CVN & JP MORGAN (SEEKING BIDDERS) AFR STREET TALK, page-2

More added this morning in street talk guys - see below. A couple of us were spot on, Santos want to consolidate part of their stake with CVN’s which would hand an incumbent investor 50% of Dorado.

Eyes on Santos’ slice

Potential bidders have been told to think of the opportunity to consolidate their Dorado stake by buying up JV partner Santos’ stake. Santos, also under pressure from shareholders after its failed merger with Woodside Energy, had already been seeking buyers for a share of its slice via Goldman Sachs before the merger talks spilled out into the open.

JPMorgan’s three-point pitch said Carnarvon is sitting on a 10 per cent stake in a world-class development that has a clear pathway to producing sweet oil, that can be sold at a premium to Brent customers in the Asia Pacific region. It is essentially fully funded to produce its first barrel, thanks to $181 million cash and $US90 million future carry, the flyer said.

The strategic review comes after two Carnarvon shareholders, Nero Resources Fund and Collins St Asset Management, succeeded in rolling the board after years of the company trading at a discount to the value of its underlying assets. The duo have acquired a combined 12.75 per cent stake.

At the time, Nero chief investment officer Russell Delroy told The Australian Financial Review his biggest concern was Carnarvon would make “value destructive M&A” bets. In early May, as it announced the strategic review, the company also swore off acquisitions.

The two-pronged announcement has added some $70 million to its market capitalisation in the past two weeks.