Condor Petroleum Inc. ("Condor" or the "Corporation") (TSX:CPI) is pleased to
announce the release of its unaudited Interim Financial Statements for the three
and nine months ended September 30, 2011, together with the related Management's
Discussion and Analysis ("MD&A"). 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. All financial amounts in this press release are
presented in Canadian dollars. The unaudited Interim Financial Statements have
been prepared in accordance with International Financial Reporting Standards
("IFRS"). Further details on Condor's conversion to IFRS are provided in the
Financial Statements and MD&A.
Third quarter and recent highlights include:
Kazakhstan - Zharkamys West 1
In September 2011, the Company completed a 1,280 km2 3D seismic program on the
south-eastern portion of Zharkamys and 87% of Zharkamys is now covered with high
fold, high resolution 3D seismic, providing a data source for on-going
prospecting activities. This is also a key component to progressing the
Company's two phase exploration strategy.
Phase 1 of the exploration strategy targets shallow (up to 1500 meters), lower
risk prospects that are intended to provide early production and cash flow.
Phase 2 focuses on deeper (1500 to 3500 meters), higher impact prospects that
are intended to generate significant reserve additions. The Phase 2 prospects
currently being matured are incorporating Phase 1 well results and insights,
including the calibrated 3D seismic responses to help identify direct
hydrocarbon indicators. The intent is to mitigate Phase 2 geologic risks.
Tendering and contracting activities are underway to drill the first Phase 2
sub-canopy well, Zhaman Koblandy 2 (Zk-2), which is planned to commence in
December 2011.
Of the nine Phase 1 wells drilled to date in 2011, five have been cased (Sh-1,
Sh-2, Sh-3, Eb-1, Tas W-4) and four have been or will be abandoned (Kn-3, Tse-1,
Eb-5, Ut-6). The 90 day production tests on the three Shoba wells began in
August and September with combined flow rates from the three wells averaging
over 500 barrels per day on various choke settings.
The Eb-1 exploration well was drilled to a total depth of 1,000 meters and
encountered 8 meters of net oil pay in the Triassic zone. After completing the
well and beginning clean-up flow activities, there was limited inflow to the
wellbore as indicated from surface pressure and flow measurements. Given the
extensive oil saturation observed in core recovered and porosity (16%) derived
from wireline logs, the reasons for the low inflow are being further
investigated. The well is currently suspended awaiting possible further
evaluation and remedial work.
The Eb-5 exploration well was drilled after Eb-1 and reached a total depth of
1,000 meters. Although oil shows were encountered on core samples and oil pay
indicated on wireline logs, the well was deemed non-commercial and abandoned.
The most recent exploration well, Ut-6, targeted a Triassic Post Salt prospect
and reached a total depth of 1,236 meters but did not encounter commercial
hydrocarbon accumulations and will be abandoned.
The TasW-4 Phase 1 well was drilled to a total depth of 1,329 meters and
penetrated 19 meters of net oil pay within two Triassic intervals. The lower
interval, which contains 13 meters of net oil pay, was not encountered in the
original TasW-3 discovery and represents an additional pay zone for the field.
This interval was identified using Condor's 3D seismic attribute and pre-stack
analysis. Based on formation pressure data, the oil gravity at TasW-4 is
estimated to be 35 degrees API. Production casing has been run and cemented and
the 90 day flow test will commence once regulatory approvals are obtained.
One other well completed during the third quarter was TasW-3. Originally drilled
and tested in 2009 (stabilized oil rate of 220 barrels per day from a 5 meter
net pay interval), an additional 5 meter net pay interval was identified with
the recently acquired 3D seismic data. The new interval flowed at a stabilized
oil rate of 300 barrels per day during well clean-up operations and up to 580
barrels per day initially. The well produced 35 degree API gravity oil with no
water. The 90 day flow test will commence once regulatory approvals are
obtained.
There is no certainty that any of the hydrocarbons will be recovered.
Hydrocarbon recovery is subject to all of the risks associated with oil and gas
operations, both domestic and international, as discussed in greater detail in
Condor's Management's Discussion and Analysis for the three and nine months
ended September 30, 2011 and in Condor's prospectus dated March 31, 2011.
Kazakhstan - Marsel
Since acquiring the Marsel license, the Company has gathered and processed 1,761
km of high resolution 2D seismic and 426 km2 of 3D seismic. The corresponding
interpretation of the data has generated a portfolio of both Devonian sandstone
and Carbonate shoal prospects. Acquisition of an additional 900 km of 2D seismic
data commenced in August 2011 and is now 70% complete, while remaining on target
to finish in December 2011. This latest seismic program is focused on defining
additional prospects in the under-explored southern area of Marsel.
A drilling rig has been mobilized for the Assa 1 prospect, a Devonian sandstone
target with a total well depth of nearly 3,000 meters. Drilling operations are
expected to commence in November and reach the target interval by year end.
Selected information
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For the three months ended September 30 2011 2010
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Gross petroleum and natural gas sales 1,037,542 792,858
Net loss attributable to Condor Petroleum Inc. (2,371,064) (3,707,239)
Net loss per share - basic and diluted (0.01) (0.02)
Capital expenditures 12,388,091 9,971,126
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For the nine months ended September 30 2011 2010
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Gross petroleum and natural gas sales 2,741,826 2,519,491
Net loss attributable to Condor Petroleum Inc. (7,145,849) (8,947,103)
Net loss per share - basic and diluted (0.02) (0.05)
Capital expenditures 27,908,572 19,092,896
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As at September 30 December 31
2011 2010
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Total assets, end of period 208,304,996 129,775,751
Working capital, end of period 88,760,683 42,333,310
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About Condor Petroleum Inc.
Condor is a junior oil and natural gas corporation engaged in the exploration
for, and the acquisition, development and production of oil and natural gas
resources in Kazakhstan and Canada. Condor holds a 100% interest in the oil and
natural gas exploration rights to the 2,610 km2 Zharkamys West 1 territory
located in Kazakhstan's Pre-Caspian basin, a 66% interest in the oil and natural
gas exploration rights to the 18,500 km2 (gross) Marsel territory located in
Kazakhstan's Chu-Sarysu basin and operates certain properties in Alberta and
Saskatchewan and holds non-operated working interests and royalty interests in a
number of other properties in Alberta. For further information, see Condor's
prospectus, dated March 31, 2011, a copy of which is available under Condor's
SEDAR profile at www.sedar.com.
Forward-Looking Statements
Certain statements in this MD&A constitute forward-looking statements under
applicable securities legislation. Such statements are generally identifiable by
the terminology used, such as "anticipate'', "believe'', "intend", "expect",
"plan", "estimate", "budget'', "outlook'', "scheduled", "may", "will", "should",
"could", "would" or other similar wording. Forward-looking information in this
MD&A includes, but is not limited to, information concerning the timing and
ability to obtain various regulatory approvals; the timing of planned well
testing and drilling operations; the expectations, timing and ability of the
Company to mature and drill future targets and prospects; the timing and ability
of the Company related to the acquisition of seismic data and its proposed use
thereof; the possible extension of exploration periods; the execution of
drilling contracts; excess profit taxes; the potential for additional
contractual work commitments; the flexibility of capital spending plans and the
source of funding therefore; the effect of the Company's risk management
program; the Company's ability to pay its creditors, suppliers, and to meet and
fund its contractual work commitments; the effect of the Company's risk
mitigation policies, systems, processes and insurance program; the expected
impact and timing of various accounting pronouncements, rule changes and
standards, including IFRS, on the Company and its consolidated financial
statements; projections relating to the adequacy of the Company's provision for
taxes; projections with respect to natural oil and gas production, the possible
further evaluation and remedial work on the Eb-1 well, interpretation of well
results, increase to the Marsel work program, the commencement of drilling
operations, the target interval and timing thereof, the intensions of the Phase
1 and Phase 2 strategies at Zharkamys, and the satisfaction of the work
commitments at Zharkamys and Marsel. 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 factors and assumptions include, but are not limited
to: the results of exploration and development drilling and related activities;
imprecision of reserves and resources estimates, ultimate recovery of reserves,
prices of oil and natural gas; general economic, market and business conditions;
industry capacity; competitive action by other companies; fluctuations in oil
and natural gas prices; the ability to produce and transport crude oil and
natural gas to markets; 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; changes
in environmental and other regulations; risks associated with oil and gas
operations, both domestic and international; international political events;
expected rates of return; 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 labour and material supply,
project management, drilling rig rates and availability, and seismic costs.
Additional information about Condor is contained in greater detail as set forth
in Condor's prospectus dated March 31, 2011, as well as in other filings made by
Condor with Canadian securities regulatory authorities and 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. Readers should also read the
Risks and Uncertainties section below. The forward-looking information contained
in this MD&A are made as of the date of this MD&A 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.
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