Cosmoterios I think there is some confusion. I certainly feel...

Cosmoterios

I think there is some confusion. I certainly feel (hope?) there is substantially more than 175 million barrels but think it is unlikely that the next announcement will have a number which is say 400+ million barrels as much more work needs to be done to prove it up. This is consistent with Euroz’s statement in its latest note of 13 August (later than the 9 August note), reproduced below:

- To that end, with appraisal, we still see further upside to the potential volumes contained within the broader Dorado Structure;

I really hope I am wrong as I also bought stock at prices above the current market price so would like to see it increase substantially after the estimate is out! However, I’m trying to temper people’s expectations that the initial number will be substantially in excess of 175 – 200 million barrels.

Of course the Geo staff at both CVN and Quadrant have way more information and more expertise to make the assessment than Euroz!

Anyway, we will soon know what CVN thinks!

Hope that has cleared any confusion.

	Column 1	Column 2	Column 3	Column 4	Column 5
0	Column 1 0 Carnarvon Petroleum Ltd (CVN $0.45) Buy Column 1 0 Analyst	Date	Price Target Jon Bishop	13th/08/2018	$1.00/sh

Phoenix South-3 UpdateKey Points · The Phoenix South-3 appraisal well has encountered hydrocarbons in the Primary Caley Formation sandstone reservoir;· Results from wireline has indicated a gross column of 131m;· Net reservoir was interpreted to be 16m with average porosity of 8% and permeabilities at the low end of pre-drill expectations;· Inability to sample hydrocarbons leaves the JV unclear as to the phase;· Core sample analysis will now be undertaken to determine the ability of the reservoir to flow at commercial rates;· Phoenix South-3 was drilled 1000m deeper than the Dorado and therefore reservoir quality was always a key risk but arguably has no bearing upon Dorado or its neighbouring updip targets;· Post wireline analysis, results will be collated ahead of volumetric analysis. This is anticipated within 4-6 weeks of completion of operations;· The Caley was mapped to contain P50 gross mean volumes of 125mmbboe (CVN – 20%), comprising 30mmbbls condensate and 545Bcf gas however, today’s results would indicate to us that volumes are likely well below the P50 numbers;· Sufficient moveable volume at Phoenix South would otherwise substantiate a standalone gas-condensate hub, tying in the accumulations discovered at Roc and Phoenix (circa 20mmbboe net to CVN);· In addition, the discovery of gas condensate in good quality and thick reservoir in the Baxter Member at the Dorado location, would add volume to a potential development;· Never-the-less, any possible gas-condensate development is secondary and long dated compared with potential oil development of Dorado; · To that end, with appraisal, we still see further upside to the potential volumes contained within the broader Dorado Structure;· We are Buyers on today’s weakness noting that we have not formally included a Phoenix South success case in our $0.84/sh, rather including a broad nominal exploration value for the entire 22,000km2 portfolio: · Price Target of $1/sh and Buy Recommendation retained. Investment CaseWhilst today’s announcement from Phoenix South-3 has taken the shine of the recent string of positive announcements, it is yet to undermine the value potential of CVN on our analysis. Ultimately, we view that the Dorado oil discovery will drive the value of CVN in the short to medium term. On our numbers, discoveries to date underpin $0.53/sh for Dorado alone. And there is strong geological case for further upside to the Dorado Caley, Crespin and Milne oil accumulations to be demonstrated with appraisal drilling early next CY. Further to which, we are not yet sure that a further gas-condensate development is no longer viable with the Phoenix South-3 release: Roc-Phoenix have already proven circa 100mmbboe of gross moveable gas-condensate, Phoenix-South location may yet be additive and the Baxter Member demonstrated thick, good quality gas-condensate bearing reservoir at Dorado. We retain our $1/sh Target Price noting that current sell off prices CVN below our Dorado oil valuation, therefore stripping the business of any value for Cash (5cps); Phoenix-Roc discovered boes (10cps); risk value of 31mmbbls of oil at Buffalo (3cps) and an exploration portfolio that has been substantially upgraded by the Dorado result. Buy. [/table]

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9	Column 10	Column 11
0	Carnarvon Petroleum (CVN) Share Price	0.45	A$/sh​ Price Target	1.00	A$/sh​ Valuation	0.84	A$/sh​ Shares on issue	1,190	m(dil) ​ Market Capitalisation	536	A$m ​

|

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7	Column 8	Column 9	Column 10	Column 11
0	Enterprise Value	486	A$/m​ Debt	0	A$/m​ Cash est	50	A$/m​ Largest Shareholder	Mgmt	~6% ​		​

*last close [/table]