Rated as a buy with a target of 72c Also. "We feel it is only a...

Rated as a buy with a target of 72c
Also.

"We feel it is only a matter of time before some of the 65 million barrels of net contingent resources are converted to production and reserves.

We estimate that the potential value from appraisal activity
for Carnarvon is >$1b or 158cps."

Insulated from the Crisis

"Carnarvon is insulated from low oil prices by several factors:
• Low operating costs of ~US$5 per barrel

• Drilling costs of ~US$2m per well

• Progressive tax structure, which means that decreasing
revenue results in a lower percentage of tax being paid

• Exploration immediately deductible for tax purposes

• Pricing based on Singapore fuel oil, which is less volatile than US based oil price markers (such as WTI)

All of this means that Carnarvon’s Thailand operations are still profitable down to ~US$10 per barrel oil price.
We believe that Carnarvon will continue to increase reserves and production at its acreage in Thailand and we rate it as a Buy.