Carnarvon Petroleum Ltd (ASX:CVN) is conducting a fully underwritten institutional placement to raise about $79 million and a non-underwritten share purchase plan (SPP) to retail investors which aims to raise about $5 million.
The issue price under the placement and the SPP will be 39 cents per share.
Carnarvon’s North West Shelf focused strategy
Proceeds from the placement and SPP, along with existing cash on balance sheet, will fund a number of important activities which include:
• Ongoing appraisal of the Dorado discovery, including 3D seismic and well costs;
• Front End Engineering Design (FEED) studies for the initial Dorado development;
• Contribution towards the equity component of the initial Dorado development; and
• General corporate purposes, working capital requirements and contingencies, including costs to progress the company’s other projects.
Dorado project
Dorado is a major oil and gas field on Australia’s prolific North West Shelf in water depths of 70 to 100 metres.
The resource was discovered through the Dorado-1 exploration well.
The field was further evaluated through the Dorado-2 appraisal well which confirmed the presence of a major oil, gas and condensate resource.
READ: Carnarvon Petroleum appraisal confirms major Dorado oil and gas resource, shares up
Following the success of the Dorado-2 well, the company engaged ERC Equipoise (ERCE) to independently review the Dorado resource.
On a 2C or best estimate basis, ERCE’s work shows a 162 million barrel liquids resource, which is substantial in an Australian context and a valuable asset to Carnarvon and its shareholders.
READ: Carnarvon Petroleum’s independent report confirms major Dorado oil & gas resource
A second appraisal well (Dorado-3) is scheduled to spud late July 2019 to confirm sub-surface characteristics, reservoir connectivity and carry out flow testing ahead of FEED.
Dorado’s shallow water depth and quality reservoirs are expected to aid field design and development costs.
FEED is expected to commence early 2020 and be completed by the end of calendar 2020.
This equity raising will fund Carnarvon’s share of upcoming Dorado project costs, enabling the company to advance the project as it progresses to the development phase.
Carnarvon’s net share of contingent resources
The Dorado gas volume of 748 billion cubic feet (reviewed by ERCE) is a substantial resource, particularly when combined with the nearby Roc resource of 332 billion cubic feet.
Carnarvon sees a broad range of options for the development of the gas given that over one trillion cubic feet has been confirmed on a gross 2C basis.
The gas resource provides Carnarvon with a unique growth opportunity in terms of its ability to reinvest cash flows from the Dorado liquids project into an already discovered substantial gas field.
Indicative timetable for SPP