At the time of writing, shares of Carnarvon Petroleum Ltd [ASX:CVN] are up by 24.74%, to 60.5 cents per share. Carnarvon Resources is an oil and gas explorer, with offshore leases across Western Australia.
Why did Carnarvon Petroleum Ltd shares do this?
The company announced that it hit another 40 metres of net oil pay in the Crespin and Milne Members of its Dorado-1 well.
What now for Carnarvon Petroleum Ltd?
Carnarvon’s Managing Director, Adrian Cook said the latest results make the Dorado result all the more impressive:
‘The oil discovered in the Caley Member is very significant in terms of its likely scale and in proving that this play works in the basin. Discovering more oil in the Crespin and Milne Members makes this a truly incredible find, for Dorado and for similar structures nearby that have been identified in Carnarvon and Quadrant’s prospect list.’
Traders and investors agreed with Cook, sending the share price higher. The market capitalisation stands at close to $720 million at 60.5 cents.
The discovery could be a massive boost for the struggling oil and gas sector ― especially at the junior end of the market. In the future, with drilling and evaluation of the Dorado-1 completed, Carnarvon’s assessment of the hydrocarbon volumes is underway.
The bottom line: I like where the company is going. But the story now comes down to the hydrocarbon volumes ― how big is this discovery? The Dorado structure at the Caley interval is estimated to hold roughly 125 million barrels of oil equivalent. If the actual volume exceeds this estimate, the share price could explode ― especially if the oil price pushes higher!
Resources Analyst, Markets & Money
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