With the business potentially at an important milestone, we thought we'd take a closer look at Carnarvon Energy Limited's (ASX:CVN) future prospects. Carnarvon Energy Limited engages in the exploration, development, and production of oil and gas properties in Australia. The AU$313m market-cap company announced a latest loss of AU$656k on 30 June 2024 for its most recent financial year result. Many investors are wondering about the rate at which Carnarvon Energy will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Carnarvon Energy

Carnarvon Energy is bordering on breakeven, according to the 4 Australian Oil and Gas analysts. They anticipate the company to incur a final loss in 2024, before generating positive profits of AU$2.9m in 2025. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of -26% is expected,

We're not going to go through company-specific developments for Carnarvon Energy given that this is a high-level summary, however, bear in mind that typically energy companies, depending on the stage of operation and resource produced, have irregular periods of cash flow. This means that a low or volatile growth rate in the near future is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one aspect worth mentioning. Carnarvon Energy currently has no debt on its balance sheet, which is quite unusual for a cash-burning oil and gas company, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Carnarvon Energy to cover in one brief article, but the key fundamentals for the company can all be found in one place – Carnarvon Energy's company page on Simply Wall St. We've also compiled a list of essential aspects you should further examine:

1. Historical Track Record: What has Carnarvon Energy's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Carnarvon Energy's board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.