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Carnarvon Petroleum Ltd: THE INVESTMENT CASE
INVESTMENT OVERVIEW

Carnarvon Petroleum has strong potential to add to oil bounty of Dorado-1

Three additional prospects are estimated to contain significant quantities of oil, gas and condensate.
New prospect areas near the Dorado-1 oil discovery
INVESTMENT OVERVIEW: CVN The Big Picture
Shale filled channels set up multiple follow-up prospects to the Dorado discovery

Carnarvon Petroleum Limited (ASX:CVN) has completed a positive initial assessment of follow-up prospects to the recent highly successful oil discovery at Dorado-1 offshore Western Australia.

Three prospects – Roc South, Pavo and Apus – have been estimated to contain significant quantities of oil, gas and condensate.

Dorado-1, for which volumetric results estimate a gross contingent resource of 283 million barrels of oil equivalent (MMboe), including 171 million barrels of light oil, has unlocked a new play type.

READ: Carnarvon Petroleum progressing one of the largest oil resources ever found on the North West Shelf

Investors responded initially with shares up almost 8% at the opening to 42 cents.

Work by Carnarvon and project partner Quadrant Energy since the Dorado-1 discovery has included assessment of other prospects.

These are in multiple stacked, high-quality sandstone reservoirs set-up and trapped by what is now known to be a shale filled channel ‘Dorado Canyon’.

Preliminary mapping of the extent of this canyon, and the similar Apus Canyon, identified numerous other prospects that have been significantly de-risked due to the success of the Dorado-1 well.

Three key, nearby prospects have been further evaluated and volumetric and risking analysis undertaken.

Prospect estimates with net volumes pertaining to CVN’s interest in the gross figures.

Data collected from Dorado-1 has been extensively used to evaluate the potential of the nearby prospects, and the range of net reservoirs and column heights interpreted for the Dorado-1 well have been used to constrain the parameters.

READ: Carnarvon Petroleum welcomes Santos move on joint venture partner Quadrant

The high quality of the Dorado reservoirs, with porosities averaging around 20% for the Caley reservoir, combined with the quality of the light oil (around 50⁰ API) has meant that prospective resources have been estimated to have high recovery factors averaging around 43%.

Roc South estimate

Roc South prospect appears to be a very similar trap to Dorado, being similarly situated up-dip of the Roc discoveries and relying on the Dorado Canyon for sealing and setting up the prospect.

Recoverable oil from this prospect is estimated at 56 million barrels (gross Pmean).

Reservoir packages are expected to be thicker compared to Dorado, although the smaller areal extent means overall volumes are anticipated to be smaller than Dorado.

Roc South prospect is on trend and in close vicinity to Dorado.

Given the very similar seismic characteristics between Dorado and Roc South, and what is anticipated to be an identical oil sourcing mechanism, the Roc South prospect has a relatively high chance of geological success.

READ: Carnarvon Petroleum plans to drill Buffalo oilfield redevelopment taking shape

With the Roc South crest being around 13 kilometres from the Dorado structure crest, and the two structures even closer at lower levels, drilling success at Roc South would naturally lead to this structure being developed along with Dorado.

Pavo estimate

The Pavo structure is around 40 kilometres from Dorado and analysis suggests that this trap consists of a single reservoir layer, leading to a more modest potential size of 82 million barrels of oil (Pmean, gross).

Given the proximity to a well drilled by previous permit holders, Keraudren-1, the technical attributes of this prospect are better known and hence this well has a higher geological chance of success.

Keraudren-1 encountered the Hove seal and below 100s of metres of high porosity and permeable sands and as such is unlikely to have stacked sands like Dorado.

Hence the estimated volumes are calculated at one single Caley level only.

A number of reservoirs at Apus

Similar to Dorado, which is only a few kilometres away, Apus prospect comprises a number of potential stacked reservoirs in the Caley, Baxter, Crespin and Milne sands over a considerable area.

Trapping mechanisms of the Apus trap.

When the individual sands are arithmetically added, the mean recoverable volume of oil of 612 million barrels (gross) is substantial.

The Apus reservoirs are trapped by the Hove seal and Apus Canyon, with oil being potentially sourced from below the Dorado Canyon.

Strong interest expected

Dorado and these three prospects are expected to attract significant joint venture focus in 2019 and 2020.

These estimated quantities of petroleum that may potentially be recovered by the application of a future development project relate to undiscovered accumulations.

The estimates have an associated risk of discovery and risk of development with further exploration, appraisal and evaluation required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

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