Carnarvon waits to clear foreign investment hurdle

Carnarvon Energy is waiting on approval from the Foreign Investment Review Board to sell a slice of its Dorado project to Taiwan's national oil and gas enterprise. 

The West Perth-based junior is due to receive $218 million for a 10 per cent stake of its Bedout assets, located off Western Australia’s northern coast.

Taiwan's CPC Corporation agreed to buy half of Carnarvon's 20 per cent stake in the Dorado gas field back in February this year. 

Oil major Santos holds the remaining 80 per cent and is the operator of the project which has been previously estimated to cost around $US2 billion for stage one.

Carnarvon signed the deal with a subsidiary of CPC about six months after Santos deferred a final investment decision on the project the foreseeable future.

The transaction, currently pending investment review board approval, means Taiwan's CPC will become the third party to the WA offshore development. 

Commenting on the decision in August 2022, Carnarvon managing director Adrian Cook said the risk of cost escalation was ‘unacceptably high’ and would be taking a more prudent approach until the environment showed signs of stabilising.

Updating the market this morning on the sale transaction, Carnarvon said it continued to work diligently with FIRB to obtain approval and that the process often took several months.

Mr Cook indicated FIRB approval was the last hurdle in the sale process and was optimistic about getting the deal over the line. 

"CPC is already an established investor in oil and gas assets in Australia, with interests in the Prelude FLNG and Ichthys LNG projects," he said. 

"CPC has also more recently received FIRB approval to acquire an interest in Exploration Permit WA-533-P from INPEX.

"We look forward to concluding the divestment this quarter, and progressing the Dorado development and wider Bedout exploration in partnership with CPC and Santos.”

Both parties are looking to finalise the transaction by the end of the current quarter, having previously targeted completion by July."

An initial $US56 million (approximately $A80 million) will be paid upfront, with the remaining US$90 million (approximately A$129 million) to be paid once a final investment decision on the broader Dorado project has been made.

Azure Capital was Carnarvon’s financial adviser on the transaction and its ongoing debt financing process.