CALGARY, Alberta, March 18, 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 Consolidated Financial Statements for the year ended December 31, 2019, 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.
2019 HighlightsIn September 2019 the Company’s wholly owned subsidiary, Falcon Oil & Gas Ltd (“Falcon”) entered into a binding agreement to sell Falcon’s 100% interests in the Shoba and Taskuduk production contracts and associated field equipment in Kazakhstan for USD 24.6 million (“Sale Proceeds”).To date, USD 22.5 million of the Sale Proceeds have been received and the remaining USD 2.1 million is due within ten business days following the signing of the addendums to the Shoba and Taskuduk production contracts by the Government of Kazakhstan.In January 2020 Condor fully repaid its non-revolving credit facility (“Credit Facility”) and subsequently the Company has positive working capital and no long term debt.On November 12, 2019 Condor signed a Heads of Agreement with the Ministry of Energy of the Government of Uzbekistan (“Uzbekistan Ministry”) which provided the Company a 120 day window to negotiate a definitive production sharing agreement (“PSA”) with the Uzbekistan Ministry. An application to extend the Heads of Agreement has been submitted.On February 27, 2020, the Company received the 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 is in discussions for a farm-in to drill the Yakamoz prospect in Turkey. The intent is to drill the Yakamoz side-track well in 2020. The reference natural gas sales prices in Turkey set by BOTAŞ, the state owned pipeline transportation company, were increased in both July and August of 2019 and the Canadian Dollar equivalent price is $9.54 per Mscf as of March 1, 2020.For continuing operations, production decreased to an average of 266 boepd for the year ended December 31, 2019 from 739 boepd in 2018, sales decreased to $5.2 million for 2019 from $11.7 million in 2018 and the net loss decreased to $10.1 million for 2019 from $14.1 million in 2018.Shoba and Taskuduk SaleOn September 23, 2019, Falcon entered into a binding agreement to sell Falcon’s 100% interests in the Shoba production contract, Taskuduk production contract and associated field equipment for United States dollars (“USD”) 24.6 million (“Sale Agreement”). The buyer (“Buyer”) paid the USD 3.8 million deposit within ten business days of signing the Sale Agreement. In January 2020 certain terms of the Sale Agreement were amended and instead of using an escrow account for the remaining USD 20.8 million to be released upon closing the transaction (“Closing”), the Buyer paid USD 18.7 million in January 2020 and the remaining USD 2.1 million is due upon Closing.Falcon remains the oilfield owner and operator until Closing occurs. Upon Closing, the net revenues less operating costs generated from the production and sale of crude oil from the oilfields will be attributed to the Buyer from the effective date of December 25, 2019 until the Closing date as an adjustment to the purchase consideration.The various Government of Kazakhstan consents and confirmations required for Closing have been received and all commercial conditions have been satisfied by Falcon and the Buyer. The respective addendums to the Shoba and Taskuduk production contracts have been signed by Falcon and the Buyer and submitted to the Government of Kazakhstan for final processing and execution. As per the Sale Agreement, Closing is scheduled to occur within ten business days from the receipt of the signed addendums.Heads of Agreement with the Government of UzbekistanOn November 12, 2019 Condor signed a Heads of Agreement with the Uzbekistan Ministry which provided the Company a 120 day window to negotiate a definitive PSA with the Uzbekistan Ministry. An application to extend the Heads of Agreement has been submitted. If executed, the PSA is expected to include five producing gas fields and associated gathering pipelines and gas treatment infrastructure along with the right to explore and develop certain exploration areas surrounding the current producing gas fields. The fiscal and operating terms expected to be defined in the PSA include royalty rates, cost recovery, profit splits, gas marketing and pricing, governance and steering committee structures and baseline production levels and reimbursement methodology. The Company recently submitted a detailed feasibility study for the five producing gas fields to the Uzbekistan Ministry and an independent reserves evaluation is underway. The Company also submitted an economic analysis and discussions related to the fiscal terms are continuing.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 $4.0 million for the first twelve months and is comprised mainly of drilling two exploration wells. The Company has been having farm-in discussions for this program which have been temporarily deferred due to recent travel restrictions.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. The Company produced 97,074 boe in Turkey or an average of 266 boepd and received an operating netback1 of $30.84 per boe for the full year 2019 (full year 2018: produced 269,498 boe or an average of 739 boepd and an operating netback1 of $31.34 per boe). A study is underway to identify stimulation workover alternatives that could increase Poyraz Ridge production rates for the lower permeability reservoirs.Cash used in continuing operations decreased to $3.6 million for the full year 2019 versus cash from continuing operations of $3.6 million for the same period in 2018.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 non-binding letter of intent and term sheet signed during the second quarter of 2019 with a potential farm-in partner to drill the Yakamoz 1 side-track well and a subsequent appraisal well in Turkey has expired. The Company is discussing the farm-in with another interested party. The intent is to drill the side-track well in 2020. Selected Financial Results of Continuing Operations
RESULTS OF CONTINUING OPERATIONSSales and operating netback1 for the year ended December 31
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