I’m pleased to report the Carnarvon team is making steady progress towards closing the partial Bedout Sub-basin asset divestment to OPIC Australia Pty Limited, a wholly owned subsidiary of CPC Corporation, Taiwan (CPC).
Once closed, Carnarvon will be in a very strong financial position with around $178 million in cash, which is equivalent to around 10c per share.
In addition to bolstering the Company’s cash balance, the transaction was also designed so CPC would pay US$90 million (A$129 million) towards our share of forward expenditure in the Bedout, including Dorado development costs.
Importantly, these proceeds from the divestment, together with debt finance, is expected to cover our share of Dorado development costs without the need to raise further equity capital.
There is no doubt we all see quality and value in producing the Dorado and Pavo fields as well as the exciting potential from further exploration of the Bedout Sub-basin.
However, it’s important we carefully step through the challenges as they arise, and the decision last year to defer Dorado FID, given the cost pressures in the sector, increasingly looks like a wise move in hindsight.
I spent a lot of time at the APPEA conference in Adelaide this month with senior executives from our existing joint venture partner Santos. We discussed the Dorado and Pavo developments, including our desire to reach a final investment decision (FID) to develop the liquid resources in a timely manner, and thereafter to produce the gas resource in a stage 2 development.
I’m looking forward to Santos, as the operator of the Dorado and Pavo projects, outlining go forward plans for these developments in coming months.
We also talked at length about the incredible exploration opportunities identified across the Bedout Sub-basin portfolio, with the top 20 of the more than 100 prospects identified across our permits estimated to hold more than 1.5 billion barrels of oil equivalent.
A key task for us as we progress Dorado towards FID is to work through new stakeholder engagement arrangements that came into play late last year, and Santos is well placed to do this.
Overall, we have a high-quality suite of projects, with the key imperative for the Carnarvon team in the near term being to complete the partial Bedout divestment to CPC, which I anticipate to close mid-year.
Carnarvon is in a strong position to realise the value of both our development portfolio at Dorado, Pavo and Roc, and our extension exploration portfolio, and I look forward to sharing more updates as these milestones progress.