Carnarvon turns oil dreams into gold, raising $50m to find its next Dorado
Oil that is, black gold, Texas tea. Picture: The Beverly Hillbillies/CBS
Carnarvon Petroleum has raised $50 million to keep the momentum around the perfectly named ‘Dorado’ discovery moving.
In July, the company (ASX:CVN) found light oil from an “excellent reservoir” in the Caley Member, one of four ‘columns’ the company is appraising, with a net pay thickness — the size of the area containing oil that can be extracted — of 79.6 metres.
The discovery, one of the largest offshore fields ever found in Australia, sent the explorer’s shares rocketing and briefly reignited interest in the local oil sector.
Today the stock dipped 4 per cent to 35.5c, as the raising was done at 33c.
Carnarvon owns 20 per cent and 30 per cent of the two Dorado wells that were drilled in the Phoenix project, but the whole of four other prospects up and down the coast of north-western Australia.
It’s raised the ready this week from institutional and sophisticated investors in order to further work around these other fields, as well as prepping the Dorado site for further appraisal.
The next step for the two Dorado wells starts in April as they try to confirm precisely how much oil and gas is down there.
Carnarvon also plans to drill a well at the Roc South site, which is between the Roc and Dorado fields.
The company is hoping the Roc field could be a ‘Dorado 2’.
Carnarvon’s share of the oil and gas in the Phoenix project and the Buffalo project further north is 108 million barrels of oil equivalent (that’s oil and gas) of a 2C resource.
A resource is an unconfirmed reservoir of oil or gas — this is turned into a reserve once more drilling and testing confirms the extent of the play — and ‘2C’ refers to a contingent resource.
Contingent resources are resources estimated to be potentially recoverable but it’s not certain yet they’re commercially recoverable. 1C, 2C and 3C refer to the degree of certainty: 1C is higher probability and 3c is the lowest.