Dorado remains go, go: Carnarvon

DESPITE most energy stocks losing up to half their value since last year, including Carnarvon Petroleum which is back trading at 14cps pre-Dorado levels, the company has reiterated its front-end engineering and design plans for the field, with no plans to move from FEED entry next quarter.
Dorado remains go, go: Carnarvon Dorado remains go, go: Carnarvon Dorado remains go, go: Carnarvon Dorado remains go, go: Carnarvon Dorado remains go, go: Carnarvon

Company has no plans to delay FEED

Helen Clark

Editor

 
"The sheer size and nature of the Dorado field means that it is a strong and robust project which is expected to produce at globally competitive capital and operating costs per barrel," it said this morning. 
 
Carnarvon (20%) and operator Santos (80%) are working on a variety of components needed to formally enter FEED. 
 
"This is a priority for Carnarvon and global events have not affected this position," it said. 
 
The company remains keen on exploration suggesting the area around its prospects Pavo and Apus "are looking attractive on the new Keraduren 3D seismic data". 
 
"There are also new prospects showing up on the 3D seismic data which we look forward to maturing for presentation to shareholders in due course," it said. 
 
It does not believe the current oil price will remain this low. 
 
"It makes sense to proceed with the businesses' plans unchanged,' it said. 
 
"We have experienced market volatility in the past, such as with the oil prices falling in 2015," managing director Adrian Cook said.
 
He said then Carnarvon "carefully assessed" the situation and charted a path through uncertainty. 
 
"Taking this considered approach to put the company in an incredibly strong position that resulted in the discovery of the Dorado field in 2018," he said. 
 
"Our strong conviction is that the COVID19 virus issue and the low oil prices will be resolved in time." 
 
He said Carnarvon is cashed up and ready to proceed through FEED and into final investment decision. 
 
Santos' annual report of last month said major capital expenditure and dividend payments would be funded from operating cash flow and debt. It reported free cash flow of $1.1 billion for 2019 and a 7% increase in net profit. 
 
Santos has been planning to sell down a share of its 80% share of the project, which could be difficult in the current oil price environment. 
 
It announced last week the sell down of part of its share of ConocoPhillips' Northern Australian and Timor-Leste assets  to project partner SK E&S, though it remains contingent on the closing of the ConocoPhillips's A$1.4 billion sale first announced in October last year. 
 
It said staff were avoiding "potential virus bearing situations".
 
Carnarvon wasn't present at last weeks' Australasian Oil and Gas conference, and skipped the Timor-Leste breakfast despite possessing the Buffalo oil field in Timor-Leste waters. 
 
Dorado has a recoverable liquids resource of 153 million barrels on a 2C basis, according to Santos. 
 
Carnarvon's confidence has paid off with a 6.67% rise this morning to 16cps, though it was trading at 25cps a week ago before the oil price crash and at 39cps at the beginning of the year. 
 
Santos is down 10.7% so far today with shares worth $4.09. In mid-January shares were worth $9 each.