Dorado oil project minority owner Carnarvon Energy plans to hand cash back to shareholders, after the project’s majority owner Santos deferred a final investment decision over the field.
Dorado oil project minority owner Carnarvon Energy plans to hand cash back to shareholders, after the project’s majority owner Santos deferred a final investment decision over the field.
Cashed-up Carnarvon ended last year with a cash balance of $187 million, money set aside to fund its 10 per cent share of Dorado’s development.
Santos and Carnarvon had hoped to take FID at Dorado – the largest oil discovery in Western Australia for 30 years when found in 2018 – sometime this year, but the former scuppered that target in January and is non-committal on a new milestone.
Carnarvon’s cash reserves were built from a $218 million sell-down of a 10 per cent stake in Dorado to Taiwanese CPC Corporation – a move made in 2023 to fund its share of development costs.
The sale halved its stake in Dorado from 20 per cent to its current 10 per cent, while cashing the company up to support development costs.
In a release to the ASX today, Carnarvon said the enduring uncertainty around Dorado’s development timeframes had led it to reconsider its cash position.
It will look to return up to $125 million to its shareholders, having deemed “the business may hold cash that is surplus to its current requirements”.
The cash splash is subject to shareholder approval, an ATO class ruling, the receipt of any ASX waivers required, and no better alternate use of the cash being identified by the board.
Carnarvon plans to retain at least $62 million in cash, to fund the drilling of three wells in the Bedout sub-basin over the next four years and carry it to a Dorado FID.
“Any future Dorado development costs may be funded by a combination of the existing US$90 million capital carry cost and new debt,” it said.
Carnarvon chair Rob Black said a strategic review of its opportunities – including external and corporate options.
“A capital return is one of the options available for the board to maximise shareholder value, and the work has now commenced to ensure that energy distribution is completed in a tax effective manner,” he said.
Santos first delayed FID at Dorado in 2022.
Managing director Kevin Gallagher’s latest indication is that the project is that project will be one of several “competing to get in the queue” of its development options globally.
Carnarvon shares were 4.5 per cent higher at 11.5c at 10.30am this morning.
