One of the unsung small-cap oil companies, Carnarvon Petroleum Limited (ASX: CVN), has seen its share price soar 314% higher in the space of just 12 months on the back of successful drilling activities and resource discoveries.
Strong drilling updates the key to share price growth
Despite boasting a market cap of $784 million and a share price of $0.58 per share at present, Carnarvon shares were trading at just $0.14 on 4 July last year.
However, a strong quarterly June 2018 update and a series of Dorado-1 well drilling updates propelled the company’s share price to a 52-week high of $0.70 per share by the start of August 2018.
The Aussie petroleum company has continued to announce successful developments regarding not only its Dorado-1 well, but more recently Dorado-2.
In May 2019, the company commenced drilling at Dorado-2 and has since told the market that wireline logging of the well has successfully confirmed pre-drill expectations of a major oil and gas resource at Dorado.
Carnarvon said it had successfully extracted high-quality oil from its Caley reservoir and excellent reservoir properties are comparable to those discovered in Dorado-1, boosting investors’ hopes even higher.
The company has also commenced drilling at its Roc South-1 well in mid-June 2019, which should increase production numbers for 1H20.
The company’s monumental share price gains have been made even more impressive amid volatile global oil prices, which have been impacted in the last 12 months by ongoing geopolitical tensions and the macroeconomic environment.
Where to now for Carnarvon?
As at its last results release, the company remains cash flow negative and has been busy raising equity capital to continue its impressive growth into FY20.
However, Carnarvon has increased its cash reserves to $93 million as at 31 March 2019, with zero debt and contingent net resources of 108 million barrels of oil equivalent (mmboe).
The company is due to report its full-year results in August 2019. It will be interesting to see if it can continue to post strong numbers and capitalise on its “world-class” Dorado resource in Western Australia in the second half of the year.
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Motley Fool contributor Kenneth Hall has no position in any of the 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 Scott Phillips.
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