Condor Petroleum Inc., a Canadian based oil and gas company focused on exploration, development and production activities in Turkey and Kazakhstan, provides an operations update. All financial amounts in this news release are presented and stated in United States dollars (“US$) and Canadian dollars (“CA$”).
Drilling is underway on a two well infill program. The first horizontal well has been completed and is being tied into the production facility. A 500 meter lateral section was drilled and oil production is expected to commence later this month. Intermediate casing has been set on the second horizontal well and drilling the lateral section will begin next week. The second well is targeting completion in September 2018 and to begin production in October 2018. A two well workover program is also underway and targets completion in September 2018. This drilling and workover program is intended to increase oil production to over 800 bopd. Oil production has averaged 365 bopd over the past thirty days.
As previously disclosed, the Company has submitted a 630 day extension application to the Ministry of Energy of the Government of Kazakhstan (the “Ministry”) for the Company’s Zharkamys exploration contract. This application is currently being reviewed by the Ministry.
Effective September 1, 2018, the natural gas reference price in Turkey was increased a further 14% by BOTAŞ, the national oil and gas pipeline transportation company. This marks the fourth increase in reference gas prices during 2018 and totals 62% for the year and has effectively offset the depreciation of the Turkish Lira over the same period. At prevailing exchange rates, the gas price of CA$6.65 per Mscf as of September 1, 2018 is essentially unchanged from CA$6.60 per Mscf as of January 1, 2018.
Gas production has averaged 585 boepd over the past thirty days which is below the rates initially forecast due to greater variability in reservoir quality and continuity than originally modelled. A workover program for existing wells is being developed and focusing on completing additional pay sections and stimulation options to realize commercial flow rates for the lower permeability reservoirs.
On September 13, 2018, certain terms of the Company’s existing secured non-revolving credit facility were amended with the single arm’s length lender including the extension of the term by nine months and spreading the remaining six quarterly principal payments of US$1.25 million each over nine quarterly principal payments consisting of three payments of US$0.1 million, followed by three payments of US$0.9 million and then followed by three payments of US$1.5 million. The next scheduled principal payment of US$0.1 million plus interest is due on September 30, 2018 and the final scheduled principal payment plus interest is due September 30, 2020.
The Lender now holds warrants entitling them to purchase one million common shares of the Company at an exercise price of CA$0.35 per share and expire on December 31, 2021 which represents all warrants held by the Lender. Further, the Company paid US$75,000 and issued 900,000 common shares to the Lender in a private placement at CA$0.40 per share as a restructuring fee.
Don Streu, President and CEO commented:
“The loan restructuring allows us to continue growing near term production and cash flow by drilling two infill wells and performing two well workovers in Kazakhstan. This production growth will be very impactful as Kazakhstan’s commodity prices have strengthened during the year, yielding an estimated operating netback of CA$26.29 per barrel in August 2018.”