Condor Energies Inc. (TSX: CDR): Very high flow rate at bypassed zone boosts production and unlocks reserves

• A potential bypassed 60 m gas pay section, identified using advanced cased-hole logging tools and reprocessed existing 3-D seismic data, was put in production over a 23 m perforated interval at a rate of 1,100 boe/d, increasing to 1,300 boe/d over the past five days as the completion fluid has been recovered. The flow rate is above expectations and unlocks reserves.
• This result showcases the potential upside at Condor’s Uzbekistan assets. The cost of the work-over was only ~US$0.23 mm. Prior to the work-over, the well was not producing. Assuming US$6/boe netbacks, the well pays back in less than a month.
• Five additional well candidates have been identified with similar geologic characteristics using a combination of legacy data and reprocessed 3-D seismic data. These will be worked over back to back (2 weeks per well).
• The arrival of a 3rd work-over rig and a 2nd wireline unit will enable Condor to accelerate production growth. A multi-well vertical and horizontal drilling campaign is also expected to commence in 2Q25.
• Production has averaged 11,455 boe/d over the last five days. This is the highest reported by Condor. Condor is on track to grow production to 14-15 mboe/d by mid-2025 and 15.5-17 mboe/d by YE25.
• We re-iterate our target price of C$5.60 per share, in line with our ReNAV. First LNG sales in Kazakhstan are still expected in 1Q26.

4Q24 production and revenue
The two wells where Condor was evaluating shallower Cretaceous-aged stacked channel sands not previously penetrated on Condor’s fields could not be put in production. Gas flowed to the surface, but the wellhead flowing pressure was insufficient to match the existing flowline gathering system pressures. Condor believes that the targeted new zones could not be properly perforated with the available equipment, hampering downhole pressure. Additionally, there was water inflow from other zones, increasing the weight of the hydrocarbon column. Condor plans to revisit these sands later in 2025. Even with the workover rigs entirely focused on these two wells from late December until early January, 4Q24 production of 10,510 boe/d was broadly in line with our expectations. 4Q24 revenue of C$20.9 mm is also in line with our expectations.

Valuation
Our ReNAV is unchanged at C$5.60/sh with a Core NAV of C$1.58/sh. The key source of upside continues to be the Kazakh LNG project. We estimate that the first two modular LNG plants are worth ~C$7.50/sh.