Carnarvon Petroleum Ltd(CVN $0.26) BuyInitiation of...

Carnarvon Petroleum Ltd
(CVN $0.26) Buy
Initiation of Coverage
Investment Highlights
�� CVN is a focused low cost oil producer based onshore Thailand
�� Signifi cant upside potential exists though its near fi eld appraisal and exploration
opportunities
�� Current net production from its Thailand fi elds (CVN 40%) is ~5,600 bopd with growth
expected next year
�� Low capex per well (US$1-1.5m) and current operating costs US$5/bbl
�� High fl ow rates - 3,940 bopd gross the best well so far
�� Continuous, fully funded exploration and development program, 15-20 wells planned in
CY’09 targeting >20 mmbbls and further production growth
�� Forecast PER’s at <4x for the next three years
�� Strong reserves base – 11.4 mmbbls 2P recoverable oil and large upside through 45.7
mmbbls 3P
�� CVN hold a high quality strategic portfolio of Thai assets – corporate appeal exists
�� High leverage with interests of >35% through its high impact exploration portfolio
�� Attractive fi scal terms rank Thailand in top third of most favourable
�� Cash currently totals $52m, no debt, no hedging
�� Solid management and technical team with signifi cant in-country experience
�� Euroz valuation and price target $0.55/sh
Contact Details
Analyst
Oliver Foster
Telephone: +61 8 9488 1431
Facsimile: +61 8 9488 1479
Email: [email protected]
International Toll Free
(If calling to Euroz from the following
countries)
Germany 0800 1800 554
Switzerland 0800 835 385
Hong Kong 800 900 936
Malaysia 1800 805 002
Singapore 800 6161 759
New Zealand 0800 441 271
USA 18 772 804 390
United Kingdom 08 000 929 851
4 December 2008
Contents
Executive Summary 3
Valuation 5
Investment Issues 6
Background 8
Production Assets 8
Exploration and Appraisal 11
Other Assets 12
Issued Capital 13
Directors 13
Top 20 Shareholders 13
Share Price Performance
Forecast Production
Year end June 30 2008a 2009f 2010f 2011f
OP Revenue 65 154 205 213
NBPT ($m) 46 68 71 78
NPAT ($m) 24 48 49 51
EPS (c) 3.5 7.1 7.3 7.6
PER (x) 13.0 3.7 3.6 3.4
Cashfl ow 43 49 66 59
CFPS (c) 6.2 7.2 9.8 8.8
CFR (x) 7.2 3.6 2.7 3.0
DPS (c) - - - -
Yield (%) - - - -
Market Statistics
Issued Capital
FP Ord 673.7m
Opts (@ $0.10/sh) 10.0m
Total Dil FP Ord 683.7m
Market Capitalisation $177m
Cash $52m
Debt nil
Valuation $0.55/sh
Year Low - High $0.23/sh - $0.80/sh
Average Daily Turnover $1.5m
Major Shareholders
- Directors 10%
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0
2000
4000
6000
8000
10000
CVN Volume ('000)
CVN Share Price ($)
Dec-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08
20m 18m
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
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Carnarvon Petroleum Ltd
4 December 2008
PROFIT AND LOSS 2008a Dec H’08f 2009f 2010f 2011f
Oil Equivalent Sales 64 72 152 202 206
Deferred Revenue - - - - -
Interest Revenue 0 1 2 3 6
Other Revenue 0 - - - -
TOTAL REVENUE 65 73 154 205 213
- - - -
Operating Costs* 14 29 72 120 122
Dep/Amort 2 3 8 10 10
O/H + New Bus Dev 2 2 4 4 4
W/O & Provisions 1 2 2 - -
EBITDA 49 41 76 78 81
EBIT 45 36 66 68 71
Interest Expense - - - - -
NPBT 46 37 68 71 77
Tax 22 12 20 22 26
Minorities - - - - -
NET PROFIT 24 25 48 49 51
Net Abnormal Gain/(Loss) - - - - -
NET PROFIT After Abn’l 24 25 48 49 51
CASH FLOW 2008a Dec H’08f 2009f 2010f 2011f
Net Profi t 24 25 48 49 51
+ Working Capital Adj. (3) - - - -
+ Dep/Amort 2 3 8 10 10
+ Provisions 1 2 2 - -
+ Tax Expense 22 12 20 22 26
- Tax Paid 4 17 30 16 28
-Deferred Revenue - - - - -
Operating Cashfl ow 43 25 49 66 59
-Capex + Development 19 13 23 16 5
-Exploration 1 6 14 13 13
-Assets Purchased - - - - -
+Asset Sales - - - - -
+ Other - - - - -
Investing Cashfl ow (20) (19) (37) (29) (18)
+Equity Issues 1 - - - -
+Loan D’down/Receivable - - - - -
+Other - - - - -
-Loan Repayment - - - - -
-Dividends - - - - -
Financing Cashfl ow 1 - - - -
Period Sur (Def) 23 6 12 36 42
Cash Balance 32 38 44 81 122
BALANCE SHEET 2008a Dec H’08f 2009f 2010f 2011f
Assets
Cash 32 38 44 81 122
Current Receivables 11 11 11 11 11
Other Current Assets 2 2 2 2 2
Non-Current Assets 27 37 42 48 43
Total Assets 72 88 99 141 178
Liabilities
Borrowings - - - - -
Current Accounts Payable 4 4 4 4 4
Non-Current Liabilities 0 0 0 0 0
Other Liabilities 5 5 5 5 5
Total Liabilities 9 9 9 9 9
Net Assets 63 78 90 132 169
RESOURCES AND RESERVES
Oil Gas Total
mmbbls bcf mmboe
NSE 8.3 8.3
WB, ST, NS 3.1 3.1
Total 8.3 - 11.4
EV / boe (A$) 10.9
CARNARVON PETROLEUM LTD (CVN) YEAR END 30 JUNE
MARKET STATISTICS
ASSET VALUATION A$m A$/sh
L44/43 reserves 258 0.38
Exploration 50 0.07
Corporate (12) (0.02)
Unpaid Capital 1 0.00
Debt - -
Cash 52 0.08
Total @ 10% nom 375 0.55
Total @ 0% nom 588 0.86
Total @ 5% nom 439 0.64
Total @ 15% nom 293 0.43
Valuation @ spot (10% nom) 324 0.47
Valuation @ 10 year ave (10% nom) 328 0.48
FORECAST PRODUCTION 2008a Dec H’08f 2009f 2010f 2011f
Attrib. Prod’n (mmboe)
L44/43 reserves 0.7 0.7 1.8 2.4 2.4
Total Attrib (mboe) 0.7 0.7 1.8 2.4 2.4
Assumptions
Avg Oil Price - WTI (US$/bbl) 96.9 90.0 75.0 75.0 80.0
US$:A$ 0.90 0.78 0.74 0.75 0.80
Cash Cost excl royalties and SRB (A$m)
L44/43 reserves 3.1 7.7 17.5 16.5 15.7
Ave Cash Cost (A$/boe) 4.0 8.2 7.1 5.2 5.2
Ave Total Cost (A$boe) 7.3 11.4 10.3 8.5 8.4
RATIO ANALYSIS 2008a Dec H’08f 2009f 2010f 2011f
CF (A$m) 43 25 49 66 59
CF / Sh (Ac/sh) 6.2 3.6 7.2 9.8 8.8
CF Ratio (x) 7.2 - 3.6 2.7 3.0
Earnings (A$m) 24 25 48 49 51
EPS (Ac/sh) 3.5 3.7 7.1 7.3 7.6
EPS Growth (%) 590% 0% 105% 3% 4%
Earnings Ratio (x) 13.0 - 3.7 3.6 3.4
- - - - -
E’prise Val. (A$m) 275 139 131 95 53
EV : EBITDA (x) 6 - 2 1 1
EV : EBIT (x) 6 - 2 1 1
NTA/sh (A$/sh) - - - - -
Net Debt / Eq (%) -103% 0% -96% -156% -261%
Net Debt / ND+Eq (%) -51% 0% -49% -61% -72%
Interest Cover (x) n/a n/a n/a n/a n/a
EBIT Margin (%) 71% 0% 43% 34% 34%
ROE (%) 37% 0% 53% 37% 30%
ROA (%) 63% 0% 66% 48% 40%
Div. (Ac/sh) - - - - -
Div. payout ratio - - - - -
Div. Yield - - - - -
Div. Franking - - - - -
* Includes Royalties and SRB
Directors
P Leonhardt Chair’n
T Jacobson MD
N Fearis Non Exec
K Judge Non Exec
Shareholders
Directors 10%
Share Price $0.26 A$/sh
Issued Capital
FP Ord 673.7 m
Opt (@$0.10/sh, 31/3/09) 10.0 m
Total Dil. FPOrd 683.7 m
Market Capitalisation $177 m
Enterprise Value $125 m
Debt nil
Cash $52 m
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
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Carnarvon Petroleum Ltd
4 December 2008
Executive Summary
CVN is a cheap, focused oil & gas producer and explorer with a strong balance sheet and
quality management. Plenty of catalysts providing signifi cant organic growth are evident
over the next 12 months – these include exploration and appraisal success, strong fl ow rates,
reserve increases and participation in deals in the region.
Gross production has increased to ~14,000 bopd (~5,600 bopd net to CVN) from its 40%
owned onshore Thai acreage, placing CVN above most of its peers in the Australian midcap oil
sector. We expect further production growth over the next 12 months to a level of 15 - 20,000
bopd bound by trucking capacity and refi nery constraints. Beyond this, we expect CVN will
need to have further exploration and appraisal success at minimal capex outlay (Forecast CVN Production v’s Peers Graph
0
5
10
15
20
25
30
BPT AWE ROC CVN TAP NZO NDO PPP AMU CUE IPM OEL COE HZN
* Calendar year end
We are forecasting strong earnings for CVN over the next couple of years, based on reasonable
production expectations and oil prices. NPAT forecasts of $48m and $49m for FY’09 and ‘10
value CVN at 3.7x and 3.6x PER’s respectively. We forecast annual cash fl ows to be ~$50m over
the same period, easily funding CVN’s planned exploration and development expenditure.
Being well capitalised combined with strong free cash fl ow has put CVN in an enviable position
in the current market. Whilst CVN is an attractive target given its strategic Thai position (and
growing production and reserves), we expect CVN will capitalise on any of a number of value
adding opportunities that arise over the next few months. We anticipate these will be largely
limited to exploration or development projects in the SE Asian region.
Attractive operating and development costs make CVN a preferred oil stock in any oil price
environment. Operating cash costs per barrel are ~US$5/bbl (US$5-7m fi xed and $2.70/bbl
trucking costs) and completed development well costs ~US$1.5m. We do not expect to see
much infl ation in these costs in the medium term at least.
One of the keys to CVN’s success over the last two years or so has been the development of
the geological model for the area and the ability to test its theories cheaply through the drill
bit. The Phetchabun Basin has multiple play types which allows for production fl exibility and
a greater reserve potential over time.
FY09
FY10
(boepd)
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
4 of 14
Carnarvon Petroleum Ltd
4 December 2008
Until recently the production from the two key fi elds in the Basin (Wichian Buri and Sirikit)
has been achieved from sandstone reservoirs. The new play type, which has been highly
successful for CVN following the POE-9 well last year, is the fractured volcanics. The new play
will be the focus of CVN’s forward program to increase production and reserves as almost all
of CVN’s current production comes from the fractured volcanics. The sandstones will likely be
appraised in the medium to long term.
Geological Cross Section - Phetchabun Basin, onshore Thailand
Wichian Buri-1 Na Sanun-1 POE-9
Bo Rang-1
Early Tertiary
Chaliang Lab Formation
Si Thep-1
Wichian Buri Formation
500
1500
2500
1000
2000
Approx.
depth
(m)
Wichian Buri Fm.
sandstones in rollover
anticline
Proven at Wichian Buri
and Si Thep
Wichian Buri Fm.
sandstones in rollover
anticline
Proven at Wichian
Buri
Buried limestone
hill play
Unproven
Fractured volcanic reservoirs
Rollover anticlines
Proven at Na Sunan, NSE and, Bo Rang
Source: Carnarvon Petroleum
Over the next 12 months CVN are expecting 15-20 wells to be drilled on its L33/43 and L44/43
licences with its two rigs under long term contracts. We expect roughly an even mix of
exploration, appraisal and development wells. This program should support gross production
growth to ~ 17,500 bopd and deliver >20 mmbbls 2P additional net reserves.
CVN hold a strong reserves position from its L33/43 and L44/43 licences and represents
>20 years of production potential. We expect reserves growth of at least 50% (including
production) over the next 6-12 months as further development and appraisal wells are drilled,
particularly on the NSE structure where >70% and ~50% of the 3P reserves and 2C resource
(respectively) exist.
CVN Recoverable Reserves Position
1P 2P 3P
Na Sanun East 2.2 8.3 32.0
Fractured
Volcanic
Na Sanun 0.1 0.3 1.0
Fractured
Volcanic
Wichian Buri 0.3 2.5 9.8 Sandstone
Si Thep 0.1 0.2 3.0 Sandstone
Total Net Carnarvon 2.6 mmbbls 11.4 mmbbls 45.7mmbbls
OIL FIELD THAILAND Proved Proved + Reservoir type
Probable
Proved +
Probable +
Possible
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
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Carnarvon Petroleum Ltd
4 December 2008
CVN 2P Reserves v’s Peers
0
10
20
30
40
50
60
70
80
BPT AWE ROC AMU NZO HZN IPM CVN TAP NDO PPP OEL CUE COE
(mmboe) 145
The Thai tax system supports domestic exploration with a $ for $ offset. For this reason we
expect CVN to continue to acquire blocks onshore and offshore Thailand. At the moment
L20/50 (CVN 50%) and its applications to the south with Pearl Energy L52 and 53 (CVN 50%)
provide potential drilling from late next year.
Valuation
Our valuation is $0.55/sh
The valuation is an npv (10% nominal, after tax and capex) of our forecast cash fl ows from
CVN’s existing onshore Thailand oil fi elds (CVN 40%) within the L33/43 and L44/43 permits
combined with a risked value for exploration and appraisal.
Our forecasts assume gross Phetchabun Basin production averages 12,500 bopd for FY’09,
16,250 bopd for FY’10, followed by a 5% decline in FY’11 and 10% pa thereafter. We assume
production continues until 2025.
We acknowledge there is potential for higher production going forward but at this stage we
remain relatively conservative until the CY’09 development program is fi rmed up.
We have forecast a WTI oil price of US$65/bbl for CY’09 and US$80/bbl long term from CY’10.
Our A$/US$ forecast is 0.70 for CY’09 and 0.80 long term from CY’10.
Our valuation includes a nominal $50m for all other prospects in CVN’s portfolio.
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
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Carnarvon Petroleum Ltd
4 December 2008
Investment Issues
CVN offers exposure to an emerging E & P company with increasing low cost production and
impressive organic exploration and appraisal upside.
Earnings and Cash Flow
We are forecasting solid earnings for CVN based upon existing reserves from its onshore
Thailand oil operations. Our FY’09 NPAT forecast is $48m assuming an average WTI oil price
of US$75/bbl from oil production of 1.8 mmbbls. Our NPAT forecast increases to $49m for
FY’09 based on the same oil price and growing production.
Operating cash fl ow is forecast to grow from $49m to $66m from FY’09 to FY’10.
Hedging
CVN is currently unhedged.
Oil Price
Phetchabun Basin crude is a waxy 30 °API product. CVN typically receives ~85% of the WTI oil
marker. We are forecasting WTI to increase from current levels of ~US$50/bbl to US$80/bbl
long term from CY’10. In the interim we have forecast US$60/bbl and US$70/bbl for the June
H and Dec H’09 respectively.
The structure of the SRB tax in Thailand does shelter CVN in a lower oil price environment
whilst penalising it at higher prices. The table below showing valuation, earnings and cash
fl ow at various fl at oil prices endorses this.
Oil Price (US$) Val'n (A$/sh) NPAT (A$m) EPS (Acps) CF (A$m) CFPS (Acps)
20 0.30 25 3.7 40 5.9
40 0.46 45 6.7 63 9.3
60 0.50 47 7.0 61 9.0
80 0.53 49 7.3 60 9.0
100 0.57 60 9.0 75 11.1
120 0.64 72 10.6 87 12.9
140 0.72 83 12.3 99 14.7
* Assuming 0.70 $A/$US
CVN Sensitivity to Oil Price
Fiscal Regime/Tax/Royalties
Thailand
A sliding scale royalty applies (5-15%) based on monthly production levels: currently ~8%.
A super tax called Special Remuneratory Benefi t (SRB) applies after-tax on profi ts (0-37.5%)
once capital recovered: currently ~20% - it is ring fenced by concession.
Company tax of 50% applies based on net profi t after royalty and SRB. Exploration expenditure
is offset 1:1 against company taxes.
Overall, CVN takes after-tax ~25-30% of it share of fi eld revenues.
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
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Carnarvon Petroleum Ltd
4 December 2008
Dividends
We have not forecast any dividends at this stage for CVN given its growth plans through
exploration and appraisal.
Balance Sheet
CVN currently has circa $52m cash. CVN’s budget exploration and development spend is circa
$35m for CY’09 - this is expected to be comfortably funded out of cash fl ow.
CVN has no debt.
Currency
All revenues are received in Thai Baht with the oil price received linked to the US$ price.
Almost all costs associated with its Thai assets are in Thai Baht.
The majority of CVN funds are held in A$ or US$ depending upon forward capex commitments
to be paid in US$.
We view currency as a minimal risk given the US$ oil receipts provide a natural hedge against
any fall in Thai Baht.
Sovereign Risk
Thailand’s government is a constitutional monarch, the same as that of Australia.
Thailand has well developed infrastructure and is generally considered to have proinvestment
policies. An emerging economy, IMF forecast real GDP growth of 4.7% in 2008
and 4.5% in 2009 with exports (rice) a major contributor. Bangkok has pursued preferential
trade agreements with partners to continue its growth.
The Asian Financial Crisis in 1997/98, the 2006 military coup and the prospect of changes to
Thailand’s policies governing foreign-owned businesses present a history of sovereign risk.
Further unrest cannot be ruled out. However, Thailand is an active member of the regional
Association of South-East Asian Nations which provides confi dence for foreign investment.
In the southern region, separatist violence has resulted in closures and controls to stem
terrorist activities.
Thailand is a net importer of >600 kbopd for refi ning capacity of ~750 kbopd. This has led to
strong government support for all oil operations.
Other Risks
Pan Orient Energy, CVN’s operator has other assets in Indonesia, potentially diverting capital
from its Thai assets. This may slow CVN’s exploration and development program but we see
it as low risk.
The nature of CVN’s fractured volcanic reservoirs represent a relatively high level of geological
risk. We are confi dent that the geological risk is diminishing as wells are drilled and production
data is gathered.
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
8 of 14
Carnarvon Petroleum Ltd
4 December 2008
Background
The fi rst discovery of oil was made at the Wichian Buri fi eld in the 1980s with production
from shallow but extensive sandstone intervals. Well fl ow rates declined fairly rapidly from
an initial rate of 100 bopd to relatively low sustained rates of ~20 bopd. Low oil prices made
Wichian Buri a marginal fi eld. No new drilling occurred over a two year period as the result
of a 2004 dispute between CVN and former operator Tiger Petroleum Ltd. In addition, workovers
on existing wells were also limited.
The dispute was resolved by the takeover of Tiger by Pan Orient Energy, a Canadian listed
company. A new Joint Venture arrangement was established and a more substantial
development and exploration program was initiated. Ted Jacobson (formerly technical
director of Tap Oil) was appointed Managing Director of CVN at this time.
The new drilling program has continued smoothly since commencement in July 2006. The
trend of declining production rates was halted when the watershed POE-9 discovery was
made, showing that the underlying volcanic rocks in the Na Sanun oil fi eld were oil bearing.
Although the reservoir is still not fully understood, the oil is known to be present in both
the extensive fractures of the volcanics and the matrix itself. The matrix has a porosity of
~10%. POE-9 oil production commenced at 330bopd in early 2007 which incidentally was
the best initial fl ow rate up to that point. It is currently producing 260bopd representing an
approximate 15% annual decline rate.
The signifi cant discovery made by the POE-9 well has subsequently focused the JV on the
volcanics play type due to its size, extent and the fact that they are generally much more
productive than the sandstone reservoirs above. The best result to date has been recorded by
the L44H-D1 project in the Na Sanun East oil fi eld which fl owed at 3,940 bopd.
Production Assets - Thailand
�� CVN hold a 40% non-operating interest in four producing oil fi elds onshore Thailand,
~200km north of Bangkok
�� The producing oil fi elds are Wichian Buri, Na Sunan, Na Sunan East and Si Thep.
THAILAND PERMITS AND INFRASTRUCTURE MAP
CVN
50%
CVN
40%
Source: Carnarvon Petroleum
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
9 of 14
Carnarvon Petroleum Ltd
4 December 2008
�� CVN’s partner and operator of its producing projects is Pan Orient Energy a Canadian
listed producer.
�� CVN‘s net 2P recoverable reserves total 11.4 mmbbls, 3P 45.7 mmbbls.
�� Gross current production is ~14,000 from a total of 13 wells. The wells produce via a
combination of free fl ow, beam and submersible electric pumps.
�� Phetchabun Basin crude is a waxy 30° API product, typically priced at ~85% of the WTI
oil marker.
�� Three trucking contractors supply 200bbl tankers to deliver the oil from the fi eld to the
local refi nery in the southern outskirts of Bangkok, roughly a 3 hour journey – 60 to 70
trucks currently operate.
�� Key well results over the past 18 months have been: NS-4 686 bopd, NS3-D1 337 bopd,
L44-H 1,265 bopd, NS2-D1 1,920 bopd, L44H-D1 3,940 bopd, NSE-A1 1,245 bopd, NSE-B1
2,650 bopd and NSE-D1 710 bopd.
�� High fl ow rates per well (as shown above) from shallow reservoir depths (7-900m) appear
to be the result of the fractures, acting as the conduit for the oil trapped in the volcanic
matrix (porosities ~10%).
�� Development activity in the near term will focus on the NSE fi eld which produces >90%
of its oil volumes from two of fi ve fractured volcanic zones.
�� At this stage a number of development wells are planned in CY’09 aimed at taking gross
production from 14,000 bopd to ~20,000 bopd. We estimate CVN will budget ~US$10m
for this program.
L33/43 AND L44/43 PRODUCTION MAP
L33/43
L44/43
7 km
Wichian Buri
Oil Field
6 mmbbls
Si Thep
Oil Field
1 mmbbls
Bo Rang
Gas Field
Na Sanun
Oil Field
1 mmbbls
Na Sanun
East Oil
Field
21 mmbbls
Bo Rang
prospect
L44-R
Si Thep new discovery
prospects
L44-F
prospect
L33 prospects
Prospects
Oil Field
Source: Carnarvon Petroleum
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
10 of 14
Carnarvon Petroleum Ltd
4 December 2008
�� We expect these oil assets will produce for many years to come – for modelling purposes,
we run the production out to 2025. The L33/43 and L 44/43 production licences expire in
2020 with two 5 year licence extensions available.
�� Production data from NSE so far suggests that <10% decline is possible, but it is still
relatively early days with the oldest fractured volcanic well only two years old.
PRODUCTION/CASH FLOW FORECAST CHART
0
1
2
3
FY08a FY09f FY10f FY11f FY12f
0
25
50
75
100
Production (mmboe) Cashflow (A$m)
Source: Carnarvon Petroleum/Euroz
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
11 of 14
Carnarvon Petroleum Ltd
4 December 2008
Exploration and Appraisal - Thailand
�� Appraisal activity over the next 12 months will likely focus on a combination of NSE, Bo
Rang, Si Thep and the new L44-R discovery.
�� NSE – will target contingent resources of 14 mmbbls net to CVN in compartments to the east
and north. Additional other potential volcanic reservoirs will be tested throughout 2009.
�� Bo Rang – will target 7 mmbbls net potential reserves on an old gas well which intersected
6 fractured volcanic sections, only the top one was tested. A downdip well is expected in
the Mar Q’09.
�� Si Thep – will target 7 mmbbls net potential reserves following the intersection of 4
fractured volcanic reservoirs that were never tested in Si Thep-1 (currently producing ~10
bopd from sandstone reservoir). The Si Thep area is very sensitive due to the pending
status as a world heritage site and will likely pose delays.
�� L44-R – will attempt to intersect fracturing after a modest fl ow (29 bopd) in the Mar’08
well. Potential to add ~ 3 mmbbls if successful.
L33/43 AND L44/43 APPRAISAL MAP
L33/43
L44/43
7 km
Wichian Buri
Oil Field
Si Thep
Oil Field
Bo Rang
Gas Field
Na Sanun
Oil Field
Na Sanun
East Oil
Field
Bo Rang
prospect
~7 mmbbls
net
L44-R
new discovery
3 mmbbls net
Si Thep
prospect
7 mmbbls net
Prospects
Oil Field
Source: Carnarvon Petroleum
�� Exploration in L33/43 and L44/43 will focus on prospects to the north and west of Wichian
Buri as well as a deeper fault compartment within the Wichian Buri structure. We estimate
net potential volumes to be in the order of 5-10 mmbbls per target.
�� CVN expect results from its seismic acquisition in L20/50 (CVN 50% and operator) in the
June H’09. A re-drill of Nong Bua-1 - drilled on trend with the 200 mmbbl Sirikit fi eld looks
likely for late CY’09.
�� CVN hold two onshore licence applications L52 and L53 (CVN 50%), to the south of
Bangkok with Pearl Energy. These licences look to be an onshore extension of the
prolifi c offshore hydrocarbon trend. Seismic is planned in CY’09, with wells expected
from CY’10.
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
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4 December 2008
Other Assets
Carnarvon Basin, Western Australia
�� CVN hold three offshore permits (CVN 35-50%).
�� All permits are in the seismic reprocessing phase.
�� CVN will seek farmouts on these permits in the medium term with exploration wells likely
in 2010.
Perth Basin, Western Australia
�� CVN hold two permits onshore northern Perth Basin.
�� The key asset is a 2.5% overriding royalty over the Warro gas fi eld.
�� The fi eld is set to be tested via a development well in the Mar Q’09.
�� Maximum potential pre-tax cash fl ow is $5m / year from this asset.
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
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Carnarvon Petroleum Ltd
4 December 2008
Issued Capital
The current issued capital is:
Fully paid ordinary shares 673.7m
Options (exercisable @ $0.10/sh) 10.0m
Total Fully Diluted Capital 683.7m
Directors
Mr Peter Leonhardt - Non-Executive Chairman
Ted Jacobson – Managing Director
Neil Fearis – Non-Executive Director
Ken Judge - Non-Executive Director
Directors & Shareholdings
Ordinary Shares $0.10 Options
Director Role held at 1/12/08 held at 1/12/08
P Leonhardt Non - Executive Chairman 14,900,000 3,000,000
E Jacobson Managing Director 28,917,335 4,000,000
N Fearis Non - Executive Director 6,400,000 2,000,000
K Judge Non- Executive Director 12,932,855 1,000,000
Top 20 Shareholders
Carnarvon Petroleum Ltd as at 28 November 2008
No. Shareholder Shares (m) (%)
1 J P Morgan Nominees Australia Limited 40.46 6.01
2 National Nominees Limited 34.35 5.10
3 Hsbc Custody Nominees (Australia) Limited 33.17 4.93
4 Mr Edward Patrick Jacobson 14.92 2.22
5 Anz Nominees Limited 11.62 1.73
6 Citicorp Nominees Pty Limited 10.51 1.56
7 Arne Investments Pty Ltd 8.92 1.32
8 Mr Peter James Leonhardt 7.70 1.14
9 Macquarie Bank Limited 7.20 1.07
10 Athol Steel Pty Ltd 6.80 1.01
11 Arne Investments Pty Ltd 6.71 1.00
12 Pendomer Investments Pty Ltd 6.40 0.95
13 Mr Edward Patrick Jacobson 6.00 0.89
14 Mr G Munyard + Mrs M Munyard + Miss C Munyard 5.90 0.88
15 Macquarie Bank Limited 5.65 0.84
16 Mr Brett Williamson + Ms Nicole Rockliff 5.30 0.79
17 CIticorp Nominees Pty Limited 5.27 0.78
18 Kaymac Nominees Pty Ltd 4.94 0.73
19 Mr Lawrence Addison Brown + Mrs Jill Brown 4.59 0.68
20 Seawell Super Pty Ltd 4.05 0.60
TOTAL 230.46 34.23
Carnarvon Petroleum Ltd
1322 Hay Street,
West Perth, WA, 6005
Telephone: +61 8 9321 2665
Facsimile: +61 8 9321 8867
www.carnarvon.com.au
All information and advice is confi dential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any
account whatsoever on the part of Euroz Securities Limited or any member or employee thereof. Refer to full disclaimer at the end of this document.
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4 December 2008
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