Carnarvon & Santos Strike Black Gold at Dorado

Oil and gas explorers Carnarvon Petroleum Ltd [ASX:CVN] and Santos Ltd [ASX:STO] have done it. Their persistence in WA has paid off after they finally found what they were looking for: oil.

It took them 12 hours to fully test and evaluate their appraisal well, Dorado-3. The results were well worth the effort, though.

From the initial flow rate test, the max measured rate capped out at 11,100 barrels per day. One of the highest readings ever seen from the North West Shelf.

Furthermore, because the tests were limited by equipment, the reservoir could be even more free-flowing. And that has certainly got traders’ tongues wagging.

Shared spoils: a boon for both

With an 80/20 split in favour of Santos, the larger operator will reap much of the reward. However, as a smaller operator, Carnarvon has enjoyed a bigger uptick in share price this morning.

At the end of the day, this development will comes as a boon for both.

And as Santos’ Managing Director, Kevin Gallagher made clear, the final flow rates could be far more impressive, commenting:

The results are very encouraging for development of the shallow-water Dorado field, with the test indicating very high potential flow rates of around 30,000 barrels per day from each single production well in the Caley reservoir. This positive result represents a significant step in progressing Dorado as one of Santos’ most exciting new development projects.

The cherry on top is that the well housed more than just oil too. 21 million cubic feet of gas was measured from the tests. Another great find that will add to the prospects of the site.

Sentiments that were echoed by Carnarvon’s Managing Director, Adrian Cook:

These results are the highlight of an incredibly successful 2019 appraisal program in which we have now confirmed a very large resource of oil and gas at Dorado and prolific production flow rates.

Dorado is an exceptional project given these appraisal outcomes and is complemented by its local jurisdiction, it’s location in shallow water and its services advantages given its proximity to shore and supporting infrastructure which will aid development and operational costs.

All that is left to do now is finish up the prep and get the wells flowing full time. A goal that should be reached early next year.

For investors though, the real question still revolves around the broader market for oil. With plenty of talk, but little price movement, it remains a tough commodity to back right now.

However, it certainly points to the broader resources rally we’re seeing of late. And although oil may be a bit too dicey for our liking right now, there are plenty of other investing opportunities out there.

You can check out our list of the top 10 mining stocks for some compelling resource plays. Get a hold of your free copy, right here.


Ryan Clarkson-Ledward,
For Money Morning

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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