Highlights
- The Company has entered into a binding sale and purchase agreement to acquire a 95% working interest in a mining license in
Kazakhstan . - Gas production increased 130% for an average of 122 boepd for the third quarter of 2022 compared to an average of 53 boepd for the second quarter of 2022 due to the recently drilled P-7 infill well and P-2 workover.
- The infill drilling and workover programs allow the Company to benefit from strong Turkish gas prices which have increased 202% year-to-date to
$35.41 (CAD) per Mscf as ofNovember 1, 2022 and for the three months endedSeptember 30, 2022 the Company realized natural gas sales prices of$157.48 per boe (2021:$43.91 ) and netbacks of$115.18 per boe (2021: negative). - In
Kazakhstan , discussions are ongoing to reach agreement on feed-gas and LNG end-user delivered volumes, plant locations and fiscal terms. - Condor continues to actively pursue an agreement to operate multiple producing gas fields in
Uzbekistan and has held numerous meetings during 2022 with various government ministries to discuss the proposed project.
Lithium License Acquisition
The Company has entered into a binding sale and purchase agreement with a state-owned entity (the “Seller”) to acquire a 95% working interest in a mining license in
The Company and the Seller have established a partnership company to hold and operate the Lithium License. As per the terms of the partnership, Condor holds a 95% working interest, will operate and be responsible for funding all activities under the Lithium License while the Seller maintains a 5% carried working interest. The transaction is subject to customary approvals from the Government of
The Lithium License was assigned to the Seller on
The Company intends to produce the lithium by utilizing closed-looped Direct Lithium Extraction (“DLE”) technologies. With the lithium already in brine solution and with the use of existing DLE production technologies, the Company expects to have a much smaller environmental footprint than existing lithium production operations. Furthermore, the Company is evaluating the construction of a solar power generation project to support the long-term expansion of the project to achieve net-zero emissions.
The Company is not treating the historical estimate as current mineral resources or mineral reserves as additional drilling and testing is necessary, and a qualified person has not done sufficient work to classify the historical estimates as current mineral resources or mineral reserves. It is uncertain if further drilling will result in the area being delineated as a mineral resource or reserve.
Turkiye Operations
Gas production increased 995% to 11,249 boe for an average of 122 boepd for the third quarter of 2022 compared to 1,028 boe for an average of 11 boepd for the third quarter of 2021. The Company also produced 320 barrels of condensate in the third quarter of 2022, compared to 5 barrels in the third quarter of 2021. The production increase was a result of the successfully drilled P-7 infill well, a workover on the existing P-2 well and that in the third quarter of 2021, all wells were shut-in for 66 days for pressure build-up tests. Comparing 2022 third quarter to second quarter, gas production increased 132% as a result of the drilling and workover program.
As the
LNG Initiatives
The Company continues to mature opportunities to implement proven North American modular LNG technologies and processes in
Uzbekistan Production Contract
Natural gas production in
As a result, the Company has adjusted its focus to revitalizing and operating mid-sized existing gas fields with the intent to use the incremental gas production for LNG feedstock. Providing LNG to mining operations to displace diesel usage, as is planned in
Selected Financial Information
For the three months ended ($000’s except per share amounts) | 2022 | 2021 | ||||
Natural gas and condensate sales | 1,612 | 47 | ||||
Total revenue (sales less royalties) | 1,397 | 40 | ||||
Cash used in operating activities | (267 | ) | (1,171 | ) | ||
Net income (loss) | 35 | (1,251 | ) | |||
Net income (loss) per share (basic and diluted) | 0.00 | (0.03 | ) | |||
Capital expenditures | 394 | 944 | ||||
For the nine months ended ($000’s except per share amounts) | 2022 | 2021 | ||||
Natural gas and condensate sales | 2,478 | 632 | ||||
Total revenue (sales less royalties) | 2,149 | 548 | ||||
Cash used in operating activities | (2,951 | ) | (4,629 | ) | ||
Net loss | (2,121 | ) | (6,557 | ) | ||
Net loss per share (basic and diluted) | (0.05 | ) | (0.15 | ) | ||
Capital expenditures | 1,723 | 3,359 | ||||
The Company’s ability to realize assets and discharge liabilities in the normal course of business as they become due is dependent upon the ability to fund operations by generating positive cash flows from operations, securing funding from debt or equity financing, disposing of assets or making other arrangements. The Company is actively pursuing various strategies to enhance its liquidity position and those matters are discussed in greater detail in the Company’s financial statements and management’s discussion and analysis for the three and nine months ended
Results of Operations
Production
For the three months ended | 2022 | 2021 | Change | Change % | |
Natural gas (Mscf) | 67,494 | 6,164 | 61,330 | 995 | % |
Natural gas (boe) | 11,249 | 1,028 | 10,221 | 995 | % |
Condensate (bbl) | 320 | 5 | 315 | 6,300 | % |
Total production volume (boe) | 11,569 | 1,033 | 10,536 | 1,020 | % |
Natural gas (Mscfpd) | 734 | 67 | 667 | 995 | % |
Natural gas (boepd) | 122 | 11 | 111 | 995 | % |
Condensate (bopd) | 3.5 | 0.1 | 3.4 | 6,300 | % |
Average daily production (boepd) | 126 | 11 | 115 | 1,020 | % |
For the nine months ended | 2022 | 2021 | Change | Change % | |
Natural gas (Mscf) | 114,550 | 107,260 | 7,290 | 7 | % |
Natural gas (boe) | 19,092 | 17,877 | 1,215 | 7 | % |
Condensate (bbl) | 389 | 77 | 312 | 405 | % |
Total production volume (boe) | 19,481 | 17,954 | 1,527 | 9 | % |
Natural gas (Mscfpd) | 420 | 393 | 27 | 7 | % |
Natural gas (boepd) | 70 | 65 | 5 | 7 | % |
Condensate (bopd) | 1.4 | 0.3 | 1.1 | 405 | % |
Average daily production (boepd) | 71 | 66 | 5 | 9 | % |
Overall production increased 1,020% to 11,569 boe or an average of 126 boepd for the three months ended
Sales and operating netback1
For the three months ended
($000’s) | 2022 Gas and Total | Gas | 2021 Condensate | Total | |||||||
Sales | 1,612 | 35 | 12 | 47 | |||||||
Royalties | (215 | ) | (6 | ) | (1 | ) | (7 | ) | |||
Production costs | (206 | ) | (183 | ) | (1 | ) | (184 | ) | |||
Transportation and selling | (12 | ) | (24 | ) | (2 | ) | (26 | ) | |||
Operating netback1 | 1,179 | (178 | ) | 8 | (170 | ) | |||||
($/boe) | |||||||||||
Sales | 157.48 | 43.91 | 101.69 | 51.37 | |||||||
Royalties | (21.00 | ) | (7.53 | ) | (8.47 | ) | (7.65 | ) | |||
Production costs | (20.13 | ) | (229.61 | ) | (8.47 | ) | (201.09 | ) | |||
Transportation and selling | (1.17 | ) | (30.11 | ) | (16.95 | ) | (28.42 | ) | |||
Operating netback1 | 115.18 | (223.34 | ) | 67.80 | (185.79 | ) | |||||
Sales volume (boe) | 10,236 | 797 | 118 | 915 | |||||||
For the nine months ended
($000’s) | 2022 Gas and Total | Gas | 2021 Condensate | Total | |||||||
Sales | 2,478 | 609 | 23 | 632 | |||||||
Royalties | (329 | ) | (82 | ) | (2 | ) | (84 | ) | |||
Production costs | (491 | ) | (585 | ) | (2 | ) | (587 | ) | |||
Transportation and selling | (44 | ) | (220 | ) | (4 | ) | (224 | ) | |||
Operating netback1 | 1,614 | (278 | ) | 15 | (263 | ) | |||||
($/boe) | |||||||||||
Sales | 142.50 | 39.30 | 96.64 | 40.17 | |||||||
Royalties | (18.92 | ) | (5.29 | ) | (8.40 | ) | (5.34 | ) | |||
Production costs | (28.24 | ) | (37.75 | ) | (8.40 | ) | (37.31 | ) | |||
Transportation and selling | (2.53 | ) | (14.20 | ) | (16.81 | ) | (14.24 | ) | |||
Operating netback1 | 92.81 | (17.94 | ) | 63.03 | (16.72 | ) | |||||
Sales volume (boe) | 17,389 | 15,497 | 238 | 15,735 |
1 Operating netback is a non-GAAP measure and is a term with no standardized meaning as prescribed by GAAP and may not be comparable with similar measures presented by other issuers. See “Non-GAAP Financial Measures” in this news release. The calculation of operating netback is aligned with the definition found in the Canadian Oil and Gas Evaluation Handbook.
Non-GAAP Financial Measures
The Company refers to “operating netback” in this news release, a term with no standardized meaning as prescribed by GAAP and which may not be comparable with similar measures presented by other issuers. This additional information should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP. Operating netback is calculated as sales less royalties, production costs and transportation and selling on a dollar basis and divided by the sales volume for the period on a per barrel of oil equivalent basis. The reconciliation of this non-GAAP measure is presented in the “Sales and operating netback” section of this news release. This non-GAAP measure is commonly used in the oil and gas industry to assist in measuring operating performance against prior periods on a comparable basis and has been presented to provide an additional measure to analyze the Company’s sales on a per barrel of oil equivalent basis and ability to generate funds.
Forward-Looking Statements
Certain statements in this news release constitute forward-looking statements under applicable securities legislation. Such statements are generally identifiable by the terminology used, such as “anticipate”, “appear”, “believe”, “intend”, “expect”, “plan”, “estimate”, “budget”, “outlook”, “scheduled”, “may”, “will”, “should”, “could”, “would”, “in the process of” or other similar wording. Forward-looking information in this news release includes, but is not limited to, information concerning: the timing and ability to obtain the approvals from the Government of
By its very nature, such forward-looking information requires Condor to make assumptions that may not materialize or that may not be accurate. Forward-looking information is subject to known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such information. Such risks and uncertainties include, but are not limited to: regulatory changes; the timing of regulatory approvals; the risk that actual minimum work programs will exceed the initially estimated amounts; the results of exploration and development drilling and related activities; factors affecting the Lithium License Seller’s ability to complete the sale of the Lithium License to Condor; prior lithium testing results may not be indicative of future testing results or actual results; imprecision of reserves estimates and ultimate recovery of reserves; the effectiveness of lithium mining and production methods including DLE technology; historical production and testing rates may not be indicative of future production rates, capabilities or ultimate recovery; the historical composition and quality of oil and gas may not be indicative of future composition and quality; general economic, market and business conditions; industry capacity; uncertainty related to marketing and transportation; competitive action by other companies; fluctuations in oil and natural gas prices; the effects of weather and climate conditions; fluctuation in interest rates and foreign currency exchange rates; the ability of suppliers to meet commitments; actions by governmental authorities, including increases in taxes; decisions or approvals of administrative tribunals and the possibility that government policies or laws may change or government approvals may be delayed or withheld; changes in environmental and other regulations; risks associated with oil and gas operations, both domestic and international; international political events; and other factors, many of which are beyond the control of Condor. Capital expenditures may be affected by cost pressures associated with new capital projects, including labor and material supply, project management, drilling rig rates and availability, and seismic costs.
These risk factors are discussed in greater detail in filings made by Condor with Canadian securities regulatory authorities including the Company’s Annual Information Form, which may be accessed through the SEDAR website (www.sedar.com).
Readers are cautioned that the foregoing list of important factors affecting forward-looking information is not exhaustive. The forward-looking information contained in this news release are made as of the date of this news release and, except as required by applicable law, Condor does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained in this news release is expressly qualified by this cautionary statement.
Abbreviations
The following is a summary of abbreviations used in this news release:
boe | Barrels of oil equivalent |
boepd | Barrels of oil equivalent per day |
Mscf | Thousand standard cubic feet |
MMscf | Million standard cubic feet |
* Barrels of oil equivalent (“boe”) are derived by converting gas to oil in the ratio of six thousand standard cubic feet (“Mscf”) of gas to one barrel of oil based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mscf to 1 barrel, utilizing a conversion ratio at 6 Mscf to 1 barrel may be misleading as an indication of value, particularly if used in isolation.
The TSX does not accept responsibility for the adequacy or accuracy of this news release.
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