Carnarvon Petroleum confirms major resource at Dorado oil field

Wireline logging by Carnarvon Petroleum (ASX: CVN) at the Dorado-2 joint venture appraisal well on the North West Shelf of Western Australia has confirmed pre-drill expectations of a major oil and gas resource at multiple reservoir levels.

Commencing in May, the well was drilled down-dip approximately 2km from the Dorado-1 discovery in the offshore Bedout Basin and encountered 85m of net reservoir in the primary Caley formation.

An expected oil-water contact was intersected at 4,003m depth, with 40m of net oil pay encountered in Caley and an additional 11m encountered in the Upper Caley sands.

Preliminary well-site analysis indicates the oil bearing potential of the upper zone and is subject to further analysis to confirm the hydrocarbon phase.

Caley formation results will provide definition of the required facilities for developing the Dorado oil field and assist in the progression to first phase development.

Last year, Dorado was confirmed as the North West Shelf’s third largest oil discovery.

Secondary target

At the secondary Baxter reservoir target, condensate-rich gas was extracted from the well, increasing confidence in the presence of large hydrocarbon column between the Dorado-1 and Dorado-2 wells, and a related increase in gas resources relative to pre-drill estimates.

Logging encountered 32m of net pay in the underlying Baxter and Milne sandstones, with no fluid contacts intersected.

Both sands are currently interpreted to be gas bearing and similar to Upper Caley, and the Milne hydrocarbons will require further analysis to confirm the hydrocarbon phase.

Carnarvon said the very light nature of the oil in the Milne reservoir may result in the hydrocarbon phasing being re-classified as a highly condensate-rich gas.

“Initial indications are that fluid compositions [at Milne] are similar to the light oils and gases sampled in Dorado-1, where high condensate yields range from 70 to 245 barrels per million standard cubic feet,” the company said.

Billion dollar acquisition

The Dorado wells are located within the Phoenix project, which is 80% owned by Santos (ASX: STO) after the petroleum major acquired previous owner Quadrant in a $3.08 billion deal last August.

Carnarvon holds the remaining 20% interest and operator rights.

Dorado-2 is the first appraisal well of the Dorado oil and gas field which was discovered in 2018.

It is located in petroleum permit WA-437-P, approximately 160km north of Port Hedland and 2km from Dorado-1, discovered in July.

Once wireline logging operations are complete, Dorado-2 will be plugged and abandoned, and operations will focus on the Roc South-1 exploration well before returning to drill Dorado-3.

Dorado-2 has been considered important to Carnarvon for its potential to transition the company into a strong producer.

Carnarvon said the joint venture would move forward with its plans for a fast-tracked Caley oil development and a more substantial full-field operation, which is expected to incorporate the Roc discovery on a staged basis.

At mid-afternoon, shares in Carnarvon were trading 10.19% higher at $0.595.

Santos shares were up 2.26% to $6.80.