The Carnarvon Energy Ltd (ASX: CVN) share price is tumbling today.
Carnarvon shares closed yesterday trading for 20 cents and are currently trading for 17 cents, down 17.5%.
The ASX energy share certainly hasn't been helped by sliding oil prices, now at six-month lows.
But the real pressure on the Carnarvon share price today looks to be an update on its Dorado development, located offshore in Western Australia.
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What's happening at the Dorado project?
Investors are driving down the Carnarvon share price today after the company reported it will not make a financial investment decision (FID) for the project this year.
While the Dorado Front End Engineering and Design (FEED) works are "substantially" complete, the company said current instability in the cost environment and uncertainty around supply chain capacity will delay its FID.
Commenting on the progress and delays at Dorado, Carnarvon CEO Adrian Cook said:
Carnarvon is keen to see the timely sanctioning of the Dorado development and commencement of the construction phase, and we continue to work collaboratively with the operator to achieve this.
That said, given the current regional inflationary pressures and supply chain challenges, the risk of cost escalation is unacceptably high and requires fiscal discipline until this environment shows signs of stabilising.
As for funding, Carnarvon said a formal and ongoing process is underway to fund its share of the Dorado development. Carnarvon said it may divest some of its share in the project and associated exploration acreage prior to taking FID.
On the regulatory front, the Carnarvon share price could also be facing some headwinds. The explorer's offshore project proposal remains under assessment by the National Offshore Petroleum Safety and Environmental Management Authority.
Cook remained upbeat on the project's future, adding:
The analysis of the Pavo discovery to date shows that this is a tremendous resource with the potential to generate a significant amount of value for Carnarvon shareholders by utilising the proposed Dorado facilities. Accordingly, the Joint Venture is undertaking detailed studies to optimise an integrated Dorado development concept.
Carnarvon share price snapshot
The Carnarvon share price has struggled this year, down 53% since the opening bell on 4 January.
By comparison, the All Ordinaries Index (ASX: XAO) is down 7% in 2022.
