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Carnarvon Petroleum progresses development work for Dorado oil & gas discovery

Expressions of interest received for the well-head platform reflect positive industry interest in the Dorado JV with Santos.

Carnarvon Petroleum Ltd - Carnarvon Petroleum progresses development work for Dorado oil & gas discovery
A final investment decision on the project is targeted for 2021

Carnarvon Petroleum Limited (ASX:CVN) is making progress on the Dorado oil & gas JV development offshore WA with Floating Production Storage and Offtake (FPSO) vessel and well-head platform (WHP) work advancing.

The important progress made includes the recent awarding of pre-Front End Engineering Design (pre-FEED) contracts to three leading contractors.

Terms of these contracts will see the parties working independently to advance their FPSO designs and mature their vessel construction plans and supply terms.

Maintaining schedule

The award of these contracts enables the Dorado Joint Venture between Carnarvon (20%) and Santos Ltd (ASX:STO) to maintain its project schedule.

Carnarvon’s managing director Adrian Cook said: “The award of the pre-FEED contracts for the supply of an FPSO is a significant step and demonstrates the momentum which is building within the Dorado development project.

“This is testament to the quality of the project as we have the confidence to enter the next phase of development during this short period of uncertainty.”

Competitive pre-FEED process

One of the pre-FEED contractors will be selected at the end of the pre-FEED stage to begin the formal FEED work.

The award of the FEED contract is expected to occur later this year while the pre-FEED process will also determine the contracting strategy for the FPSO.

By appointing three contractors to separately undertake this engineering and design work, the JV will be able to consider the optimal technical design, cost and schedule for the provision of the FPSO.

Strong WHD EOIs

Expressions of Interest have been received from a significant number of companies for the fixed well-head platform (WHP) that will support the production and ancillary wells and connect to and supply the FPSO.

A shortlist of contractors will shortly be invited to tender for all or relevant parts of the WHP work including engineering and design, fabrication of jacket and topsides, and transport & installation into the field.

Cook said: “It is pleasing to have experienced, world-class FPSO contractors appointed to the Dorado project.

“The short-listed organisations have supplied excellent vessels in recent times and Carnarvon looks forward to working with them during the next phase of the project to ensure we have an optimised technical and financial solution.”

Additional work on schedule

Additional work for the Dorado project, including preparation of the Field Development Plan and Offshore Project Plan, are also on schedule.

The FEED process for the Dorado field development is a relatively low-cost phase within the total field development.

This phase is intended to be progressed broadly by the JV as scheduled, subject to operational impacts associated with COVID-19 restrictions.

The current schedule has the Final Investment Decision (FID) slated for 2021, however, this will be subject to market conditions at the relevant time.

Heading towards FID

Cook added: “Along with the great industry response to the expressions of interest for the supply and installation of a well-head platform, Carnarvon is looking forward to all the necessary items being in place for a final investment decision on the Dorado project in 2021.

“Progressing the project now provides the joint venture with the greatest case to make the final investment decision next year if, as we expect, market conditions have improved.

"I would like to thank the Carnarvon team, the operator and our suppliers for working diligently and safely in these challenging conditions to ensure we progress this fantastic project.”

Despite difficult oil & gas market conditions, Carnarvon shares have increased from a 12-month low of 11 cents on March 23 to a close of 23.5 cents yesterday.

Quick facts: Carnarvon Petroleum Ltd

Price: 0.26 AUD

ASX:CVN
Market: ASX
Market Cap: $406.87 m
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