Carnarvon Energy Ltd (ASX:CVN) remains on track with its strategic objectives as it advances an optimised development plan for the Dorado Project offshore Western Australia.
The company's board refined its strategic goals late last year, emphasising the restoration and maximisation of value from its asset base.
Enhancing project value
One key strategy is enhancing project value at Dorado by reducing overall capex (capital expenditure) and aiming for the project to be final investment decision (FID)-ready by the end of 2024.
Carnarvon has a healthy cash balance of A$181 million, a US$90 million development funding cost carry and a prospective debt facility, and anticipates being fully funded for its share of development costs up to first oil production.
The company is also exploring alternative transactions to accelerate value realisation, collaborating with JP Morgan to evaluate strategic options.
Reduced costs
Carnarvon has reduced its corporate and administrative costs by more than 40% compared to 2023. These cost cuts, coupled with a commitment to refrain from significant new acquisitions, positions the company's balance sheet well for the Dorado Project.
Carnarvon Energy expects to be fully funded to reach FID and commence first oil production by 2025.
The company's commitment to preserving a strong balance sheet aligns with progressing Dorado and other valuable assets in the Bedout Sub-basin.
Given the current interest rate environment, Carnarvon's reduced corporate costs are lower than the interest income from its cash deposits, making now the optimal time to move on its strategy.
"Well-positioned"
Carnarvon CEO Philip Huizenga commented: “I am extremely pleased with the progress on the Dorado development.
“Carnarvon is well-positioned to deliver the Dorado Project through to a Final Investment Decision this year, and onto first oil.
“Our strengthened focus on Dorado and preserving our significant cash balance for this project gives us confidence to achieve these outcomes.
“Carnarvon is also actively exploring alternative transactions to realise accelerated value for our shareholders. The company is working with J.P. Morgan as its financial advisor to explore these opportunities.
“I look forward to updating shareholders on continued Dorado development progress along with any other corporate activities as these initiatives progress.”