The shares of junior oil and gas company Carnarvon Petroleum Limited (ASX: CVN) rocketed higher by an incredible 50% to a new 52-week high of 15 cents in morning trade after emerging from a trading halt.
The reason for the rampant buying of Carnarvon Petroleum’s shares today is down to a positive announcement regarding its activities in the Bedout sub-basin of the Roebuck Basin.
The announcement reveals that the Roc-2 well test successfully flowed gas and condensate to the surface over the course of a sustained test program. Flow rates and reservoir pressure conditions were well ahead of expectations and the test confirmed a quality conventional reservoir that flows strongly without intervention.
Another big positive for the company was that gas and condensate ratios came in at the high end of the range of pre-drill estimates.
According to the release the well flow tested at rates up to 51.2 million standard cubic feet per day of gas and 2,943 barrels of condensate per day. This works out to be approximately 11,500 barrels of oil equivalent per day.
Carnarvon’s managing director Adrian Cook was understandably very pleased with the results. He stated that:
“We are very happy with the Roc-2 well flow test results which are at rates that are significant in our industry. There is great potential within this basin for significant hydrocarbon volumes to exist as I have referred to on numerous occasions. These results provide Carnarvon and its partner with enormous blue sky potential and a platform within the Phoenix South and Roc area in which to test and develop this potential.”
Clearly this is a great breakthrough for the company and makes it an interesting investment alternative to industry peers Woodside Petroleum Limited (ASX: WPL), Santos Ltd (ASX: STO), and Beach Energy Ltd (ASX: BPT).
But at this stage it is a little too speculative for my tastes. So I would suggest investors sit this one out and just add it to your watch list for now.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
- Why the Mesoblast share price is leading the ASX 200 on Monday – July 6, 2020 1:51pm
- Afterpay share price pushes higher on Qantas partnership – July 6, 2020 1:30pm
- Cochlear and these ASX 200 shares could be fantastic buy and hold investments – July 6, 2020 12:55pm