Quarterly Report June 2018
- Phoenix South-3 and Dorado-1 wells commenced and are near the primary target Caley Sandstone
- Preparations commenced to drill the Buffalo-10 well - the first step to redevelop the Buffalo oil field
- Successful completion of capital raise to progress the Company's Buffalo project plans
- A$63.6 million held in cash at the end of the quarter with A$3.9m exploration spend
Managing Director's Comments
During the quarter, Carnarvon and its Joint Venture partner Quadrant Energy, commenced drilling the Phoenix South-3 and Dorando-1 wells in the Bedout Sub-basin of the Australian North West Shelf. With an existing string of discoveries and successful flow test in the Phoenix area, the objective of these wells is to confirm commercial quantities of gas and condensate (very light oil) to underpin a development in the area.
At the end of the quarter, both of these wells were setting the final casing point prior to drilling into the target Caley reservoir sections. With great excitement, Carnarvon is expecting to announce the results of the Phoenix South-3 and Dorado-1 wells in the coming weeks. These wells are targeting significant quantities of gas and condensate which has the potential to deliver significant value to shareholders.
In relation to corporate matters, I would like to welcome new shareholders and thank existing shareholders for their participation in our recent capital raise. Carnarvon raised approximately $20 million (before costs) through a placement and a share purchase plan. The raising strengthened the Company's cash position and will enable Carnarvon to pursue its plans in the Buffalo oil field redevelopment.
Carnarvon has initiated preparations to drill the Buffalo-10 in 2019 well which will be completed to be a production well. The Company is in the process of designing the well and has commenced the environmental approvals process. Carnarvon has also commenced a number of workflows to enable the Company to operate the drilling, field development and production of the Buffalo oil. Given the relative simplicity of this project and the fact that it has the potential to deliver significant value to shareholders at a low risk, Carnarvon is aiming to undertake this project with the maximum possible equity.
The Carnarvon team is continuing to work with the governments of Timor-Leste and Australia to finalise the arrangements whereby the Buffalo oil field will fall under the exclusive jurisdiction of Timor-Leste. Under the newly signed Maritime Treaty between the nations, it has been agreed that the fiscal terms for the Buffalo project are to be equivalent to those in place under Australian domestic law. Carnarvon is well underway to being established in Timor-Leste with an office presence in Dili and the appointment of local Timorese representatives.
At the end of the quarter, the Company had a cash balance of A$63.6 million. Carnarvon prides itself of prudently managing its financial resources to ensure we remain well funded after the Phoenix South-3, Dorado-1 and Buffalo-10 wells. It is encouraging to have a number of maturing assets in our portfolio as global oil and gas prices continue to strengthen.
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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