From the Herald Sun column by John Beverage yesterday in the...

From the Herald Sun column by John Beverage yesterday in the business section.

SMALL exploration companies need to grab their chances when they can — Carnarvon Petroleum did.

In the wake of the GFC, Carnarvon and partner Finder Exploration managed to secure an impressive 28,000 sq kms in five blocks between the highly productive Carnarvon and Browse basins.

Fast forward to now and the majors are all over the area, with more than $500 million in committed exploration spending in neighbouring acreages and farmouts on two of the blocks to Apache and JX Nippon.

Carnarvon has a fairly conservative attitude to conserving cash so it can live to fight another day should offshore wells come up dry.

A recent partial sale of a Thailand asset has left Carnarvon with around $50 million on the balance sheet, future royalties of up to $35 million and 20 per cent free to carry on two farmed out wells.

It is the prospects for those two wells off Port Hedland that is the major upside fizz for Carnarvon shares, with early wells drilled in the area showing gas. Since then seismic testing by Carnarvon shows the chances of hitting a large gas field are firming.

Success would be wonderful but even without it, Carnarvon will survive.

Another speculative buy, despite a recent price spike.