Condor announces 2016 third quarter results
CALGARY, November 10, 2016 – Condor Petroleum Inc. (“Condor” or the “Company”) (TSX: CPI) is pleased to announce the release of its Unaudited Interim Consolidated Financial Statements for the three and nine months ended September 30, 2016, 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. All financial amounts in this news release are presented in Canadian dollars, unless otherwise stated.
Q3 2016 Highlights
- Production contracts for the Shoba and Taskuduk oil fields in Kazakhstan were signed in the third quarter of 2016 and commercial oil production at both fields has commenced. The combined production from these 100% owned oilfields has averaged over 600 barrels per day over the past 30 days.
- In Turkey, the Poyraz 5 appraisal well and Poyraz 3 development well were drilled and cased. Based on wireline log interpretation, the Poyraz 5 well encountered over 140 meters of net gas pay and the Poyraz 3 well encountered over 135 meters of net gas pay.
- The Poyraz West 5 appraisal well is expected to be spud in November and reach total depth in December 2016.
- Equipment is being mobilized to the Poyraz 3 well to begin completion and testing operations.
- Construction and procurement activities continue on the 15 MMscf/day gas processing facility for the Poyraz Ridge field. The project remains on track for gas sales to commence in mid-2017, providing access to cash flow from a region with strong domestic gas demand and pricing.
- Capital expenditures for the three and nine months ended September 30, 2016 amounted to $6.6million and $9.3 million respectively (2015: $6.3 million and $10.5 million) which relate mainly to Poyraz Ridge field development in Turkey.
- Working capital (defined as current assets minus current liabilities) as of September 30, 2016 was $28.7 million and the Company has no debt.
- A credit facility is being pursued to assist with funding the Poyraz Ridge development costs.
- The Company recorded net loss of $1.6 million for the three months ended September 30, 2016 (2015: $1.4 million) and $8.7 million for the nine months ended September 30, 2016 (2015: $3.9 million).
In Turkey, the Poyraz 5 appraisal well was spud in late August and drilled to 1,879 meters and cased with 7” production casing. Based on wireline log interpretation, the well encountered over 140 meters of net gas pay in multiple stacked reservoirs of Miocene (Kirazli and Gazhanedere sandstone formations) and Eocene (Sogucak carbonate formation) age. No gas-water contact was encountered in the Gazhanedere and the gas-water contact in the Sogucak was confirmed to be located beneath the Company’s mapped structural spill-point. There were also three new gas bearing zones encountered in the Gazhanedere that are not present in previous wells. Poyraz 5 results should have a positive impact on the Company’s reserves as the ‘gas down to’ depth for the Gazhanedere is now deeper and the Sogucak is gas-filled to the structural spill point. Poyraz 5 also validates the Company’s seismic interpretation, geologic modelling and petrophysical analysis.
The Poyraz 3 development well was spud in October and drilled to 1,926 meters and cased with 7” production casing. Based on wireline log interpretation, the well encountered over 135 meters of net gas pay in the same multiple stacked reservoirs. Advanced borehole wireline imaging of the Sogucak carbonate in Poyraz 3 confirms the presence of an extensive network of fractures within the pay column which should serve to enhance flow performance while further adding to the Company’s reserves. Equipment is being mobilized to the Poyraz 3 well to begin completion and testing operations. Completion and testing of Poyraz 5 will occur after Poyraz 3.
The drilling rig has moved to a different drilling pad and is preparing to spud Poyraz West 5, which is another appraisal well and is designed to test the northern extension of the Poyraz Ridge field. This region represents up to 30% of the trap closure area but currently has no reserves attributed to it.
Construction and procurement activities continue on the 15 MMscf/day Poyraz Ridge gas processing facility. Project costs and schedule uncertainties continue to decrease as the major components for the facility and gas sales pipeline have been purchased, contracted or tendered. Two gas compressors were recently installed and delivery of the refrigeration unit and inlet separator is expected in December. Regulatory approvals have been received for the gas sales pipeline routing and tie-in entry point and installation is planned to commence in the first quarter of 2017. Negotiations are underway for a gas sales agreement which is expected to be completed in the fourth quarter of 2016. The project continues to target first gas by mid-2017, providing access to cash flow from a region with strong domestic gas demand and pricing.
Production in Kazakhstan resumed at the Shoba oilfield in September and at the Taskuduk oilfield in October after the respective production contracts were signed with the Government of Kazakhstan in the third quarter of 2016. The Company signed the first sales contract since commencing commercial production at the approximate wellhead price of $29 per barrel which, after deducting royalties, provides a netback of $28 per barrel. The combined production from Shoba and Taskuduk averaged over 600 barrels per day over the past 30 days. Planning is underway to drill additional Shoba horizontal wells in the second half of 2017.