Carnarvon vents at Santos over Dorado delays

Carnarvon Energy management has used the company’s annual report to vent “personal frustration” over Dorado JV partner Santos’ delay in announcing a final investment decision.

Carnarvon owns 10 per cent of the Dorado project in the Bedout Basin north of Port Hedland, having recently halved its share by selling a 10 per cent stake to Taiwan-owned CPC Corporation, in part to subsidise its contributions to Dorado’s development.

Santos holds the majority 80 per cent stake.

In a candid chairman’s letter, Chairman Bill Foster said the company had been hampered by the pace of decision making at Dorado.

Santos first delayed FID at Dorado in August 2022, citing inflationary pressures.

“While I would like to thank the Carnarvon team who worked hard to prepare the Dorado asset for a financial investment decision (FID), I would also like to record my personal frustration with the progress of development, especially around the delay to FID that we reported to shareholders in August 2022,” he said.

“Our partner and operator of the Dorado development has not progressed development activity at a pace Carnarvon wishes, despite best efforts by Carnarvon.

“This delay to FID had a knock-on impact to Carnarvon’s share price which was particularly disappointing for shareholders.”

Mr Foster said the sell down of a 10 per cent stake in Dorado had allowed it to secure capital for the development without an equity raising.

Managing director and chief executive Adrian Cook echoed Carnarvon’s disappointment.

“Despite the Dorado development being technically ready for FID during the past year, the decision was made to defer FID in August 2022 due to global cost and supply chain reasons,” he said.

“Disappointingly, at the end of the period, the FID for the Dorado development is yet to be realised, with the joint venture planning for FID in 2024.”

Mr Cook said the company continued to focus on ensuring it was in a strong financial position to be FID ready and had $319 million in liquidity available to it for Dorado following the sale to CPC.

Dorado was discovered in 2018 and is estimated to hold around 162 million barrels of light oil and condensate on a gross 2C basis.

The project’s 2C contingent gas resource is estimated at 748 billion cubic feet, for a gross 2C contingent resource of 344 million barrels of oil equivalent.

Carnarvon reported an after-tax loss of $4.1 million for the financial year.

Its shares were trading 10.7 per cent higher this afternoon.