The Carnarvon Petroleum Limited (ASX: CVN) share price is moving higher today, up 3.5% at the time of writing.
This comes after the company released a progress report on its Buffalo oil field, located offshore Timor-Leste in the Bonaparte Basin.
What did Carnarvon announce today?
In this morning's update to the ASX, Carnarvon reported that it is progressing with plans to drill its Buffalo-10 well. Carnarvon plans to commence drilling in late 2021. The company has entered into a binding agreement with Advance Energy to support the redevelopment.
In the newly formed joint venture, Advance will fund the drilling of the well up to US$20 million (A$26.6 million) on a free carry basis. In return it will acquire up to a 50% interest in the Buffalo project. If additional funding is needed from third party lenders, Advance has agreed to provide that as an interest free loan.
Carnarvon will continue as the operator. The agreement remains subject to fulfilling the customary conditions, including obtaining government approvals.
Commenting on the partnership, Carnarvon's CEO, Adrian Cook, said:
Carnarvon is excited to welcome Advance Energy into the Buffalo joint venture and together we look forward to drilling the Buffalo-10 well next year and moving forward with the redevelopment of the Buffalo oil field.
The Buffalo redevelopment opportunity is well placed to succeed given its known production capability and low development cost and will be greatly enhanced as oil prices continue their recovery.
We look forward to Advance completing their capital raise activities and the joint venture is eager to get started, with drilling planning already underway. Carnarvon is incredibly well placed for an exciting 2021 as we add drilling at the Buffalo Project to our Dorado FEED activities and the Bedout exploration drilling campaign.
Carnarvon share price and company snapshot
Carnarvon Petroleum is an Australian-based company primarily engaged in oil and gas exploration, development, and production. Its exploration projects include Phoenix, Labyrinth, Condor and Eagle, Outtrim and Maracas, and the Buffalo oil field.
Like most ASX energy shares, Carnarvon's share price fell of cliff as COVID-19 saw oil and gas prices plummet. Its shares fell 69% from 6 January through to 23 March. Since that low shares have rebounded 143%, compared to a 52% rebound of the broader All Ordinaries Index (ASX: XAO) over that same time.
Year-to-date the Carnarvon share price remains down 19%.
