• Carnarvon to return up to $0.07 per share (A$125 million) to shareholders
• Capital Return subject to shareholder approval and other conditions
• Company to retain at least A$62 million cash to fund future drilling and Dorado project

Carnarvon Energy Limited (Carnarvon) has announced the commencement of a process to enable the company to return capital to shareholders (Capital Return). Considering the announced delays in the development of the Dorado liquids project (Dorado), and in the absence of alternative value-accretive opportunities being identified to date, the Board has determined that the business may hold cash that is surplus to its current requirements and is accordingly proposing to potentially return up to $0.07 per share (A$125 million) to shareholders. The Capital Return is subject to Carnarvon shareholder approval, confirmation of the Australian income tax treatment of the distribution by an Australian Taxation Office (ATO) class ruling process, the receipt of any ASX waivers sought, and no better alternative use of the capital being identified by the Board. Following the Capital Return, the Company intends to retain at least A$62 million cash, which is expected to be sufficient to fund the drilling of up to three wells in the Bedout Sub-basin, planned to occur over the next 4 years, as well as take the Dorado Project to a Final Investment Decision. Any future Dorado development costs may be funded by a combination of the existing US$90m capital cost carry and new debt.

The Company will be seeking a Class Ruling from the ATO to confirm that the Capital Return will not be treated as a dividend for Australian taxation purposes. A Class Ruling is expected within six months. A more detailed explanation of the Capital Return proposal and confirmation of the timetable will be included in a Notice of Meeting to be released at a later date.