Condor Energies Inc. (TSX: CDR): Further feed gas allocation in Kazakhstan is key step to derisking the 2nd high value LNG plant
• Condor has received a second natural gas allocation to feed the second modular LNG plant near the Kuryk Port on the Caspian Sea.• The natural gas allocation will allow the company to produce the energy equivalent of 565,000 litres of diesel per day (~400 t/d of LNG).
• This is line with the company’s targets and is a key milestone in derisking the Kuryk plant. This second allocation more than doubles the overall natural gas allocation to the company. Overall, the combined LNG production from both plants could power ~280 LNG locomotives.
• The first natural gas allocation was sufficient to feed the Alga plant (phase 1 + phase 2). We estimate that each phase of Alga will generate ~US$25 mm of free cash flow per year (total of ~US$50 mm per year for both phases) once online. Kuryk would add a further US$60 mm per year of free cashflow. The combined free cashflow per year potentially generated by both plants would represent 150% of the current market cap.
• Condor is now discussing offtake agreements with end users, a key step to taking FID on the first LNG plant. This is expected to take place in the coming months. First LNG production is expected in 2026. All new locomotives in Kazakhstan are expected to be LNG powered from 2027.
• We re-iterate our target price of C$5.80/sh, in line with our ReNAV.
Further reflections on Kuryk
Condor has already acquired 16 hectares of industrial land for the LNG facility at Kuryk. The company has also secured a 5 MWh electricity allocation that will provide power from the nearby electrical grid. The Kuryk plant is located at a port on the Caspian Sea. This opens up the potential for sales of LNG to the marine fleet on the Caspian Sea.
Valuation
Our core NAV for Condor based on Uzbekistan only is C$1.20 per share. Our unrisked NAV for the first LNG plant at Alba is ~C$4.30 per share. The unrisked value of Kuryk would add ~C$4.20 per share. Our ReNAV is ~C$5.70/sh.
Auctus Advisors is a specialist Equity Capital Markets and Advisory business with a focus in the Energy Sector.
The partners have complementary skill sets, with decades of experience across Equity Capital Markets, Investment Banking and the Energy industry. We have worked at Société Générale, Canaccord Capital, BMO Capital Markets and Schlumberger. Most recently we have worked together for many years at GMP FirstEnergy.
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