projects with its inhouse geoscience team.

A further benefit of this point in the cycle was that significantly reduced rig rates were negotiated, compared to earlier years, and Carnarvon was one of the most active in drilling wells throughout the bottom of the cycle.

Phoenix Blocks (predominantly CVN 20% working interest)

The Phoenix Blocks in the North West Shelf offshore Western Australia represent one such area of focus.

Following the recent completion of the Dorado-1 and Phoenix South-3 wells, Carnarvon and its joint venture partner will have drilled six wells in this sub-basin, with hydrocarbons discovered in each well.

The Dorado-1 well was one of the higher risk exploration targets considered by the joint venture, and the decision to drill was taken because of the large geological structure (i.e. potential for large volumes of hydrocarbons) and the low drilling cost relative to the potential reward.

The joint venture has now announced that the well encountered about 120 metres of net oil pay.


Both the light oil recovered in the wireline testing and the indicative quality of the reservoir point to a highly valuable discovery.

The commerciality of this will be assessed in time, but it is the oil in Dorado and potentially successful adjacent structures that will now become our immediate focus.

Carnarvon expects this to be highly profitable for shareholders in due course.

Buffalo Project (100% CVN)

A project that the company is equally excited about, but that has attracted far less investor attention so far, is the Buffalo Project in Timor-Leste territorial waters.

The project appears economically compelling based on Carnarvon’s preliminary mean recoverable volume of 31 million barrels, which has been reviewed by leading independent consulting firm RISC.

READ: Carnarvon Petroleum moves closer to oil production at Buffalo with preparations for first well

To emphasise the scale of this project, at today’s oil price this project would generate a revenue of more than $3 billion over a project life of a few years.

Carnarvon is progressing discussions with the Timor-Leste Government, with whom the company is having a constructive and supportive dialogue and have set up a representative office in the capital Dili.

Forward plan

The Dorado result is a truly spectacular discovery and Carnarvon is expected to report on the volumetric estimates in the next couple of weeks.

The Buffalo project remains an ideal oil field redevelopment and the company is making good progress with this asset.

Carnarvon’s share price has seen significant volatility over July and August.

As speculators move off Carnarvon’s register and are replaced by institutions seeking medium-term exposure to two quality oil projects, the volatility is expected to make way for a phase of sustained growth.

View full CVN profile View Profile

Carnarvon Petroleum Ltd Timeline

Related Articles

picture of gas flare
February 13 2018
A new gas generator also came on stream recently and has started to produce the first power from the project
picture of wind turbines
January 11 2018
The construction of more than 600 wind turbines was funded by securing US$1bn of financing during the year.
oil and gas operations
April 18 2018
Falcon's shale project is now clear to advance now that a ban on fracking has been lifted in Australia's Northern Territory.

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use