Condor Energies Inc. (“Condor”) (TSX:CDR), a Canadian based, internationally focused energy transition company focused on Central Asia is pleased to announce the release of its unaudited interim condensed consolidated financial statements for the three months ended March 31, 2024 together with the related management’s discussion and analysis. These documents will be made available under Condor’s profile on SEDAR+ at www.sedarplus.ca and on the Condor website at www.condorenergies.ca. Readers are invited to review the latest corporate presentation available on the Condor website. All financial amounts in this news release are presented in Canadian dollars, unless otherwise stated.
HIGHLIGHTS
- The Company executed a production enhancement services contract in January 2024 to increase natural gas production and overall recovery rates from eight conventional natural gas-condensate fields in Uzbekistan and the Company commenced operations on March 1, 2024.
- March 2024 production from Uzbekistan was 11,167 boe/d comprised of 65,416 Mcf/d (10,903 boe/d) of natural gas and 264 bopd of condensate.
- March 2024 sales from Uzbekistan production was $7.2 million.
- The Company received a natural gas allocation in January 2024 in Kazakhstan to be used as feed gas for the Company’s first modular liquefied natural gas (“LNG”) production facility.
- On March 22, 2024, the Company issued three-year term convertible debentures bearing 9% interest per annum and convertible into 2,950,336 common shares for gross proceeds of USD $4.8 million (CAD $6.5 million).
Production Enhancement Contract in Uzbekistan
On January 30, 2024, the Company executed a production enhancement services contract with a national holding company of Uzbekistan to increase the production, ultimate recovery and overall system efficiency from an integrated cluster of eight conventional natural gas-condensate fields (the “Fields”) in Uzbekistan (the “PEC Project”). The Fields consist of stacked carbonate and clastic reservoirs which are geologically similar to those in the Western Canadian Sedimentary Basin. The Project license area is 279 km2 (69,000 acres) and includes 77 wells currently producing and 39 wells shut-in or suspended that have the potential for recompletion and reactivation. The PEC Project will increase the country’s domestic supply of natural gas while also contributing to carbon emission reductions. The Company is responsible for all capital expenditures and operating costs of the PEC Project and receives a percentage of revenues less prescribed royalties in exchange for performing the production enhancement services.
The Company, through its local subsidiary, commenced operations of the PEC Project on March 1, 2024 and March 2024 production was 11,167 boe/d comprised of 65,416 Mcf/d (10,903 boe/d) of natural gas and 264 bopd of condensate. Although restricted in April and May for 18 days due to downstream infrastructure maintenance, production from April 1 to May 14, 2024 was 9,996 boe/d, comprised of 58,548 Mcf/d (9,758 boe/d) of natural gas and 238 bopd of condensate.
To enhance production, the Company plans to introduce proven modern technologies and operating techniques that include artificial lift, workover programs, infill and extension drilling programs along with investigating deeper horizons which are productive in other fields and regions of the country. Reservoir and production data is being collected and analyzed to confirm near-term capital efficient enhancement opportunities. Seismic reprocessing and a 3-D seismic program are also planned to support these efforts and a reserve report compliant with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities will be completed for 2024 year-end reporting purposes. The existing pipeline and facilities infrastructure is also under evaluation for optimization of water handling, field compression and the field gathering network. Production guidance will be provided once the baseline production, decline rates and field operating parameters are confirmed.
LNG in Kazakhstan
In January 2024, the Company received a natural gas allocation from the Government of Kazakhstan to be used as feed gas for the Company’s first modular LNG production facility. The feed gas will be liquefied to produce up to 350 Tonnes per day (210,000 gallons per day) of LNG, which can fuel approximately 125 rail locomotives or 215 large mine haul trucks (150 Tonne haul capacity) while contributing to carbon emissions reductions by displacing diesel fuel usage. Discussions are underway with end-users to confirm LNG volume commitments and the Company is reviewing project funding alternatives before proceeding with construction. Front-end engineering and design are complete and detailed engineering will commence in 2024. The Company has secured the land required for construction of the first two modular LNG production facilities.
The Company’s LNG initiative fully supports the strategy of the Government of Kazakhstan to materially expand the Trans-Caspian International Transport Route (“TITR”) which links a major Asian trade route with Europe. LNG will be used as a domestically produced low-carbon substitute to diesel fuel to address the increased usage of rail locomotives and transport trucks between China and the Caspian Sea and the marine vessels used to cross the Caspian Sea.
Lithium License in Kazakhstan
The Company holds a 100% working interest in the contiguous 37,300-hectare area which provides the subsurface exploration rights for solid minerals for a six-year term (the “Lithium License”). Given its strategic access to Asian and European lithium markets, this region is ideally suited for the rapid deployment of emerging Direct Lithium Extraction (“DLE”) technologies to generate lithium for EV batteries and other electricity storage applications.
Since the Lithium License is not associated with legacy oil wells nor any reported presence of hydrogen sulphide, a less complex and less capital intensive modular DLE technology is envisioned for the separation of lithium from the brine when compared with lithium extraction projects targeting oilfield brines, as are being advanced in Canada. By applying proven DLE production technologies, the Company expects to have a much smaller environmental footprint than existing lithium production operations which use open-pit mining or brine evaporation ponds. The Company is also evaluating the construction of a renewable power generation project to achieve net-zero emissions for its lithium production.
The Company’s initial development plan for the Lithium License includes drilling and testing two wells to verify deliverability rates, confirm the lateral extension and concentrations of lithium in the tested and untested intervals, conduct preliminary engineering for the production facilities, and prepare a mineral resources or mineral reserves report compliant with National Instrument 43-101 Standards of Disclosure for Mineral Projects.
Convertible Debentures issued in March 2024
On March 22, 2024, the Company issued convertible debentures (the “Debentures”) convertible into 2,950,336 common shares for gross proceeds of USD $4.8 million (CAD $6.5 million) less debt issue costs of CAD $0.2 million for net proceeds of CAD $6.3 million. The Debentures are unsecured, bear interest at 9% payable in cash semi-annually in arrears, mature in three years, and the principal amount is convertible at any time on or before the maturity date at a conversion price of USD $1.61676 per common share. The Debentures, and any common shares issued upon conversion, cannot be sold or transferred without an exemption from applicable securities laws for four months and a day after March 22, 2024. After the initial four month and a day hold period, the Company can force conversion of the Debentures if the 20-day volume weighted average trading price of the Company’s shares on the TSX exceeds CAD $3.00. The proceeds are available for general corporate purposes. The Debentures have no associated financial covenants.