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Carnarvon - Positive News Regarding Apus, Petrus And Kepler Oil Prospects

Timothy Anderson

Timothy Anderson is a contributor with the Australian Stock Report and is currently in his final year of studying a Bachelor of Applied Economics and a Bachelor of International Relations and Politics at the University of Canberra. Tim has a genuine passion for economics, specifically in macroeconomic analysis including how certain macroeconomic policies and indicators affect financial markets and the economy, as well as how these factors affect personal investment strategies. Tim currently holds RG146 Tier 1 Generic Knowledge qualifications.

Carnarvon Petroleum Ltd (ASX: CVN) is an oil and gas exploration company with projects located offshore off the north-west coast of Western Australia and in the Timor Sea. Carnarvon has a market capitalisation of A$305 million.

Carnarvon main project is a 20% interest is the Dorado/Roc project (located 160 kms north of Port Hedland (Santos Ltd (ASX: STO) has an 80% interest).


What has Carnarvon announced today?

Carnarvon announced an update on the company’s Apus, Petrus and Kepler prospects (which are located near the Dorado prospect).

Apus Prospect

According to Carnarvon’s 3D seismic survey, the Apus prospect is estimated to contain 235 million barrels of oil, 408 billion standard cubic feet of gas. This totals 307 million barrels of oil equivalence of liquids and gas combined).

Interestingly, this prospect resides in shallow water at a depth of around 75 metres and has a shallow depth to the top of the reservoir of less than 2,500 metres. This discovery could support a standalone development project in the future, or a tieback to the Dorado development is also considered possible.

Petrus and Kepler Prospect

Petrus and Kepler prospects are estimated to contain 46 million and 12 million barrels of oil respectively, 79 billion standard cubic feet and 21 billion standard cubic feet of gas respectively. This amounts to 60 and 16 million barrels of oil equivalent of liquids and gas combined (million barrels of oil equivalent) respectively.

Like the Apus Prospect, this prospect lies in a water depth of approximately 85 metres, meaning drilling can also be achieved using a lower-cost jack-up type drilling rig. In addition, Kepler and Petrus are only 14 and 18 km respectively to the east of the proposed location of the Dorado field. This short distance allows these prospects to be tied-back to the Dorado development. This would reduce the operational cost of extracting oil and gas reserves in these areas.

Dorado project  

On 8 October 2019, Carnarvon and Santos (ASX: STO) announced the results of the Caley flow test for Dorado-3. The test was very successful. It was reported that the Caley reservoir flow test exceeded 11,000 barrels of oil per day plus associated gas. Carnarvon notes that the potential flow rate is even higher, but the flow rate was limited by the capacity of the test equipment on the rig. This is a significant oil discovery. The test indicates very high potential flow rates of around 30,000 barrels per day from each production well in the Caley reservoir.

Dorado development concept is now well advanced. The initial phase involves of oil and condensate production with gas reinjection to support the oil recovery. Production facilities are being designed for production of 75,000 to 100,000 barrels per day. Front end Engineering Design work will fully define the scope and plan for the project so that a Final Investment Decision (FID) can be made by the Joint Venture in 2021, subject to business conditions.

General thoughts

This news announced today is positive for Carnarvon’s long-term prospects (in addition to the Dorado project). The Apus, Petrus and Kepler prospect can all be tied-back to the Dorado operation, reducing the cost of extraction at these sites. In addition, the most positive news is from the Apus prospect is that there is likely a higher ratio of liquids compared with the Dorado project, opening another strong prospect for the company to exploited in the future.

What is the market reaction?

The market reaction to Carnarvon’s is positive, Carnarvon share price is up around 5% and is currently trading at A$0.2075.  



This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.
ASR has no position in any of the stocks mentioned.

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