Carnarvon Energy Limited (ASX: CVN) has reported continued progress across its Bedout Sub-basin exploration portfolio and reaffirmed its strong financial position in its Quarterly Activities Report for the period ended 31 December 2025. The update outlines advancements in seismic interpretation, regulatory readiness, and procurement for a planned exploration drilling campaign in the first half of 2027, alongside ongoing work to progress the Dorado oil and gas development offshore Western Australia.
An offshore drilling rig in Western Australian waters. Carnarvon Energy is advancing exploration readiness in the Bedout Sub-basin ahead of a planned 2027 drilling campaign. (Source: ABC)
The Company also confirmed it ended the quarter with approximately A$98 million in cash, no debt, and a US$90 million development carry for the Dorado Project, underpinning its capacity to advance near-term exploration and longer-term development priorities.
The Bedout Sub-basin, which hosts the Dorado and Pavo discoveries, remains the core focus of Carnarvon’s exploration strategy. Management said the upcoming drilling campaign would target the northern play fairway, where a large prospect with material upside potential sits beyond the existing 450 million barrels of oil equivalent (boe) in gross 2C resources already discovered.
Key Findings and Operational Highlights
During the December quarter, the Bedout Joint Venture progressed key regulatory and operational readiness activities, including preparation of a multi-well Environmental Plan and procurement of long-lead items ahead of the next drilling phase. Tender processes to secure an offshore drilling rig were also well advanced.
Interpretation work was significantly enhanced by the completion of the Bedout Mega Merge seismic reprocessing Project, which consolidated multiple datasets into a single high-resolution seismic volume covering more than 15,000 square kilometres, or over 80% of Carnarvon’s exploration permits in the basin.
Key operational highlights included:
- Advancement of regulatory approvals and procurement for an exploration drilling program targeted for H1 2027.
- Identification of new structural and stratigraphic features following high-resolution seismic reprocessing.
- Targeting additional gas resources capable of underpinning a future gas export development.
- Continued environmental planning to maintain permit standing and regulatory compliance.
The Company said the improved seismic imaging had revealed previously undetected subsurface features, enhancing prospectivity and refining the risk profile across the basin. Ongoing technical work will focus on narrowing drilling targets and defining the prospective resource base.
Economic and Strategic Benefits
Carnarvon’s flagship Dorado Project remains one of the largest undeveloped oil discoveries in Australia. Located approximately 150 kilometres offshore Western Australia in around 90 metres of water, the field contains an estimated 249 million barrels of light oil and condensate (gross, 2C) and 1.1 trillion cubic feet of gas (gross, 2C). Mean prospective resources across the broader Bedout area are estimated at approximately 1.6 billion barrels of liquids and 9 trillion cubic feet of gas.
The Dorado development concept contemplates a staged approach, beginning with liquids production via a single wellhead platform tied back to a floating production, storage, and offloading (FPSO) facility, followed by a potential gas export phase.
Carnarvon chief executive Philip Huizenga said the Company was well-positioned to unlock further value across its portfolio.
“With high-resolution seismic data now covering the majority of our permits and a clear plan to return to exploration drilling in the first half of 2027, we are well-positioned to unlock the next phase of value for our shareholders,” Huizenga said.
Carnarvon Energy CEO Philip Huizenga says the Company is positioned to unlock further value across its Bedout Sub-basin portfolio. (Source: Carnarvon Energy)
He added that robust demand for light, sweet crudes across Asia and Australia supported the long-term investment case for Dorado.
“We remain committed to maintaining a lean corporate structure and driving the Dorado development toward production to meet the robust demand for light, sweet crudes across Asia and in Australia,” he said.
Resource and Exploration Updates
Exploration in the Bedout Sub-basin has been materially strengthened by the seismic mega-merge Project, which improved subsurface resolution across more than 15,000 square kilometres. The Company said it had identified new potential trapping mechanisms and reservoir geometries not previously resolved.
Drilling activity is expected to resume in the first half of 2027, with the next phase of exploration designed to test large-scale gas prospects in the northern play fairway. These prospects are viewed as strategically important, given their potential to support a future gas export development that would complement the liquids resources at Dorado and Pavo.
The Dorado Project itself has a preliminary development plan in place. However, progress was deferred in early 2025 to allow further appraisal of broader Bedout basin exploration potential prior to a Final Investment Decision (FID). Carnarvon said development work would recommence in line with the evaluation of additional basin resources.
The Company continues to work with operator Santos to identify innovative solutions to accelerate the development timeline and advance Dorado in a capital-efficient manner, while maintaining a strong focus on environmental and regulatory compliance.
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Market and Strategic Context
Carnarvon has also diversified its energy exposure through a strategic investment in Strike Energy Limited (ASX: STX), acquiring a 19.9% equity interest for A$86 million. The investment provides exposure to near-term gas production and the Western Australian domestic gas and electricity markets, including the South Erregulla gas-fired peaking plant targeted for commissioning in 2026.
Gas-fired power infrastructure in Western Australia. Carnarvon Energy’s 19.9% stake in Strike Energy provides exposure to near-term gas production and the domestic energy market. (Source: The Australian)
Management said the investment complemented Carnarvon’s oil-weighted portfolio and preserved financial strength to advance its Bedout assets.
The Company ended the quarter with A$98 million in cash, no debt, and a US$90 million Dorado development carry. Administrative and corporate costs were fully offset by interest income earned on cash holdings, reflecting what management described as a disciplined approach to cost control.
Looking ahead, Carnarvon has forecast exploration and evaluation expenditure of A$1.0 million to A$1.3 million in the Bedout Sub-basin over the coming quarter, alongside corporate costs of A$0.5 million to A$0.8 million.
With improved seismic clarity, a defined pathway to drilling, and a strong balance sheet, Carnarvon remains positioned to advance its Bedout Sub-basin strategy and progress Dorado toward development as market conditions and technical evaluation allow.
