The Carnarvon Petroleum Ltd (ASX: CVN) share price has continued its march higher this week, gaining 17% in the past week of trading.
Shares in the oil and gas explorer finished the week at 31 cents apiece, not too far off their 52-week high of 33.5 cents achieved in January this year.
Let's investigate further.
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What's been fuelling Carnarvon shares lately?
It seems the elephant in the room is the price of natural gas, which has spiked to 5-year highs of US$6.215 per million British thermal units on 28 September.
The move began on 23 September, spurred on by the energy crisis in Europe in the United Kingdom that has unfolded in recent weeks.
In addition, the price of oil has climbed almost 7% in the past 2 weeks for both major oil contracts, after making a prior jump of 21% from August 20 for crude WTI, and over 20.3% for Brent crude in this time.
Around this time in September, Carnarvon announced a key update to its Buffalo project in the Timor Sea.
The release noted several progress highlights, including that the Buffalo-10 well is set to start spud in early November, and that "mid-case recoverable volume estimate is 31 million barrels".
Carnarvon said there was a "strong likelihood" the Buffalo-10 well would confirm a "sanctionable development project, based on minimum economic field size".
Just prior to this, Carnarvon announced that it had contracted the VALARIS JU-107 drilling rig to drill the Buffalo-10 well.
The rig will move to the Buffalo site in early November, once completed its current operations.
The report concludes that Carnarvon expects to ramp up operations at Buffalo-10 from November, but that the final timing will be "subject to the release of the rig from the previous operator… and receiving the necessary joint venture and regulatory approvals".
What did management say?
Carnarvon managing director and CEO Adrian Cook welcomed the results, saying:
Our preparations for drilling the Buffalo-10 well are in good shape and we're looking forward to commencing drilling relatively soon.
We continue to work well with and enjoy the support of our joint venture partner, Advance Energy Plc, who have contributed US$20 million towards the cost of the Buffalo-10 well and now hold a 50% interest in the project.
Cook said the company expected to reach the target in around 35 days once drilling started, adding that the well had the potential to be "value transforming" for Carnarvon.
The Carnarvon share price has popped from a low of 25 cents since the announcement on 22 September, to reach its highs of 31.5 cents in afternoon trade today.
Carnarvon share price snapshot
The Carnarvon share price has jumped into the green this past month, gaining 21.5% in this time.
However, it has only climbed 3.3% year to date, behind the S&P/ASX 200 index (ASX: XJO)'s return of around 9%.
Despite this, it has beaten the benchmark index over the last 12 months, posting a return of more than 44% in that time.
