Carnarvon Energy Advances Bedout Drilling Plans with A$98M Cash and No Debt

Bedout Exploration and Drilling Preparations

Carnarvon Energy Limited (ASX:CVN) is advancing its exploration ambitions in the Bedout Sub-basin with preparations well underway for a multi-well drilling campaign scheduled for the first half of 2027. The upcoming program will focus on high-impact prospects in the northern Bedout, aiming to unlock significant new oil and gas discoveries that could reshape the company’s resource base.

During the March quarter, the Bedout Joint Venture progressed regulatory approvals, including the multi-well Environmental Plan, and moved forward on procurement of key long-lead items such as the offshore drilling rig. Tender processes for rig selection are nearing completion, with further details on exploration targets expected once contracts are finalised. Success in this campaign could de-risk more than 50 additional prospects across permits WA-435-P and WA-436-P, potentially adding material volumes to Carnarvon’s portfolio.

This drilling push builds on the company's prior updates, including the acquisition of enhanced seismic data that has improved the prospectivity of the Bedout acreage, as detailed in their previous Bedout Sub-basin drilling planned report.

Dorado and Pavo Development Progress

The Dorado oil and gas field remains a cornerstone asset for Carnarvon, with a fully appraised resource base estimated at 162 million barrels of 2C oil (gross). Adjacent Pavo adds another 43 million barrels of 2C oil, bringing combined 2C resources to 205 million barrels, alongside significant gas volumes. The field lies about 150 kilometres offshore from Port Hedland, a critical fuel import hub for Western Australia’s iron ore sector.

Carnarvon and operator Santos have refined a staged development plan for Dorado, commencing with liquids production via a single wellhead platform tied back to a Floating Production Storage and Offloading (FPSO) vessel. This setup is designed for efficient production and potential future tiebacks from nearby fields like Pavo. The operator is working towards a capital-efficient Final Investment Decision (FID), with efforts focused on innovative solutions to accelerate development timelines.

While development work is contingent on further appraisal and evaluation, Carnarvon’s US$90 million development carry for Dorado provides a financial buffer. The company’s approach aligns with recent strategic shifts, including their substantial equity position in Strike Energy, which offers exposure to Western Australia’s gas market and complements their oil-focused assets.

Financial Position and Share Buy-Back

Financially, Carnarvon is in a strong position with A$98 million cash on hand and no debt, maintaining a lean corporate structure where administrative costs are offset by interest income. The company’s strategic investment in Strike Energy, valued at approximately A$86 million for a 19.9% stake, further diversifies its asset base and growth prospects.

During the quarter, Carnarvon reinstated its on-market share buy-back program, approved to acquire up to 10% of issued capital over a 12-month period. Funded from existing cash reserves, the buy-back offers flexibility to manage capital structure and potentially enhance shareholder value, though any purchases will depend on market conditions and company discretion. This move echoes the company’s earlier relaunch of the buy-back programme announced earlier in 2026.

Outlook and Upcoming Catalysts

Carnarvon forecasts exploration and evaluation expenditures of between A$1 million and A$1.2 million in the Bedout Sub-basin for the coming quarter, alongside A$800,000 to A$1 million in corporate costs. The company’s capital discipline and strong liquidity position provide a runway to support its exploration and development ambitions.

Key upcoming milestones include finalising the drilling rig contract and commencing the high-impact Bedout drilling campaign in H1 2027. Success in this campaign could materially enhance the company’s resource base and underpin future development decisions. Meanwhile, progress on Dorado’s FID and ongoing collaboration with Santos will be critical to advancing one of Australia’s largest undeveloped oil resources towards production.