Condor Petroleum Inc.
TSX : CPI

Condor Petroleum Inc.

November 10, 2011 18:13 ET

Condor Announces Third Quarter Results

CALGARY, ALBERTA--(Marketwire - Nov. 10, 2011) - 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
For the three months ended September 30 2011 2010
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
For the nine months ended September 30 2011 2010
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
As at September 30 2011 December 31 2010
Total assets, end of period 208,304,996 129,775,751
Working capital, end of period 88,760,683 42,333,310

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.

Contact Information

  • Condor Petroleum Inc.
    Don Streu
    President & Chief Executive Officer
    (403) 201 9694

    Condor Petroleum Inc.
    Sandy Quilty
    Vice President, Finance & Chief Financial Officer
    (403) 201 9694