The Group reports an after-tax loss of $53,753,000 for the financial year ending 30 June 2022 (2021: profit: $17,136,000).
Carnarvon’s balance sheet remains strong with cash and cash equivalents of $112,424,000 (2021: $98,436,000), with no debt and minimal commitments going forward.
During the financial year, Carnarvon successfully raised $67,194,000 after fees through a placement of 234,806,987 new shares to professional and institutional investors. The proceeds of the placement contributed to the strong current financial position and are expected to contribute to the Dorado field liquids development.
Following the completion of the Buffalo-10 well, Carnarvon recognised a $30,120,000 loss in relation to its investment in the Buffalo Joint Venture which primarily included the write-off of previously capitalised exploration costs in relation to the Buffalo-10 well. As the Company was free carried for the first US$20 million of the Buffalo-10 well costs, this does not reflect the cash outlay by the Company during the period and includes impairment of the accounting fair value adjustment of $23,635,000 that was recognised in the prior year.
In July 2021, Carnarvon formed the FutureEnergy Australia Joint Venture with Front Impact Group, investing $2,592,000 to fund a biorefinery project. The Company recognised it’s 50% share of the loss of $513,000 incurred by the Joint Venture during the year as the Joint Venture commenced Front-End Engineering and Design (FEED) work for its first biorefinery.
During the period, the Company invested $38,598,000 on exploration and evaluation assets. These costs were primarily in relation to the drilling costs for the Pavo-1 and Apus-1 exploration wells, acquisition of 3D seismic within the Bedout basin permits and FEED activities for the Dorado development.
The Company also wrote off $10,724,000 (2021: $0) of exploration expenditure which was previously capitalised. This expenditure related to the TL-SO-T 19-14 production sharing contract and the WA-523-P, WA-521-P, WA-155-P, AC/P62 and AC/P63 permits. This prudent accounting position was taken because it is not certain that these costs will be recovered, particularly as the Company focuses its resources on the proven and highly prospective Bedout Sub-basin, which contains the Dorado development, the recent Pavo oil discovery and a significant number of attractive prospects.
During the financial year there was an unrealized gain on foreign exchange of $3,800,000 (2021: loss $1,224,000) due to the effect of a depreciation of AUD against the Carnarvon’s USD cash and financial assets.
The Company does not currently use derivative financial instruments to hedge financial risk exposures and therefore it is exposed to daily movements in the international oil prices, exchange rates, and interest rates. The Company manages its cash position in US Dollars and Australian Dollars to naturally hedge its foreign exchange rate exposures having regard for likely future expenditure.