CALGARY, Alberta, May 13, 2020 (GLOBE NEWSWIRE) — Condor Petroleum Inc. (“Condor” or the “Company”) (TSX: CPI), a Canadian based oil and gas company focused on exploration and production activities in Turkey and Kazakhstan, is pleased to announce the release of its unaudited interim condensed consolidated financial statements for the three months ended March 31, 2020 together with the related management’s discussion and analysis. These documents will be made available under Condor’s profile on SEDAR at www.sedar.com and on the Condor website at www.condorpetroleum.com. 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.
Q1 2020 HighlightsOn April 22, 2020, the Government of Kazakhstan signed the Shoba and Taskuduk production contract addendums and no further approvals are required in order to complete the sale of the two properties. The transaction is scheduled for closing as soon as practical once the novel coronavirus (“COVID-19”) pandemic related travel restrictions currently in place in Kazakhstan have been lifted.In January 2020, Condor received United States dollars (“USD”) 18.7 million of the Shoba and Taskuduk sale proceeds and used a portion of the funds to fully repay the non-revolving credit facility (“Credit Facility”) to become debt-free.In February 2020, the Company received a 630 day extension to the Zharkamys West 1 exploration contract (“Zharkamys Contract”) from the Government of Kazakhstan and holds a 100% working interest in the contract area. The Company has been having farm-in discussions for this program which have been temporarily deferred due to recent COVID-19 travel restrictions.Discussions continue with the Government of Uzbekistan for the Company to secure an agreement to operate five producing gas fields and associated gathering pipelines and gas treatment infrastructure. However, progress has been hampered by recent COVID-19 travel restrictions.Despite the decrease in global crude oil prices, Turkish gas prices have remained constant in Turkish Lira and have decreased only 8% to $8.93 as of May 1, 2020 from $9.72 as of January 1, 2020 due to currency exchange fluctuations.The Company is in discussions for a farm-in partner to drill the Yakamoz prospect in Turkey. The intent is to drill the Yakamoz side-track well in 2020. Also in Turkey, the Destan operating license was extended by three years to June 9, 2023. The extension allows for continued production and exploration in the license area.The Company has taken a number of measures to protect the safety and health of its personnel, contractors and suppliers during the COVID-19 pandemic and is well positioned for the challenges of the current business environment, has a cash position of $19 million as of March 31, 2020, no debt, and positive netbacks from natural gas sales and no capital commitments in Turkey.Continuing operations in Turkey to date have not been materially affected by the COVID-19 pandemic although production decreased to an average of 147 boepd for the first quarter of 2020 from 366 boepd in 2019 due mainly to natural declines, sales decreased to $0.7 million for first quarter of 2020 from $1.9 million in 2019 and the net loss decreased to $0.8 million for first quarter of 2020 from $1.2 million in 2019.Shoba and Taskuduk SaleIn September 2019, the Company entered into a binding agreement to sell its 100% interests in the Shoba production contract, Taskuduk production contract and associated field equipment for total proceeds of USD 24.6 million (“Sale Agreement”). The buyer (“Buyer”) paid a USD 3.8 million deposit in October 2019 and an additional USD 18.7 million in January 2020.On April 22, 2020, the Government of Kazakhstan signed the addendums transferring the Shoba and Taskuduk production contracts to the Buyer. Although no further approvals are required, due to the COVID-19 pandemic and related travel restrictions in Kazakhstan, closing of the transaction (“Closing”) has been delayed until the parties are able to conduct the customary Closing and commercial handover procedures. At the request and expense of the Buyer, production was immediately shut in and there will be no further production or sales until Closing has occurred. The Company will continue to manage the properties until Closing, which is expected in the second quarter of 2020.Of the remaining USD 2.1 million previously due at Closing, the Buyer paid USD 0.6 million in May 2020 and the final payment of USD 1.5 million (“Final Payment”) is due upon Closing. The Final Payment will be reduced by an estimated USD 0.8 million for the net revenues minus operating costs from the properties which attribute to the Buyer from the effective date of December 25, 2019 until the Closing date.Zharkamys ContractOn February 27, 2020, the Company received the 630 day extension to the Zharkamys Contract from the Government of Kazakhstan and holds a 100% working interest in the contract area. The extension period carries additional work commitments of $3.4 million for the first twelve months and is comprised mainly of drilling two exploration wells. The Company has been having farm-in discussions with a potential partner for this program although these have been temporarily deferred due to the recent COVID-19 travel restrictions.Production Contract Negotiations with the Government of UzbekistanDiscussions continue with the Government of Uzbekistan for the Company to secure an agreement to operate five producing gas fields and associated gathering pipelines and gas treatment infrastructure. The Company has submitted and presented a detailed feasibility study and economic analysis for the five producing gas fields to the Government of Uzbekistan and an independent reserves volume evaluation has been completed. However, progress has been hampered by the recent COVID-19 international and Uzbekistan domestic travel restrictions.If executed, the production contract is expected to include five producing gas fields of interest, associated gathering pipelines, gas treatment infrastructure and the rights to explore and develop certain exploration areas surrounding the respective gas fields. The fiscal and operating terms expected to be defined in the production contract include royalty rates, cost recovery, profit splits, gas marketing and pricing, government participation, governance and steering committee structures, baseline production levels and reimbursement methodology.COVID-19 PandemicIn March 2020, the World Health Organization declared the COVID-19 outbreak to be a pandemic. Responses to the spread of COVID-19 have resulted in various disruptions to business operations and an increase in economic uncertainty, with more volatile commodity prices and currency exchange rates. The Company is well positioned for the challenges of the current business environment, has a cash position of $19 million as of March 31, 2020, no debt, and positive netbacks from natural gas sales and no capital commitments in Turkey. Please see the Company’s Management Discussion and Analysis for the three months ended March 31, 2020 for further information on the potential risks and impacts to the Company related to COVID-19.Continuing and discontinued operations classificationFollowing the execution of the agreement for the Sale Transaction, as of September 30, 2019 the related Shoba and Taskuduk net assets and liabilities have been reclassified to assets and liabilities held for sale and the respective results of operations are presented as discontinued operations for all current and prior periods throughout this news release. For further information relating to discontinued operations, please refer to the Company’s Financial Statements.Continuing operationsThe Company produces natural gas and associated condensate in Turkey. To date, operations have not been materially affected by the COVID-19 pandemic although production decreased due to natural declines to 13,341 boe in Turkey or an average of 147 boepd and an operating netback1 of $18.23 per boe for the first quarter of 2020 (Q1 2019: produced 32,959 boe or an average of 366 boepd and an operating netback1 of $37.61 per boe) and cash used in continuing operations increased to $1.3 million for the first quarter of 2020 versus cash from continuing operations of $0.2 million for the same period in 2019.A study is underway to identify stimulation workover alternatives that could increase Poyraz Ridge production rates for the lower permeability reservoirs. Subsurface characterization continued on the Yakamoz sub-thrust fold prospect that included reprocessing seismic data and incorporating additional 2D seismic information into a revised geological model. These efforts identified up-dip targets in both the proven Miocene and Upper Eocene reservoirs, in addition to the deeper Middle to lower Eocene reservoirs, which have not yet been tested. The Company previously drilled Yakamoz 1 and encountered numerous gas shows while drilling. A successful Yakamoz 1 side-track well would be tied 2km into the existing Poyraz Ridge gas plant for processing and onward sales. The Company is discussing a farm-in with an interested party and the intent is to drill the side-track well in 2020. Selected Financial Results of Continuing OperationsRESULTS OF CONTINUING OPERATIONSSales and operating netback1 for the three months ended March 31
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