Wayne Gretzky probably doesn’t know it, but Carnarvon Petroleum CEO Adrian Cook says the hockey legend’s strategy has played a major role in the largest liquid hydrocarbon discovery in Australia in 30 years and the potential unlocking of a new oil province in the offshore Canning Basin.

Speaking to Hart Energy after Santos announced it had bought out Carnarvon’s senior JV partner, Quadrant Energy, for US$2.15 billion, thus acquiring an 80% stake and operatorship of the jewel-in-the-crown Dorado-1 well, Cook said Carnarvon was delighted with the development.

“I think it’s a great move as it brings a large company with a lot of oil and gas experience into play. Quadrant was a smaller company with private equity owners. So obviously they had a different driver to someone like Santos. Santos is an oil and gas company, they know what exploration is, they know the risks and they’ve got the balance sheet to do more than Quadrant would under their private equity umbrella,” Cook said.

Perth-based Carnarvon, with a 20% stake in Dorado-1, saw its share price spike 57% in August as it announced a light oil, 60 degree API, 170 MMbbl 2C resource for Dorado, which was for Cook and company the equivalent of Gretzky’s Edmonton Oilers winning the Stanley Cup in the 1980s.

Through the oil price downturn, Carnarvon kept focus with Cook applying Gretzky’s hockey strategy to it exploration endeavors, “Skate to where the puck is going, not to where it has been.”

For good measure Cook may have added another Gretzky pearl, “You miss 100% of the shots you never take,” to underline strikes on goal which Carnarvon COO Phil Huizenga said were precision-executed with a “laser-sharp focus.”

“Like many of our peers, previously, we had bits and pieces everywhere with producing assets in Thailand and exploration blocks in Indonesia and New Zealand,” Huizenga said. “So, we decided about five years ago to do one thing and do it right, otherwise you can’t have a laser-like focus. We looked at our portfolio and really liked the North West Shelf, as that is where we have experience in our company, and decided to divest all other assets to fund it.”

When the industry went into survival mode contraction in early 2016 as West Texas crashed to a 10-year low of US$26/bbl, Carnarvon was in position to execute Gretzky’s strategy.

“Everyone in the industry was getting rid of people, concentrating on production and not worrying about exploration,´ Huizenga said. “We figured you can’t stop exploration for three to five years without some reaction. The oil price would have to increase sometime in the future and when that happened, people were going to want to drill more wells and would need acreage.

“Hence we were able to pick up all this acreage on the North West Shelf for a song when no one else was doing it and the whole industry was cutting costs. Now some of the big players are coming to us and saying, ‘We like your story at Dorado and obviously we can’t get in there now because Santos and you have the whole basin, but what else have you got and where else can we participate?’”

What Carnarvon does have, apart from Dorado, are excellent options in a portfolio that includes a potentially low-cost, 30 MMbbl development at Buffalo, in the Timor Sea, and an additional 800 Bcf of gas and 40 MMbbl condensate combined at Roc-Dorado, which are only 15 km (9 miles) apart.

Santos has flagged FID for an FPSO development at Dorado for 2020 and the JV’s gas has multiple options to market including a domestic pipeline at Port Hedland, 150 km (93 miles) away, the North West Shelf LNG plant at Karratha or the Santos-operated Devil’s Creek domestic gas plant at Dampier.

Carnarvon is not rushing a decision moving forward with Santos and says it will be guided by only one driver, to “get the most value for our shareholders.”

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