Dorado Delay Raises Questions on Carnarvon’s Near-Term Growth Prospects
Carnarvon Energy and its partners have deferred key milestones in the Dorado Phase 1 liquids development, pushing back the Final Investment Decision and FPSO purchase. Despite the delay, the Joint Venture remains confident and plans further exploration drilling in 2026.
- Deferral of FPSO vessel purchase and FEED entry for Dorado Phase 1
- Final Investment Decision (FID) postponed beyond 2025
- Joint Venture remains confident in Dorado and Bedout Basin assets
- Plans for further exploration drilling in 2026
- Carnarvon maintains strong financial position with over A$180 million cash
Project Update and Strategic Shift
Carnarvon Energy Limited has announced a significant update regarding the Dorado Phase 1 liquids development offshore Western Australia. The Joint Venture, led by Santos Limited with Carnarvon holding a 10% stake alongside OPIC Australia, has decided not to proceed with purchasing the Floating Production Storage and Offloading (FPSO) vessel previously identified as a development option. Additionally, the Joint Venture will defer entering Front End Engineering and Design (FEED) at this stage, effectively delaying the Final Investment Decision (FID) originally targeted for 2025.
This decision marks a notable shift in the project timeline, reflecting a cautious approach amid evolving market and operational considerations. While the deferral may raise questions about near-term development momentum, the Joint Venture has expressed continued confidence in the quality and potential of the Dorado asset and the broader Bedout Basin permits.
Financial and Operational Context
Carnarvon’s CEO, Philip Huizenga, conveyed disappointment over the delay but reaffirmed the company’s support for the Joint Venture’s strategy to maximise value from the asset. Carnarvon’s robust financial position, with over A$180 million in cash reserves and a US$90 million development cost carry, provides a strong foundation to weather the deferral and maintain operational flexibility.
The Joint Venture plans to continue exploration activities, with drilling of further wells scheduled for 2026 in line with tenure commitments. This exploration focus underscores a strategic pivot to de-risk and potentially expand the resource base before committing to large-scale development expenditures.
Market and Investor Implications
The postponement of the FPSO purchase and FEED entry inevitably delays revenue generation from Dorado Phase 1, which may temper near-term investor enthusiasm. However, the Joint Venture’s commitment to exploration and the strong balance sheet position mitigate some downside risks. Investors will be watching closely for updated timelines and any shifts in project economics as the Joint Venture reassesses its development strategy.
Looking ahead, the success of the planned 2026 drilling campaign will be pivotal in shaping the future trajectory of the Dorado project and Carnarvon’s role within it. The company’s ability to leverage its financial strength and maintain alignment with partners will be critical in navigating this period of uncertainty.
Bottom Line?
Carnarvon’s Dorado delay signals a cautious recalibration, with 2026 exploration set to define the next phase.
Questions in the middle?
- What factors influenced the Joint Venture’s decision to defer FPSO purchase and FEED entry?
- How will the 2026 exploration drilling results impact the revised development timeline?
- What are the potential financial implications for Carnarvon if the Dorado project timeline extends further?
