Carnarvon considers Dorado development financing

Carnarvon Energy Ltd., Perth, is considering options to fund its 20% share of Dorado field oil development in the Bedout subbasin off Western Australia including the possibility of divestment of some equity.

The current front-end engineering and design (FEED) process for Phase 1 liquids development is on target for a final investment decision (FID) on the Santos Ltd.-operated project by mid-2022.

Studies confirmed the project will initially produce 75,000-100,000 b/d of oil. Liquids are defined as an extra-light (51 degrees API), sweet product, likely to be sold as a premium to Brent crude in the marketplace.

Carnarvon said studies confirmed that the field’s associated gas can be reinjected into Dorado reservoirs to maintain reservoir pressure and continue strong production rates. Gas will subsequently be available for production as part of Phase 2 development and has been included in the basis of design for the infrastructure.

Detailed design for the production and injection wells has been completed and tenders have been issued for long-lead items required for development.

A final capital cost definition is part of the FEED process and will be provided ahead of FID.

“Given the Dorado project is in shallow water (90 m), near existing infrastructure and is an industry-standard design, the initial operating cost estimates have confirmed that Dorado development will be a low unit cost operation,” the company said.

Carnarvon has begun a formal process to fund its share of Dorado Phase 1.

Azure Capital have been appointed financial adviser. Potential funding options include:

• Traditional reserve-based, non-recourse senior debt facilities,
• Junior or subordinated debt, offtake prepayment and royalties,
• Divestment of a portion of Carnarvon’s share of the Dorado project and its associated exploration acreage.

Applications for regulatory approvals have been submitted and a production license is expected to be granted ahead of FID.

Dorado field lies in permit WA-437-P about 144 km north of Port Hedland. It has 1C contingent resources of 86 million bbl of oil and 2C contingent resources of 162 million bbl of oil.

Santos, as operator, holds 80% interest. Carnarvon holds 20% interest in the field and 20-30% in surrounding exploration upside.