The onshore Thailand fields made Carnarvon a darling of the market when they began gushing oil at rates of up to 5000 barrels of oil per day (net to the company) in 2008.
Within a year, Carnarvon's market cap had shot as high as $560 million and the company was a rare bright spot in the gloom that followed the GFC.
The company warned investors from as early as 2009 the volcanic reservoirs behind the Thailand oil bonanza were highly variable and difficult to drill but the market was eager for the good news story to continue.
Over the next two years, the volcanic reservoirs proved even trickier than feared and production declined to about 300,000 barrels a year — about a quarter of the peak level.
Carnarvon's difficult experiences in Thailand were summed up a few weeks ago with the release of an annual independent reserves report.
The company's share of 2P reserves was marked down from 20.4 million barrels to 12.1MMbbl, although 1P reserves were less affected (down from 4.7MMbbl to 3.8MMbbl, with 0.4MMbbl of the decrease due to oil produced in the year).
The report triggered a new sell-off in Carnarvon shares to a low of 10c, bringing the company's market cap down to about $70 million.
Managing director Adrian Cook is confident the company has now reached a baseline for oil production from the volcanic reservoirs and can steadily rebuild.
"From here we're looking to build on the steady base of residual oil we are getting out of volcanics and generate new production from the more predictable sandstone reservoirs," Cook said.
"We'll keep pursuing the volcanics and look for repeats of these high-flying reservoirs.
"These are very valuable when they flow but they are unpredictable and have to be treated as a bonus on the base flow.
"We will not be relying on them to the same extent that we did in the past."
The company is searching for a technological solution to what is essentially an unconventional oil play.
A trial of inflow control devices has had mixed results.
"This could be a most conventional unconventional reservoir," Cook said.
"I would like to think somewhere along the line we can begin to introduce new technologies that can more precisely pinpoint the oil in the fractures and produce it in a more controlled way.
"We do know there's a lot of oil in place. When we drill we go through oil show after oil show."
The market is still punishing the company for its Thailand experience.
A share price recovery is being hindered by delays in government approvals for drilling projects by all explorers in Thailand — onshore and offshore.
The current share price is even below the discounted value of Carnarvon's 1P reserves (about 12c a share).
It means the market is not recognising probable reserves and cash on hand of $10 million.
The market is also putting no value on what is fast emerging as the company's ace card — the five so-called Phoenix permits in the Roebuck Basin.
The basin has undergone a transformation in the past four years from an exploration no man's land to arguably the hottest offshore patch in the country, thanks to Woodside and Shell.
Until recently, the Roebuck Basin, wedged between the Carnarvon and Browse basins, was a vacant space on the acreage maps.
The federal government offered four areas in the 2008 acreage release but bidders were hard to come by in the darkest days of the GFC, when explorers were desperate to preserve cash.
Carnarvon bagged the best permit on offer — WA-435-P, which includes the Phoenix gas discovery — by committing to a work program worth only $500,000 over the first three years.
It then swapped 50% of WA-435-P with privately owned Finder Exploration for 50% of the immediately surrounding permits, WA-436-P, WA-437-P and WA-438-P.
Carnarvon was subsequently awarded WA-443-P in 2010, giving it an interest in contiguous coverage over 28,000sq.km.
Its initiative to get into the Roebuck Basin now looks incredibly smart, based on a very aggressive subsequent move by Woodside and Shell into the same area.
Woodside now has interests in 10 permits around the Phoenix acreage, including two permits awarded earlier this week at the boundary between the Roebuck Basin and the Northern Carnarvon Basin.
Woodside managing director Peter Coleman has rated the Roebuck as the company's most exciting exploration project and is throwing vast resources at the area.
It is borne out by plans for a massive 3D seismic survey over 11,000sq.km this year, ahead of exploration drilling next year.
Cook said Carnarvon's former managing director, Ted Jacobson, had kept an eye on the Roebuck Basin for 20 years.
"Ted has great knowledge about this part of the world and he was integral to bringing a lot of assets from the area into Tap while he was there," Cook said.
"Full credit to him, I think he's landed a classic with the Phoenix permits.
"And it was really why, after taking the reins from Ted, I was keen to focus the management and staff team on the assets and area.
"We've also let go of projects in Indonesia and New Zealand and pared back to the assets in Thailand and the Roebuck Basin because these provide us with plenty of potential on their own.
"Our teams can work without distraction."
The immediate future for the Phoenix permits is to secure a farm-out over WA-435-P and WA-437-P, straddling the Phoenix and Roc prospects firmed up by the Phoenix 3D survey in 2010.
Cook is aiming to secure a farm-out with a major company in the next quarter.
Farm-outs will be sought for other permits in the group following the acquisition and processing of a 4300sq.km 3D survey (the Zeester survey) across the northern end of the Carnarvon/Finder acreage.
The Zeester survey is a big investment that would normally be beyond the resources of a junior or even mid-cap explorer but it has been made possible thanks to the connections with Fugro, which is conducting Zeester in the hope of subsequent licencing deals with other clients.
If interest in the Roebuck continues to build at the same rate as the past two years, it will be a very good bet.
