As blue-chip stocks are running out of favour, investors should start paying more attention to small and mid-cap growth stocks. The ‘Small Ordinaries’ index has recently outperformed the ‘S&P/ASX200’ and research suggests that diversification into growth companies is healthy for most portfolios. Today’s stock in focus is the oil and gas explorer Carnarvon Petroleum (ASX:CVN) which made headlines in 2014 following a significant oil discovery in the North West Shelf of Western Australia.
Carnarvon's Sep Q drilling and corporate costs were in line with the broker's expectation. Following the company's recent capital raising it should be well funded to progress the Dorado prospect through to completion of front-end engineering & design (FEED).
Carnarvon has announced a 1-5 entitlement offer at 6.4c to raise $12m ahead of the spudding of the Phoenix exploration well. A call option will also be granted. The broker assumes full take-up, and has cut FY14 earnings by 27%.