Positive SP Action, page-63

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Listed oil and gas producer Carnarvon Energy appears to have reached an impasse over its JPMorgan-advised sale process, and its future remains at the mercy of its joint venture partner, Santos.

Carnarvon’s main asset is its stake in the Dorado oil and gas project off the coast of Western Australia. The remainder is owned by Santos.

Both are believed to be keen sellers of the asset.

However, Dorado is yet to reach a final investment decision, and the understanding is that any buyer would want that before committing to taking on the asset.

Yet Santos is not currently prepared to commit the funds to its development towards FID, and plans to take its time.

It means that Carnarvon’s future is really in Santos’s hands.

Last year, Santos had investment bank Goldman Sachs assessing suitable offers for the interest in the project, but the process was paused as it considered a merger with Woodside Energy.

JPMorgan is mandated with the search for a buyer of Carnarvon Energy.

As reported by DataRoom in August, Taiwan’s state-owned petroleum company, CPC Corporation, at that time was seen as the most likely buyer of an additional stake in Dorado.

Other possible suitors were considered to be Kufpec, Mitsui, Mitsubishi, Tokyo Gas, Osaka Gas and Jadestone Energy.

However, they were later understood to have walked away.

CPC has already bought 10 per cent of Dorado from Carnarvon as well as Carnarvon’s Pavo project for an all-up payment of $US146m.

Santos has an 80 per cent interest in Dorado and the thinking in the market is that it remains keen to reduce that exposure to about 60 per cent.

Dorado, once owned by Woodside and later Quadrant Energy before it was purchased by Santos, is an integrated oil and gas project which will be developed in two phases in the Bedout sub-basin, about 140km off the coast of Port Hedland.

The Dorado and Pavo fields are estimated to contain recoverable contingent resources of 189 million barrels of liquids and 401 petajoules of gas.