Managing Director’s Review

Carnarvon’s core asset base, and business focus, lies in the Bedout Sub- basin offshore Western Australia that includes the world class Dorado and Pavo discoveries. The Dorado oil and gas discovery, of which Carnarvon holds a 10% equity interest following the post year-end divestment to CPC, was made in 2018 and at 162 MMbbl recoverable (Pmean, gross) (see page 15), is one of the largest oil fields discovered in the Northwest Shelf.

Two successful appraisal wells in 2019 allowed for the commencement of Front-End Engineering and Design (FEED) for development of the Dorado field, with the Joint Venture subsequently securing the key regulatory approvals needed for development in the form of a Production Licence and Offshore Project Proposal.

Drilling close to Dorado resulted in the discovery of the Pavo oilfield in 2022 at 43 MMbbl recoverable (Pmean, gross) (see page 15). Carnarvon holds a 20% equity interest in this field following the divestment to CPC.

Despite the Dorado development being technically ready for FID during the past year, the decision was made to defer FID in August 2022 due to global cost and supply chain reasons. Disappointingly, at the end of the period, the FID for the Dorado development is yet to be realised, with the Joint Venture planning for FID in 2024.

At all times during this journey Carnarvon has been working to be financially ready to commit to the project. A very significant effort has been made with proposed lenders and potential investors to meet Carnarvon’s required funding commitment for the project. The Company continues to focus on ensuring a strong financial position is maintained for it to be FID ready.

At the current time, the Company is in a very strong financial position having $319 million in liquidity, comprising cash of $181 million and $138 million in future contribution to Carnarvon’s Dorado development costs. In addition to these amounts, we expect to secure debt finance from a range of lenders for the Dorado development.

The exploration potential of the Bedout blocks surrounding the Dorado and Pavo fields is significant, with the twenty best exploration targets alone containing a risked potential resource of 1.5 billion boe (Pmean, gross) (see page 17). Realisation of this huge potential will be achieved through successful drilling and development, which is the key to the large financial rewards that shareholders have been waiting for. Every effort is being made by the Board, management and staff of Carnarvon to ensure the Joint Venture moves towards this goal.

The Company has also been working towards building a sustainable renewable fuels business. The technology for this business has required a more extensive assessment than was initially expected, albeit Carnarvon’s strong technical and commercial discipline has shown potential for this to result in a future commercial project.

I would like to thank the Board and Carnarvon staff for their support and dedication this year and in the year ahead as we focus on progressing the Dorado development to FID and maturing the vast opportunities within the Bedout Sub-basin, as well as the renewable fuels business and possible inorganic growth opportunities.

Adrian CookManaging Director