Ann: Bedout Exploration Update, page-9

From Jon Bishop of Euroz Research
CVN(Carnarvon Petroleum Ltd) – flat at $0.285, m.cap A$406m fully diluted, Oil&Gas:Exploration-Development)

· The Archer 3D seismic survey isunderway to image the Dorado Field and the prospectivity of the Bedout Basinimmediately to the southwest;

Post completion, the Keraudren Extension 3D survey willbe acquired

· We note STO is testing the market tosell down 20-30% (of its existing 80%) interest in its Dorado development

· Dorado phase 1 comprises developmentof c160mmbbls of 2C oil Resource gross whilst phase 2 would look atcommercialising c160mmbboe of liquids rich gas;

· This process presents a potentiallyinteresting data point for CVN given it represents the purest marker of valuefor Dorado;

· Drilling of Pavo (101mmbboe grossrecoverable) and Apus (307mmbboe gross recoverable) late this CY have thecapacity to materially uplift Dorado development economics;

· And CVN already has materialdiscovered resources at Roc and Phoenix;

· Noting CVN wrote the Joint OperatingAgreement governing its Bedout (and hence Dorado) interests, we believe thatCVN has pre-emption rights for any sell-down of Dorado itself and or theJV permits;

· We already view CVN undervalued onits net Dorado stake alone;

· Consequently, the more obvious playtherefore would be to take CVN itself as this would enable the purchaser toexercise pre-emptive rights on the STO sell-down and gross up its interest;

· The purchaser would then also securethe material exploration upside of the remaining Bedout interests, gainexposure to the upcoming Pavo and Apus programme, influence the developmentscope of Dorado as well as gain immediate exposure to the high impact Buffaloappraisal programme;

· CVN is effectively ‘in-play’;
[Price target and recommendation excluded]

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