Bedout Drilling Delayed to 2027: What This Means for Carnarvon’s Growth

Strategic Investment in Strike Energy

Carnarvon Energy Limited has taken a decisive step to broaden its exposure to Western Australia’s dynamic energy sector by completing an A$86 million strategic investment in Strike Energy Limited. This move, which grants Carnarvon a 19.9% equity stake and makes it Strike’s largest shareholder, aligns with the company’s objective to tap into the region’s expanding gas and electricity markets. The investment not only diversifies Carnarvon’s portfolio beyond its oil-weighted assets but also positions it to benefit from near-term production opportunities in the Perth Basin, including the South Erregulla and West Erregulla projects.

Robust Financial Position and Capital Management

Despite the significant capital deployment, Carnarvon maintains a robust financial footing, ending the quarter with approximately A$99 million in cash and no debt. Additionally, the company holds a US$90 million development free carry for the Dorado project, underscoring its strong liquidity and flexibility. The Board’s decision to halt the previously considered capital return reflects confidence in the strategic value of the Strike investment and a disciplined approach to capital allocation aimed at long-term shareholder value creation.

Exploration and Development Update – Bedout and Dorado

Carnarvon’s core asset, the Bedout Sub-basin, continues to hold substantial promise with a net 2C contingent resource of 54 million barrels of oil equivalent and over 130 identified prospects supported by high-quality seismic data. However, exploration drilling has been deferred to early 2027 due to industry-wide offshore rig shortages, a delay that, while disappointing, does not diminish confidence in the basin’s potential. Meanwhile, the Dorado oil and gas project development has been postponed to allow further appraisal of the broader Bedout resource base. This staged approach to development aims to optimise the value of discovered resources, including the nearby Pavo and Roc fields.

Outlook and Market Positioning

Carnarvon’s CEO, Philip Huizenga, emphasised the strategic rationale behind the investment and the company’s readiness to advance its portfolio despite timing adjustments. The partnership with Strike Energy provides Carnarvon with a foothold in Western Australia’s domestic gas supply, which is expected to tighten and drive price increases in coming years. This positions Carnarvon not only as a significant player in oil exploration but also as a growing participant in the gas and electricity markets, enhancing its resilience and growth prospects.

Looking ahead, Carnarvon plans to engage shareholders at its upcoming Annual General Meeting to discuss progress and strategic direction in greater detail. The company’s strong balance sheet and diversified asset base provide a solid platform to navigate industry challenges and capitalise on emerging opportunities in Australia’s energy landscape.