• FEED progress on target to be FID ready by mid-calendar 2022
• Strong initial production rates of 75,000 – 100,000 (gross) bopd confirmed
• Competitive development and operational costs to be fully defined ahead of FID
• Financing process commenced with a range of sources of capital being considered including senior debt, mezzanine finance and potential divestment of some project equity

Carnarvon Energy today provides an update on the Front-End Engineering & Design (“FEED”) work for the Dorado project and related project financing.

Dorado project

Detailed design and engineering work for the production facilities for the Dorado Phase 1 liquids development continues to progress as expected. The facilities engineering and subsurface studies have confirmed the project will initially produce 75,000 – 100,000 barrels of oil per day (‘’bopd’’) (gross).

The Dorado liquids are an extra light, sweet product with externally provided market analysis indicating sales are likely to achieve a premium to Brent.

Studies have also confirmed that the associated gas can effectively be re-injected into the Dorado reservoirs to maintain reservoir pressure, thereby maintaining strong production rates. This gas will be available for production as part of a subsequent, Phase 2, development, and has been incorporated in the basis of design for the facilities.

Detailed design for the production and injection wells has been completed, with tenders issued for long lead items required for development.

Final capital cost definition is being undertaken as part of the FEED process and will be finalised ahead of a Final Investment Decision (“FID”). Given the Dorado project is in shallow water, near existing infrastructure and is an industry-standard design, initial operating cost estimates have confirmed that this project will be a low unit cost operation.

Applications for regulatory approvals have been submitted to the relevant regulators for assessment, with the Production License expected to be granted ahead of FID.

Based on the status of these activities, it is anticipated that the Dorado project will be FID ready by midcalendar 2022.

Project funding

Carnarvon has commenced a formal process to fund its share of the Dorado project.

Azure Capital have been appointed as Carnarvon’s financial adviser and are currently progressing a range of potential sources of capital, which may include:

• Traditional reserve-based, non-recourse senior debt facilities;
• Alternative funding options (including junior or subordinated debt, offtake prepayment and royalties); and
• Divestment of a portion of Carnarvon’s share of the Dorado project and associated exploration acreage.

Carnarvon will consider all funding options to deliver the optimal balance of capital management while maximising value for shareholders.

Carnarvon Managing Director and CEO, Mr Adrian Cook, said:
“We are pleased that the engineering and design work on the world class Dorado Phase 1 liquids development is progressing to plan and on track to be ready for FID around the middle of this year.

Various sources of capital are being pursued to optimise the Company’s balance sheet and extract the most value from this high-quality asset. I look forward to sharing further progress updates in the coming months.”

KeyFacts Energy: Carnarvon Petroleum Australia country profile