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Carnarvon Energy Ltd

Carnarvon Energy Ltd

ASX:CVN

Energy

Fund Manager Summary

The fund managers believe that the outlook for Carnarvon Energy Ltd presents a compelling opportunity, particularly due to its 20% minority stake in the Dorado oil and gas joint venture with Santos. In their opinion, Dorado is a Tier 1 project that Santos prioritizes, despite its current focus on a Canadian venture. With Carnarvon trading at a significantly lower price than historical levels when oil was under $60 per barrel, they assert that the company’s valuation is undervalued, estimating its worth at over 35c per share compared to the current 15c share price. Furthermore, they note the potential for corporate activity, given the under-investment in energy and the quality of the project, which could attract larger oil and gas companies looking to enhance their production capabilities.

Source: Trading View

Commentary From The Managers

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NGE Capital

31 Aug 2025

$0.10

Summary

  • NGE Capital has increased its holding in Carnarvon Energy Limited (ASX:CVN), now owning approximately 39.0 million shares.
  • Carnarvon’s assets include a 19.9% shareholding in Strike Energy Limited (ASX:STX), a 10% stake in the Dorado oil and gas development, a 20% stake in the Pavo oil find, and other exploration assets.
  • The estimated value of these assets is between 25-40 cents per share, significantly higher than the current share price of 10 cents.
  • Valuation is affected by uncertainties regarding the Dorado development timeline due to delays by operator Santos Limited (ASX:STO).
  • Santos has postponed the FID timeline for Dorado, impacting investor confidence and share price.
  • Carnarvon is focused on reducing corporate costs and maximizing value from existing resources post a board reshuffle.
  • The company has attempted to sell its interests in Dorado and Pavo, hiring JP Morgan to explore options for value realization.
  • Investor patience has waned, especially after the cancellation of a proposed 7 cents per share capital return.
  • Short-term success for Carnarvon's investment in Strike Energy depends on upcoming drilling results and project completions.
  • Near-term catalysts include a planned drilling campaign in mid-2026 and progress on the XRG/ADNOC consortium bid for Santos.
  • At an average entry price of 10.46 cents, NGE Capital believes they are acquiring significant assets at a discount.
  • Despite challenges, NGE Capital sees Carnarvon as offering a favorable asymmetric investment return profile for patient investors.

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Commentary From The Managers

NGE Capital

31 Aug 2025

$0.10

  • NGE Capital has increased its holding in Carnarvon Energy Limited (ASX:CVN), now owning approximately 39.0 million shares.
  • Carnarvon’s assets include a 19.9% shareholding in Strike Energy Limited (ASX:STX), a 10% stake in the Dorado oil and gas development, a 20% stake in the Pavo oil find, and other exploration assets.
  • The estimated value of these assets is between 25-40 cents per share, significantly higher than the current share price of 10 cents.
  • Valuation is affected by uncertainties regarding the Dorado development timeline due to delays by operator Santos Limited (ASX:STO).
  • Santos has postponed the FID timeline for Dorado, impacting investor confidence and share price.
  • Carnarvon is focused on reducing corporate costs and maximizing value from existing resources post a board reshuffle.
  • The company has attempted to sell its interests in Dorado and Pavo, hiring JP Morgan to explore options for value realization.
  • Investor patience has waned, especially after the cancellation of a proposed 7 cents per share capital return.
  • Short-term success for Carnarvon's investment in Strike Energy depends on upcoming drilling results and project completions.
  • Near-term catalysts include a planned drilling campaign in mid-2026 and progress on the XRG/ADNOC consortium bid for Santos.
  • At an average entry price of 10.46 cents, NGE Capital believes they are acquiring significant assets at a discount.
  • Despite challenges, NGE Capital sees Carnarvon as offering a favorable asymmetric investment return profile for patient investors.

Summary

Collins St Asset Management

30 June 2025

$0.11

  • Carnarvon Energy Ltd (ASX:CVN) holds a 10%-20% stake in offshore oil & gas projects with Santos in the Bedout Basin.
  • The major projects, Dorado and Pavo, are flagged to contain over 500 million barrels of oil or gas equivalent.
  • Undrilled potential in the area could reach 1.6 billion barrels of gas and liquids.
  • Projects are located in a Tier One jurisdiction, positioned to meet the increasing oil and gas demand in Australia.
  • CVN’s share of the Dorado project is equivalent to approximately 50 million barrels, potentially valued at $500 million.
  • As of 30 June, Carnarvon held $186 million in cash, had no debt, and an additional cash call of ~$140 million.
  • The company’s prospects are currently tied to Santos’ progress on the Dorado project, which has faced delays.
  • CVN’s market cap is currently equal to its cash holdings, indicating zero value ascribed to its projects.
  • Recent activity in the oil & gas sector includes a purchase offer for Santos, which could positively impact CVN’s interests.
  • A new partner could enhance the perception and realization of value for the Dorado project.
  • CVN management has proposed a return of capital (7c per share), engaged with Santos, and allocated capital for additional drilling in 2025 and 2026.
  • Management is also exploring potential corporate activity to drive value for investors.
  • Collins St Asset Management believes CVN is currently undervalued, with a base value ascribed at 18c per share.
  • When development is confirmed, CVN’s value could exceed 30c per share.
  • Since 30 June, CVN announced a strategic investment in Strike Energy (ASX: STX), with further details to be provided in the future.

Summary

Collins St Asset Management

31 Mar 2025

$0.12

  • Carnarvon Energy faced setbacks as Santos decided not to proceed with Dorado this year.
  • Share price declined to 12c following the announcement.
  • Board is considering a return of 7c per share to shareholders.
  • Collins St Asset Management believes this is a correct decision that could enhance market valuation of remaining assets.
  • The Bedout basin projects, including Dorado, remain valuable.
  • This strategy may make CVN a more attractive acquisition target by lowering cash balance and purchase price.

Summary

Endeavor Asset Management

31 Jan 2025

$0.13

  • Carnarvon Energy Ltd. (CVN) faced setbacks this month, particularly at its flagship Dorado project.
  • The project is a Joint Venture between Santos Limited (80%), Carnarvon Energy (10%), and OPIC Australia Pty Ltd (10%).
  • There was an unexpected delay as the JV partners chose not to proceed with the Front-End Engineering and Design (FEED) phase at this time.
  • This postponement means a delay in the Final Investment Decision (FID), initially targeted for 2025.
  • Despite the delay, the JV remains confident in the long-term potential of Dorado and the broader Bedout Basin.
  • Plans are in place to drill further exploration wells in 2026 to meet tenure commitments.
  • Carnarvon Energy is financially sound, holding over A$180 million in cash and a US$90 million development cost carry.
  • The company announced an on-market share buyback of up to 10% of its capital, providing relief to shareholders.
  • Endeavor Asset Management continues to hold CVN and will closely monitor the company’s next steps.

Summary

Collins St Asset Management

31 Dec 2024

$0.15

  • Carnarvon Energy Ltd's core asset is its share in the Dorado tenement joint venture with Santos.
  • The development project has been pending for some time.
  • Santos has decided not to commit to the Front End Engineering and Design (FEED) at this stage.
  • This deferral will also push back the previous target for a Final Investment Decision (FID) in 2025.
  • JP Morgan has been engaged to assist the Board in exploring alternative transactions to accelerate value.
  • The value of Carnarvon Energy is expected to reflect the value of the tenement, a strong cash position, a debt-free status, and success in expense reduction.
  • With the recent delay in FID, Collins St Asset Management intends to advocate for a significant return of capital.
  • Distributing the majority of cash would reward patient shareholders while leaving enough for the company's continued operations.

Summary

Collins St Asset Management

30 Sept 2024

$0.16

  • Collins St Asset Management has witnessed a transformation in the Board within the last year.
  • They anticipate the next six months will be crucial for the company to prepare for realizing asset value.
  • The company has engaged with bankers to facilitate the marketing of its assets.
  • Expected sales or corporate actions may significantly narrow the gap between the current share price and the company’s intrinsic value.
  • While precise timing of outcomes is uncertain, Collins St Asset Management maintains a positive outlook on the business and its future prospects.

Summary

Collins St Asset Management

31 Mar 2024

$0.19

  • Carnarvon Energy (ASX:CVN) has faced management issues, with previous boards extracting over $16 million in fees while having minimal personal investment.
  • Board's alignment of interests was questioned, as they raised $203 million with only a $15,000 contribution from themselves.
  • Concerns arose regarding the board’s focus on new projects like Dorado, suggesting unnecessary risks and potential dilution for existing shareholders.
  • New management has made significant changes, including cutting costs and their own salaries, aligning their compensation with shareholder success.
  • Collins St Asset Management views the focus on core project Dorado as a positive development that may lead to outsized performance for shareholders.

Summary

Collins St Asset Management

31 Dec 2023

$0.22

  • Collins St Asset Management has a favorable view on Carnarvon Energy Ltd (CVN) due to significant oil/gas discoveries.
  • CVN’s operations are strategically located in a tier one jurisdiction off the coast of Western Australia.
  • The company is fully capitalized to fund its share of the Dorado project.
  • Current share prices are trading at a discount to the implied value of the resource.
  • Collins St continues to monitor changes in management and governance as critical to realizing CVN's value.
  • In 2023, CVN raised capital effectively, assisting in further development of the Dorado project.
  • The market reacted negatively due to management's pursuit of new projects with existing cash reserves.
  • Management change discussions initiated in early 2023 ultimately led to board-level changes.
  • Improved market response following management concessions resulted in share price recovery from 12c to 22c.
  • Collins St Asset Management is committed to closing the existing value gap and supporting new management initiatives at CVN.

Summary

Collins St Asset Management

30 Sept 2023

$0.17

  • CVN is a relatively small energy company with main assets off the coast of WA.
  • Major project is a joint venture with Santos named Dorado, considered a tier one asset.
  • Dorado project contains approximately 160 million barrels of oil, equating to about 25.5 billion litres of oil.
  • Santos has faced distractions due to another project in Canada but is refocusing on the Bedout Basin.
  • Recent procurement of primary approvals, including environmental approval achieved in February.
  • Santos expects to ramp up production to 100,000 barrels per day.
  • Carnarvon has identified additional assets that can utilize existing infrastructure during ramp-up.
  • A significant challenge is the huge capital cost associated with the project, raising market concerns about funding their 20% share.
  • Management has sold half their stake in the project to CPC Corporation (Taiwan) to address funding concerns.
  • Based on the deal terms, estimate CVN should be trading at around 32c.
  • However, despite the deal, the share price is currently at just 10c.
  • Analyst reports suggest CVN's project value (un-risked) is about $800 million.
  • Company holds approximately $180 million in cash or ~$320 million in liquidity after the asset sale.
  • Cash backing of almost 18c per share makes CVN appear unreasonably cheap.
  • With industry consolidation and corporate activity, potential interest from larger peers is plausible.

Summary

Collins St Asset Management

30 June 2023

$0.13

  • Carnarvon Energy Ltd (CVN) was initially purchased by Collins St Asset Management in 2022 due to the undervaluation of their Dorado project, which was worth significantly more than the 20c share price at the time.
  • Recognizing potential challenges, including the need for funding and a struggling sector, Collins St Asset Management remained optimistic about CVN's future.
  • Subsequent to the initial investment, management executed a partial sell-down of their Dorado stake, ensuring that their capital expenditure was fully covered.
  • The sale indicated a value for CVN of approximately 32c per share, based on the deal value and evaluations of other assets.
  • Despite this insight, CVN's share price stagnated around 14c.
  • Collins St Asset Management continues to believe in the prospects of Carnarvon's projects, especially considering the current market capitalization of approximately $200 million.
  • The company has a cash balance of about $178 million post-deal completion, along with an entitlement to an additional $130 million.
  • Even without ascribing value to their projects, CVN's share price appears excessively low.

Summary

Collins St Asset Management

31 Mar 2023

$0.14

  • Carnarvon Energy Ltd is a joint venture partner with Santos for one of the largest undeveloped offshore gas projects globally.
  • The Dorado project is located off the coast of Western Australia, a Tier 1 project in a Tier 1 jurisdiction.
  • Recently raised funds through a partial sell down of its interest, alongside a debt issuance, positioning itself to utilize almost $180 million in cash for Dorado obligations.
  • Despite recent share price activity, upside potential for Carnarvon is considered significant.
  • Struggles attributed to market frustration with Santos prioritizing other projects over Dorado.
  • Concerns regarding Carnarvon’s funding capabilities are seen as alleviated.
  • Expectations for real progress on the Dorado project in the near to medium term, given the attractive cost profile.

Summary

Collins St Asset Management

30 Sept 2022

$0.16

  • Carnarvon Energy Ltd holds a 20% minority stake in an oil and gas joint venture with Santos.
  • The Dorado asset is one of two massive Tier 1 projects controlled by Santos.
  • Santos plans to prioritize the Dorado project after completing a Canadian project to facilitate its sale.
  • Carnarvon is currently trading at a lower price than when oil was under $60 per barrel.
  • A recent conservative DCF valuation suggests Carnarvon is worth significantly more than 35c per share.
  • With an end-of-quarter share price of just 15c, there is potential for significant upside.
  • Carnarvon could be a target for corporate activity due to its project size and quality.
  • In the current market environment, small single project operators face challenges, amplifying interest from larger companies.
  • Given the underinvestment in energy, we expect significant interest from larger oil and gas firms.

Summary

Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed. 

Ella Walker, Equity Research Analyst

ANALYST INSIGHT

Equity Research Analyst

"With Carnarvon Energy's strategic position in a Tier 1 project and the looming interest from larger players, the current share price appears disconnected from its true potential. Upside seems inevitable as the energy landscape shifts and consolidation becomes essential."

Last Updated: 30 Jun 2025

Query The Data

Frequently Asked Questions

Who is investing in Carnarvon Energy Ltd (ASX:CVN)?

Fund managers including Collins St Asset Management and Endeavor Asset Management have invested in Carnarvon Energy Ltd (ASX:CVN).

Why do fund managers invest in Carnarvon Energy Ltd?

Fund managers are investing in Carnarvon Energy Ltd due to its 20% stake in the high-potential Dorado oil and gas joint venture with Santos, which is prioritized for development. Despite current trading at a lower price than historical benchmarks, a conservative valuation suggests significant upside potential. The company is also seen as an attractive acquisition target in a market with limited small operators, particularly given the underinvestment in energy and the project's Tier 1 quality.

What happened to Carnarvon Energy Ltd (ASX:CVN)?

There have been no recent updates from fund managers regarding Carnarvon Energy Ltd although fund managers including Collins St Asset Management and Endeavor Asset Management have previously commented.

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