Quarterly Report March 2018
- Drilling rig for Phoenix South-3 on location at the end of the quarter
- Buffalo redevelopment to take place under Timor-Leste jurisdiction after Maritime Boundary Treaty
- Awarded additional Vulcan Sub-basin permit AC/P63, multiple oil leads have already been identified
- A$48.1 million held in cash after A$2.1m exploration spend in the quarter
Managing Director's Comments
Firstly, I'd like to thank the investors who were able to attend our successful investor open day. We thoroughly enjoyed the opportunity to make our team available to our investors to provide an in-depth view on what has become an exciting portfolio of assets. We will hopefully hold another investor day in the future and I encourage all investors to join us if possible.
Carnarvon and its Joint Venture partner, Quadrant Energy, reached another major milestone for the Phoenix Project, with the Transocean Development Driller-1 rig reaching the Phoenix South-3 well location at the end of the quarter. Since arriving on location, the rig has been working through a series of pre-commencement checks and anchor setting and is expected to commence drilling shortly.
The Phoenix South-3 well will test the same interval that contained gas and condensate in the Phoenix South-2 well some 560 metres away. The cost to redrill to the top of the Caley interval will be mostly covered by an insurance claim associated with the Phoenix South-2 well operation, which had to cease drilling at this interval.
In addition to the Phoenix South-3 well, the upcoming Dorado-1 well is expected to commence drilling in May 2018. The primary zone in Dorado-1 is also the Caley interval although the well with also test slightly deeper secondary targets for additional oil and gas.
During the quarter, Carnarvon also continued to progress its redevelopment plans for the Buffalo oil field. Following the signing of a new Maritime Boundary Treaty between Australia and Timor-Leste, the redevelopment will now be undertaken in an area of exclusive Timor-Leste jurisdiction. Discussions held so far with officials from Timor-Leste make it clear that Carnarvon and Timor-Leste are in agreement on achieving first oil as soon as possible. Special legislation is to be enacted to ensure the Buffalo redevelopment will continue under equivalent fiscal terms previously in place with Australia.
Carnarvon completed a third iteration of the full wave form inversion seismic reprocessing on the Buffalo oil field during the quarter. This additional technical work continues to enhance Carnarvon's confidence in the project which is targeting unproduced oil in the field. Carnarvon has been working towards finalising its preferred option for developing the resource and entering into the required Production Sharing Contract with the Government of Timor-Leste.
The Company was also awarded a new permit (Eagle project) in the highly prospective Vulcan Sub-basin, located near Carnarvon's recently acquired Condor project. The Eagle project is in a hydrocarbon prone region within the North-West shelf and contains several Jurassic and Cretaceous oil leads over multiple reservoir levels. Once the recent Cygnus 3D seismic has been processed over the area, Carnarvon will progress its technical and prospect development work.
The Company had a cash balance of A$48.1 million at the end of the quarter. With existing cash and the successful insurance claim, Carnarvon remains well funded for its upcoming Phoenix and Dorado drilling campaign.
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About Carnarvon Petroleum Limited
Carnarvon Petroleum Limited is an oil and gas exploration company, listed on the Australian stock exchange (ASX:CVN), Frankfurt (FRA:CJB) and US OTC (OTCMKTS:CVONF). Carnarvon has an extensive acreage position in the North West Shelf of Western Australia that is designed to offer investors high alpha leverage to the energy sector. The company's near term focus is on maturing oil, gas and condensate discovered in its Phoenix project, with partner Quadrant Energy, and on bringing into production oil from the Buffalo field.
Carnarvon Petroleum Limited