Carnarvon Energy Ltd (ASX:CVN) has lauded the efforts of the joint venture (JV) covering the Dorado Phase 1 liquids development project off the coast of Western Australia, which has moved to optimise production rates while also reducing capital expenditure.
The project is held in JV with Santos Limited, the operator with an 80% stake, Carnarvon with a 10% stake and OPIC Australia Pty Ltd with the remaining 10%.
A review of optimisation options led the JV to fine-tune production rates, allowing a reduction in the sizing of the Floating Production Offtake and Storage (FPSO) vessel, Wellhead Platform (WHP) and other facilities, while also introducing a phased timing of well initialisation.
Operational refinements
The companies are considering several idle FPSOs that could be re-purposed for the project.
Carnarvon says – depending on the availability of a suitable vessel – there could be further cost savings and opportunities to reduce the time to first oil for the project.
“I am pleased with the progress the Dorado project has made and am excited by the re-shaping of the project, which is expected to reduce the total capital outlay by Carnarvon,” Carnarvon Energy CEO Philip Huizenga said.
“While the final investment decision (FID) timing is slightly later than previously envisaged, the joint venture is taking the requisite time to assess the optimisation and FPSO redeployment opportunities, and to materially progress EP approvals prior to FID.
“These are important activities which require additional time and are expected to unlock considerable value for shareholders.
“Carnarvon’s estimates for up-front capital expenditure savings are expected to be material to the company.
“With the company’s A$176 million (~US$115 million) cash balance (31 March 2024), US$90 million development funding cost carry and optionality for a prospective debt facility, Carnarvon expects to be fully funded for its share of development costs to first oil under the optimised project.”
CVN expects the front-end engineering design (FEED) process to resume later this year, with an FID expected in 2025.