New call-to-action


See all


Carnarvon Share Price Up On Positive Quarterly Activities Report

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities 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$555 million. 

Carnarvon main project of significant interest is the Dorado/Roc project (located 160 kms north of Port Hedland, Carnarvon’s 20% interest and Santos 80% interest).

What are the key features of Carnarvon’s December quarterly report?

  1. Exceptional flow tests from both intervals tested in the Dorado-3 appraisal well.
  2. Dorado concept select and development planning advanced.
  3. Buffalo project progressed under Timor-Leste jurisdiction.
  4. Strong cash balance of A$119 million to comfortably fund 2020 expenditure.

The main point of interest of Carnarvon is the 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.

Carnarvon's management note in their report that:

The Dorado project is currently in the late stages of concept selection work. The work to date supports the development of the Dorado liquids accompanied by gas-reinjection through a miscible flood which is expected to considerably enhance the oil recovery rates. A secondary development of the gas resources would then take place once the liquids production has commenced.

Another important point to note is that Canavan and Santos are expected to commence the Front-End Engineering and Design (FEED) phase in early calendar 2020. After the completion of the FEED phase, Carnarvon and Santos are expected to make a final investment decision, with a production target in late 2024 early 2025.

Carnarvon is a relatively small company compared with the major oil and gas companies such as BHP Group Ltd (ASX:BHP), Santos (ASX:STO) and Woodside Petroleum Ltd (ASX:WPL). The Dorado discovery could allow Carnarvon to become an established oil and gas company with significant earnings.

Carnarvon’s other main project of interest is the Buffalo project (located in the Timor Sea, 100 per cent interest). The main update for this project is that the Buffalo project is moving from Australian to Timor-Leste jurisdiction. Following this development, Carnarvon’s management signed a Production Sharing Contract with the Government of Timor-Leste. Currently, Carnarvon does not have a partner for this project. However, Carnarvon’s management note they are actively pursuing to secure a partner to join the project.

What is the market reaction?

The initial market reaction to Carnarvon’s announcement is positive. Carnarvon share price is up around 3% and is currently trading at A0.36 cents. 


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.
New call-to-action