Carnarvon Energy Limited ('Carnarvon' or 'the Company') (ASX:CVN) is pleased to provide an update on project and corporate activities that are currently in progress. Energy security and rising cost challenges continue to ripple through the global economy with Europe reporting energy costs currently comprising around 10% of household spending. Energy prices, particularly in terms of liquefied natural gas and oil are expected to remain strong, especially through the European winter for the reasons outlined below:

Carnarvon's long held view is that liquid fuel demand will continue to be robust into the foreseeable future, notwithstanding concerted efforts to advance alternative energy transition products. This has been evidenced by studies that show, despite strong electric vehicle take up, oil consumption has not materially changed. With this focus, the Company is in a very strong position having a well-advanced oil development project in the Bedout basin with resources net to Carnarvon (2C resource) from Dorado and Pavo aggregating 82 million barrels of oil equivalent. Testing of further development potential upside at Pavo is also currently under consideration. The proven and potential gas resources in the basin, which are currently under assessment by the Joint Venture for future exploitation, also offers a highly attractive investment proposition

In addition to these resources, Carnarvon has been progressing its work on and investment in transition fuels that are strategically linked with and produce products that are currently selling at premiums to their equivalent oil related products. Recently the Carnarvon team met with parties to assess markets and operations in Europe, the USA and Asia where the demand for low carbon intensity energy products, like renewable diesel and sustainable aviation fuel, materially outstrips supply. This growing market presents a very strong investment opportunity and one in which Carnarvon has already positioned itself with its focus on technology led solutions, and by securing land in the Shire of Narrogin and material feedstock supply for its first project. In terms of the Company's traditional oil and gas operations, Carnarvon remains committed to building its resource and reserve base in the highly prospective Bedout basin through the exploration, development and production of both oil and gas, which have been proven to exist in the basin. The Dorado development was scheduled to be Final Investment Decision ('FID') ready before the end of the current calendar year.

On 17th August, Carnarvon and its Joint Venture ('JV') partner advised that the project had substantially completed the Front-End Engineering and Design phase, however the current inflationary cost environment and supply chain uncertainty do not support a FID in 2022. Notwithstanding this decision, the project remains an important development for both JV partners who are seeking to balance the timely sanctioning of the project with important fiscal discipline in this current inflationary environment. The JV will continue to assess the cost environment into the new year, with some potential easing signs recently becoming apparent, and progress finalisation of the remaining regulatory approvals. Earlier this year the Pavo-1 well successfully discovered a material 43 million barrels (gross, 2C resource) of light sweet oil, plus gas and associated LPGs in the northern Pavo structure. The result at Pavo-1 also significantly de-risks the hydrocarbon bearing potential of the separate southern Pavo structure and nearby prospects that are currently being assessed in light of this discovery. The greater Pavo field has the very real potential of being produced through the Dorado field's facilities, which contain 162 million barrels (gross, 2C resource) of light sweet oil, condensate, LPGs and a substantial volume of low CO2 gas. Currently, the operator is assessing the Pavo-1 well results from the perspective of development tieback to Dorado and its impact on the prospectivity for future drilling targets. In terms of the prospectivity within the Bedout basin, more than 100 prospects have been identified across the JV's acreage (WA-435-P, WA-436-P, WA-437-P and WA-438-P). These cover a broad range of play styles. From this prospect list, the top five prospects in each block have been reassessed following the successful Pavo discovery this year with potential for high-grading to drilling status. These top prospects contain both gas and liquids focused targets. The Carnarvon team is also actively working on a number of initiatives which aim to enhance the funding position for the Dorado development as well as pursuing opportunities that have the potential to generate earnings and cash flows ahead of that currently planned from the Dorado field, including the potential for earnings from the production of renewable fuels

Managing Director, Adrian Cook said: 'Carnarvon is in a very strong position at the current time with significant oil and gas resources being progressed for development, a basin holding position with exciting exploration potential and a transition plan that is product led, earnings focused and capable of significant expansion. Supporting these activities is a strong balance sheet with over A$100 million in cash and no debt. Whilst the Dorado development FID has been delayed, it is for good reason and one in which we believe will stand us in a robust position through being financially disciplined. The Dorado and Pavo fields are unquestionably world class, capable of delivering quality product over an extended period of time, with huge potential upside from yet to be discovered additional fields, and we look forward to providing updates as we continue to progress this work.'

Contact:

Investor

Thomson Naude

Chief Financial Officer

Phone: (08) 9321 2665

Email: investor.relations@cvn.com.au

Media

Josh Nyman

General Manager

Spoke Corporate

Phone: 0413 243 440

Email: josh@spokecorporate.com

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