Condor Energies, a Canadian based, internationally focused energy transition company focused on Central Asia is today announces the release of its unaudited interim condensed consolidated financial statements for the three and six months ended June 30, 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 

• Production in Uzbekistan for the second quarter of 2024 averaged 10,052 boe/d comprised of 59,033 Mcf/d (9,839 boe/d) of natural gas and 213 bopd of condensate.
• Uzbekistan gas and condensate sales for the second quarter of 2024 was $18.95 million.
• In June 2024, the Company initiated a multi-well workover campaign on the eight gas-condensate fields it operates in Uzbekistan.
• In July 2024, Condor signed its first LNG Framework Agreement for the production and utilization of liquefied natural gas (“LNG”) to fuel Kazakhstan’s rail locomotives.
• The Company received a natural gas allocation in January 2024 in Kazakhstan to be used as feed gas for the Company’s first modular 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).

Don Streu, President and CEO of Condor commented: 
“Since assuming the Uzbekistan field operations on March 1, 2024, the team has arrested a twenty percent natural production decline rate while initiating a multi-well workover program to grow production and reserves volumes. We’re encouraged with the early gains we’ve realized by implementing proven technologies and operating practices. The first well workover yielded over a 100 percent production rate increase compared to its pre-workover rate. With more than 100 existing wells on the eight producing fields, we have a large inventory of enhancement opportunities and are working to increase production volumes and revenues beyond the second quarter of 2024 operating results. We are also excited to receive a reprocessed 3-D seismic data set this year to improve subsurface imaging that could identify additional well interventions and future infill and multi-lateral drilling programs.

We are equally excited with our first-mover LNG initiative in Kazakhstan, given that we’ve secured the feed gas supply for the first liquefaction facility and executed the Framework Agreement with KTZ and Wabtec, which introduces Condor as the LNG supplier and distributor. By applying field proven technologies to displace diesel fuel usage with LNG, end users can expect to reduce emissions and operating costs while increasing operating ranges with faster freight delivery times.

Over the past few years, we’ve truly built a strong foundation for continued growth with multiple near-term catalysts that are being actively matured.”

Production in Uzbekistan

Production for the second quarter of 2024 was 10,052 boe/d, comprised of 59,033 Mcf/d (9,839 boe/d) of natural gas and 213 bopd of condensate, despite production being restricted in April and May for 18 days due to downstream infrastructure maintenance at non-Company operated facilities. Since assuming operations on March 1, 2024, the Company has been able to flatten the natural production decline rates, which previously exceeded twenty percent annually, by introducing downhole surfactants that allows produced water to be lifted more effectively, optimizing well choke-size settings, implementing facility upgrades, and introducing new operating methodologies.

In late June 2024, the Company initiated a multi-well workover campaign for the eight fields which includes installing proven artificial lift equipment, perforating newly identified pay intervals, performing downhole stimulation treatments, and production tubing replacements. The first well’s production rate increased by over 100% compared to its pre-workover rate. Subsequent wells that have been worked-over are being cleaned up and restarted. The workover program is ongoing and with over 100 wells in the eight fields, the Company has a large inventory of both producing and shut-in wells available for evaluation, recompletion and optimization opportunities.

The Company recently fabricated Uzbekistan’s first in-line flow separation unit which separates water from the gas streams at the field gathering network rather than at the production facility and thereby reducing pipeline flow pressure that can lead to higher reservoir flow rates. This separation unit was manufactured in Canada and is expected to be operational in the third quarter of 2024. Additional separation units will be manufactured and installed in the coming months. The existing pipeline and facilities infrastructure are also being evaluated to optimize water-handling, determine long term field compression requirements, and to enhance in-field gathering networks. The Company is also reprocessing previously acquired 3-D seismic data with plans to conduct infill drilling and well deepening programs commencing in 2025. Production guidance will be provided by the Company once it has gathered sufficient operating data to confirm the fields’ baseline production, decline rates and the sustained impact of the ongoing workover program along with other optimization efforts that are being introduced.

LNG in Kazakhstan

Condor is developing Kazakhstan’s first LNG facilities and will produce, distribute, and sell LNG to offset industrial diesel usage. LNG applications include rail locomotives, long-haul truck fleets, marine vessels, mining equipment, municipal bus fleets, agricultural machinery, and other heavy equipment and machinery with high-horsepower engines. These applications have all successfully used LNG fuel in other Countries.

In July 2024, the Company signed its first LNG Framework Agreement (the “Framework Agreement”) for the production and utilization of LNG to fuel Kazakhstan’s rail locomotives. The Framework Agreement was also signed by Kazakhstan Temir Zholy National Company JSC (“KTZ”), the national railway operator of Kazakhstan and Wabtec Corporation (“Wabtec”) (NYSE: WAB), a U.S. based locomotive manufacturer with existing facilities in Kazakhstan. KTZ and Wabtec previously signed a memorandum of understanding which includes modernization work to retrofit KTZ’s mainline locomotive fleet for LNG usage and incorporate LNG into new-build locomotives. The Framework Agreement introduces Condor into this locomotive fleet modernization strategy as the supplier and distributor of the LNG.

The Framework Agreement also provides a detailed framework whereby the three parties will coordinate efforts to ensure that Condor’s LNG production volumes coincide with the delivery of new and converted LNG-powered rail locomotives from Wabtec. A working group comprised of members from each of the parties is responsible to identify and monitor the key performance indicators associated with this initiative. 

The Framework Agreement is critical to supplying a stable, economic and more environmentally friendly fuel source for the Transcaspian International Transport Route (“TITR”) expansion, which is currently the shortest, fastest and most geopolitically secure transit corridor for moving freight between Asia and Europe. The Government of Kazakhstan and KTZ are making significant investments in TITR infrastructure, including expanding the rail network, constructing a new dry port at the Kazakhstan – China border, and increasing the container-handling capacities at various Caspian Sea ports.

The planned first modular LNG facility will be constructed near the town of Alga and produce 120,000 metric tons of LNG annually, which is the energy equivalent volume of 450,000 litres of diesel per day. Phase 1 of the first facility is currently scheduled to commence LNG production in mid-2026, for which a stable feed gas supply was secured in January 2024. The Company is also advancing project funding alternatives.

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.

The 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.

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