Dorado’s partner is looking for options to finance its part of the project before the FID

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Australia’s Carnarvon Energy is working to secure financing for the Santos-operated Dorado project located offshore Australia ahead of a final investment decision (FID) for the project, which is expected later this year.

Discovered in 2018, the Santos operated Dorado Project is located in the Bedout sub-basin, off Western Australia. Santos owns an 80% stake and its partner Carnarvon Energy owns the remaining 20%.

Santos launched the Front End Engineering and Design (FEED) phase of the Dorado project in late June 2021 and awarded the FEED contract for the Dorado FPSO to Altera Infrastructure last August.

Dorado is an integrated oil and gas project, which is expected to be developed in two phases. The first phase of Dorado’s development involves the production of oil and condensate via a wellhead platform (WHP) to an FPSO. The vessel is the most important component of the project, including engineering, equipment procurement, bulk materials and services, construction, installation, commissioning and testing of the facility.

In a statement Friday, Carnarvon provided an update on the progress of FEED work for the Dorado project and related project funding.

According to the company, the detailed design and engineering work of the production facilities for the development of Dorado Phase 1 liquids continues to progress as planned. Plant engineering and underground studies have confirmed that the project will initially produce between 75,000 and 100,000 barrels of oil per day (bopd) (gross).

As Carnarvon explains, Dorado liquids are an extra light and sweet product with market analysis provided externally indicating that sales are likely to reach a premium over Brent.

Studies have also confirmed that associated gas can be efficiently reinjected into Dorado’s reservoirs to maintain reservoir pressure, thereby maintaining high production rates. This gas will be available for production as part of further Phase 2 development and has been incorporated into the design basis of the facilities.

The detailed design of the production and injection wells has been completed, and tenders have been issued for the long-lead elements required for development.

The final definition of capital cost is undertaken as part of the FEED process and will be finalized before the FID. Because the Dorado Project is in shallow water, close to existing infrastructure and is an industry standard design, initial operating cost estimates have confirmed that this project will be a low unit cost operation, Carnarvon said.

In addition, applications for regulatory approvals have been submitted to the relevant regulators for evaluation, with the production license to be granted before the FID. Based on the status of these activities, it is expected that the The Dorado project will be FID-ready by mid-2022.

Carnarvon explores financing options for Dorado

Carnarvon has begun a formal process to fund its share of the Dorado project. Azure Capital, appointed financial advisor to Carnarvon, is currently developing a range of potential sources of capital.

These may include traditional non-recourse senior credit facilities based on reserves; alternative financing options (including junior or subordinated debt, prepayment of direct debits and royalties); and, the disposition of a portion of Carnarvon’s share of the Dorado project and associated exploration acreage.

Carnarvon will review all financing options to provide the optimal balance of capital management.

Managing Director and CEO of Carnarvon, Adrian Cooknoted: “We are delighted that the engineering and design work on the development of the world-class Dorado Phase 1 liquids is progressing as planned and on track to be ready for FID by the middle of this year. Various sources of capital are sought to optimize the company’s balance sheet and make the most of this high quality asset.

Meanwhile, Santos and Carnarvon have already begun drilling operations on the first of two exploration wells located near the Dorado field, the Pavo-1 well, with the second well, Apus-1, planned to be drilled immediately afterwards. The latest update on the Pavo-1 well revealed that the well needed to be secured and that Noble Tom Prosser rig down due to potential hurricane activity.

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