Santos delays Dorado oil and gas project decision; partner Carnarvon shares tumble 23%

Carnarvon Energy

21/01/2025 07:44

Jan 21 (Reuters) - Santos  STO.AX  has effectively
stalled plans for a Western Australian oil and gas project worth
over A$3 billion ($1.87 billion), sending minority partner
Carnarvon Energy's  CVN.AX , shares tumbling on Tuesday.
    Carnarvon's shares closed about 23% lower, ending the day as
the top loser on the local all ordinaries index  .AORD , after
the firm said Santos had dumped plans to buy an oil production
and storage vessel at the Dorado project and expressed
intentions against starting engineering and design work.
    Shares of Santos, which owns 80% of the Dorado project,
ended 2.2% lower on Tuesday. Carnarvon and Taiwan's state-owned
CPC Corporation own 10% each.
    "After a detailed assessment of all relevant factors, Santos
recommended to the joint venture that the development concept
for Dorado be revisited after further evaluation of Bedout Basin
resources," a spokesperson for Santos told Reuters.
    Santos' primary focus for 2025 remains delivering on its
crucial Barossa and Pikka gas projects, it added. Its CEO Kevin
Gallagher had warned in August and again at an investor briefing
in November that the oil and gas major would put a high priority
on shareholders returns.
    CPC Corporation did not immediately respond to a Reuters
request for a statement.
    The project's slowdown poses a major risk to Carnarvon, as
its primary asset is its 10% stake in the Dorado project. 
    The company has been, for some time, facing shareholder
angst over its valuation, with the Australian Financial Review
reporting last year that it had given its bankers the go-ahead
to seek bids for the sale of the company or its assets. 

($1 = 1.6051 Australian dollars)

 (Reporting by Rishav Chatterjee in Bengaluru; Editing by Janane
Venkatraman)
 ((Rishav.Chatterjee@thomsonreuters.com;))