Australian oil & gas player offloading partial stake in Dorado oil project

Australian oil and gas company Carnarvon Energy has entered into a binding agreement to divest a 10 per cent interest in its Bedout assets, including the Dorado field, to OPIC Australia Pty Limited, a wholly owned subsidiary of CPC Corporation, Taiwan (CPC), Taiwan’s national oil and gas company.

This announcement comes a week after Santos received acceptance from the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) of the Offshore Project Proposal (OPP) relating to its operated Dorado oil development offshore Australia.

The OPP covers approval to undertake the Dorado Phase 1 liquids development – including the reinjection of gas to enhance resource recovery – and the tie-back of future resources within the project area covered by the OPP to augment Dorado production.

Regarding Carnarvon’s partial Bedout divestment agreement, the company explained on Wednesday, 22 February 2023, that it would receive total cash consideration of $146 million, comprising an upfront payment of $56 million on completion of the transaction, and a further carry of $90 million of the firm’s forward expenditure in the Bedout permits, once a final investment decision (FID) is taken on the Dorado development.

Adrian Cook, Carnarvon Managing Director and CEO, commented: “CPC’s status as a leading national oil and gas company in the Asian region, combined with its appetite for this transaction, clearly demonstrate the world-class nature of the Dorado development and the greater Bedout Sub-basin. We are delighted CPC will become a partner in the Joint Venture, and look forward to working with them, and the operator, to prepare Dorado for FID.”

Furthermore, the proceeds from the divestment, together with prospective debt finance and Carnarvon’s existing cash, will be used to fund the Australian player’s share of the Dorado development costs along with further activities that include exploration in the Bedout Sub-basin and appraisal of the recent Pavo discovery. Carnarvon retains 20 per cent of the Pavo discovery and follow-up potential in the WA-438-P exploration permit post-divestment.

As a reminder, the Santos-operated Pavo-1 well, located in exploration permit WA-438-P, was drilled in 2022, using the Noble Tom Prosser jack-up rig. The well proved to be “a significant oil discovery”, located 46 kilometres east of the Dorado field and provides an option for a low-cost tie-back to the first phase of the Dorado development.

“Following completion of the transaction, Carnarvon will be in the enviable position of holding substantial cash and financial liquidity to fund its share of the world-class Dorado development. This strong financial position is also expected to support the advancement of low-risk growth through the appraisal and development of the nearby Pavo discovery, and pursuing extensive upside potential via exploration opportunities in the Bedout Sub-basin of the highest quality,” added Cook.

While Carnarvon continues to progress its targeted debt financing process, the firm highlights that there has been a strong level of market interest across all the potential funding sources for the Dorado development. Azure Capital acted as the firm’s adviser on the transaction, as well as advising on its ongoing debt financing process for the Dorado development.

The Dorado and Pavo fields are estimated to contain gross 2C contingent resources of 189 million barrels of liquids and 401 petajoules of gas. The initial Dorado development incorporates ten wells being drilled into four reservoirs while the hydrocarbons would be produced via a 16-slot WHP to an FPSO. Singapore’s Sembcorp Marine is in charge of the FEED process for this FPSO.

With a design capacity to process 100,000 barrels of oil per day, along with 215 million scf/day of gas injection, the FPSO has a storage capacity of around 1 million barrels of oil & condensate.