Condor Petroleum, a Canadian based oil and gas company focused on exploration and production activities in Turkey and Kazakhstan, announces the release of its Consolidated Financial Statements for the year ended December 31, 2021.

Highlights

• The Company signed three Memorandum of Understandings (“MoUs”) with various Kazakhstan government agencies to construct and operate Kazakhstan’s first modular Liquified Natural Gas (“LNG”) facility.
• Condor continues to actively pursue an agreement to operate multiple producing gas fields in Uzbekistan and held numerous meetings with government ministries to discuss its proposal during the first quarter of 2022. 
• In Q2 2021, the Yakamoz 1 sidetrack well (“Yak 1-ST”) was drilled to a total depth of 2430 meters and encountered numerous strong gas shows in three of the four expected gas target intervals. Log data collected while drilling indicates reservoir-quality formations in the intervals where the strong gas shows were observed. The well is currently suspended and awaiting completion.
• In October 2021, the Akshoky North post-salt exploration well (“Aks-1”) was drilled to a total depth of 1015 meters. Oil was encountered within a 30-meter interval but was bio-degraded and therefore not commercial.

LNG Initiatives

The Company continues to mature opportunities to implement proven North American modular LNG technologies and processes in Central Asia to displace diesel fuel usage in the industrial, transportation and power generation sectors. The advantages of implementing modular LNG facilities compared to conventional LNG facilities include the significantly reduced upfront capital costs and construction time, which are especially impactful during periods of increasing diesel prices. The modular LNG plant output can be scaled up to meet continued growth demands. This initiative also serves to reduce Greenhouse Gas (“GHG”) emissions as LNG GHGs are significantly lower when compared to diesel fuel.

The Company has signed three MoUs with various Kazakhstan government agencies to construct and operate Kazakhstan’s first LNG facility. The MoUs officially confirm and underline the Government’s support of the Company’s LNG initiative, while serving as the basis to formalize the specific terms and conditions for this investment.  Discussions are continuing to reach agreement on feed-gas and LNG end-user volumes, plant locations and fiscal terms.  Front-end engineering and design are also underway and expected to be completed in the first quarter of 2022.  

Uzbekistan Production Contract

The Company continues to actively pursue an agreement to operate multiple producing gas fields in Uzbekistan and held numerous meetings with government ministries to discuss its proposal during the first quarter of 2022. If executed, the production contract could include producing gas fields, associated gathering pipelines and gas treatment infrastructure. The fiscal and operating terms would be defined in the definitive contract and include royalty rates, cost deductibility, gas marketing and pricing, government participation, governance and steering committee structures, baseline production levels and reimbursement methodology.

Turkey Operations

In Q2 2021, the Yak 1-ST exploration well on the Yakamoz prospect in Turkey was drilled to a total depth of 2430 meters and encountered numerous strong gas shows in three of the four expected gas target intervals. Log data collected during drilling operations indicates reservoir-quality formations in the intervals where the strong gas shows were observed. A combination of drilling rig mechanical issues and wellbore instability prevented production casing from being set across the target intervals. Casing was cemented to 1380 meters, which is 750 meters above the highest target interval and the well has been suspended temporarily until the required equipment can be procured and the Company is seeking a partner to fund the completion activities including re-entering, casing, and fully evaluating the Yak 1-ST well. If commercial gas flowrates are confirmed, Yak 1-ST gas would be initially trucked to the Company’s neighbouring Poyraz Ridge Gas Facility while pipeline tie-in activities are completed.

The Company is encouraged by the initial Yak 1-ST results as it confirmed the presence of both clastic and carbonate reservoirs, an active hydrocarbon system, and gas shows in the deepest Eocene formation, which had not previously been discovered on the Company’s licenses. Based on the current data, Yak 1-ST appears to be analogous to the Poyraz West 1-ST well, which has been the most prolific producer in the Poyraz Ridge field.

Natural gas and associated condensate production in Turkey for the year ended December 31, 2021 decreased 65% to 22,095 boe or an average of 61 boepd from 62,688 boe or an average of 171 boepd in 2020 and production for the fourth quarter of 2021 decreased 68% to 4,141 boe or an average of 45 boepd from 12,902 boe or an average of 140 boepd in the fourth quarter of 2020 due mainly to natural declines and poor reservoir performance.

Based on the declining production performance at the Poyraz Ridge and Destan gas fields, cash used in operating activities, and the Company's prevailing development plans, the properties were fully written off as impairment expense during Q2 2021 as the recoverable amount was deemed to be negligible. There are no economic reserves related to the Poyraz Ridge or Destan properties as of December 31, 2021.

However, during the second half of 2021, Turkish gas prices (posted in Turkish Lira and converted in CAD at prevailing exchange rates) increased from $6.12 in June 2021, to $8.93 in September 2021, to $11.74 in December 2021 and to $17.31 in March 2022. These higher realized gas prices resulted in a small but positive operating netback in Q4 2021. The Company also believes it is beneficial to maintain active production operations while efforts continue to complete the Yak 1-ST well.

Kazakhstan Operations

In the fourth quarter of 2021, the Aks-1 post-salt exploration well on the Zharkamys prospect in Kazakhstan was drilled to a total depth of 1015 meters. Oil was encountered within a 30-meter interval but was bio-degraded and therefore non-commercial. The well was plugged and abandoned and all remaining Zharkamys exploration and evaluation assets have been derecognized as of December 31, 2021. The Company has no further development plans at Zharkamys, other than to complete the contractual abandonment and reclamation works in due course. The Zharkamys contract expired on January 18, 2022.

KeyFacts Energy:   Condor Petroleum Turkey country profile   l   Kazakhstan country profile