The analyst has reduced his valuation of Australian Securities Exchange-listed explorer Carnarvon Petroleum to 18 cents per share from 28cps because of the lower than expected resource guidance.

But he stated that with an estimated $98 million in cash in the bank after 2015 costs, and a free carry to a cap of $US70 million in Roc-1 that the stock is still worthy of a speculative buy recommendation.

Carnarvon commissioned DeGolyer and MacNaughton to conduct an independent resource assessment of the Phoenix 3D seismic area, which surrounds Phoenix South and Roc, and the results were less exciting than many had hoped.

Phoenix South and Phoenix were assessed as having a best estimate gross contingent resource of 31 million barrels, or a net 6.2MMbbl to Carnarvon.

At just 30MMbbl Andrew said Phoenix was probably not large enough to support a standalone development at current oil prices, but could be tied-back to a larger development associated with any discovery at Roc.

Roc was assessed as having a best estimate prospective unrisked resource of 42MMbbl, or 8.4MMbbl net to Carnarvon.

The report found there is a risked estimate of 25MMbbl over all the prospects in the Phoenix 3D area, which is just a small part of the Bedout Sub-basin project.

DeGolyer and MacNaughton used a recovery factor of 19% for the 300MMbbl oil-in-place, which is at the lower end of the historical recovery factors on the North West Shelf of 20-30%, recognising that the Roebuck Basin has never produced commercial oil.

Noble Corporation's new build jack-up rig Tom Prosser has been contracted for Roc-1, probably in September.

Hartley's said the lower rig rates being experienced meant the cap should cover Carnarvon's entire share of costs, almost completely removing the risk of overruns.

Carnarvon will spend $8-10 million on 3D seismic this year to develop its North West Shelf assets.