• Carnarvon successful in capital raise to fund Buffalo-10 well development
• Timing allows commitments to be made now to facilitate drilling in 2019
• Buffalo-10 well to confirm attic oil and mid case volume of 31 million barrels

Carnarvon Petroleum Limited has successfully raised $16 million (before costs) which will be used to fund drilling of its Buffalo-10 well. Additional funds are expected to be secured through a share purchase offer to existing shareholders to raise up to $4 million.

The share purchase plan is being offered to existing eligible shareholders, so as to allow them to subscribe for new shares in Carnarvon at the same price as shares issued under the placement.

All capital raised is for the purpose of funding the Buffalo-10 well development and to meet the Company’s general working capital requirements.

The Company is moving quickly to progress the redevelopment of the Buffalo oil field.

The Buffalo-10 well will be the first of three production wells to be drilled in this exciting oil redevelopment project. The current expected timing for drilling to commence on the first well is between March and September 2019 (after the end of the cyclone season).

Amounts raised under the placement and share purchase plan, combined with the Company’s existing cash, will underpin the funding of the Buffalo-10 well and enable drilling to occur as soon as practicable.

The Board of Directors of Carnarvon deemed the raising the minimum needed to proceed with the Company’s Buffalo and Phoenix project activities in a prudent financial manner.

Carnarvon is currently participating in drilling the Phoenix South-3 well and will soon commence drilling the Dorado-1 well in its Phoenix project. These activities are expected to provide important value opportunities for shareholders in the near term.

Carnarvon Chief Executive Officer, Adrian Cook said: 
“The Buffalo project has the potential to generate significant value that’s ideally suited to Carnarvon in terms of scale, time to first production and overall risk profile.

This capital raise demonstrates our expeditious approach to make this production opportunity a reality for shareholders, particularly as we see oil prices currently strengthening from the recent lows of previous years.

Carnarvon now offers investors two high quality, organically derived projects progressing to commercialisation phases in the near term.”

Buffalo Redevelopment Project

Carnarvon was awarded the WA-523-P acreage in May 2016 for an initial six-year term which included the previously developed Buffalo field. The Field was discovered by BHP in 1996 and subsequently developed using four wells drilled from a small, unmanned wellhead platform installed in 25 metres water depth, tied back to an FPSO. Production commenced in December 1999 at production rates up to approximately 50,000stb/d and terminated in November 2004 after the production of 20.5MMstb of highly-undersaturated, light oil (53°API) from the Jurassic-age Elang prior to Carnarvon being awarded the block.

Carnarvon initially focussed its technical work on reprocessing of the 3D seismic dataset using state-of-the-art full waveform inversion (FWI) technology. This work supports the interpretation of a significant attic oil accumulation remaining after the original development, based on sub-optimal positioning of early wells using poorly processed seismic data. Reservoir modelling has been conducted using latest structural interpretation and available well data, including an extensive history-matching effort to calibrate model/well performance to production rates and watercut development (governed by strong aquifer drive) observed during the original production period.

Based on this work, independently audited volumetric estimates of contingent resources in the Buffalo oil field are 31.1 million barrels (2C) with high and low estimates of 15.3 million barrels (1C) and 47.8 million barrels (3C) – Refer to Carnarvon Petroleum’s ASX announcement on 28 August 2017.