Dorado JV pushing for 2024 investment call

Carnarvon Energy hopes a final investment decision will be made on the Dorado oil project by the end of 2024, as the Santos-led joint venture explores cost reduction at the field.

In a release to market this morning, Carnarvon revealed the Dorado JV was exploring ways of optimising its costs on the project, including potential re-purposing of unused floating production storage and offloading vessels – a move it said could cut timelines and costs.

It will also explore a reduced production target, with revised capacity meaning less wells need to be drilled before first oil. 

Carnarvon chief executive Philip Huizenga said the development – and Santos’ apparent commitment to the FID deadline, was encouraging.

“Dorado is an outstanding project, and these optimisations to the development concept would result in a more robust project overall,” he said.

“Optimising the project with lower upfront [capital expenditure], faster time to first oil and enhanced economics, would put Carnarvon in a strong position to unlock value for shareholders.”

Dorado, which sits off WA’s North West Shelf, was the largest oil discovery in 30 years when it was uncovered by Carnarvon and Quadrant Energy in 2018.

Santos acquired Quadrant later that year, taking an 80 per cent stake in the project where progress has since been slow – at times drawing the ire of previous Carnarvon management.

Mr Huizenga assumed the mantle of CEO in December following a board overhaul by major shareholders.

That came after Carnarvon last year halved its stake in Dorado from 20 per cent to 10 per cent for $218 million, in a deal with Taiwanese CPC Corporation that it said would allow it to fund its share of the project’s development.

Santos has been less committal on Dorado’s future, with chief executive Kevin Gallagher telling an investor call in February that the project was no certainty to attract a positive FID amid broader commentary around the investment climate for oil and gas in Australia.

“Dorado will compete with other projects across the portfolio going forward,” he said.

While not address that commentary directly, Carnarvon’s release today highlighted a “notable improvement in the acceptance of environment plans and an overall increase in confidence within the oil and gas industry in respect to environmental approvals”.

Carnarvon has previously expressed its hope that infrastructure will be in place at Dorado by the end of 2025.

Further exploration drilling by the JV in the area, which had previously been planned for 2024, has been deferred to 2025 pending approvals.

Carnarvon shares were up 5.4 per cent this morning to 20c.