Condor Energies Inc T.CDR

From Malcolm Shaw...

[mike49]

Glad i'm not the only one having trouble keeping track.....


Condor Tests Some Gas from One Zone and No Gas in Another

Condor Petroleum (CPI.TO) gave an update this morning on operations in its Poyraz gas field in Turkey. The company tested Sogucak and Gazhanedere zones in the Poyraz West 1 well and the Poyraz 5 well, yielding flow rates ranging from zero to 2 million cubic feet per day. I'll talk a bit more about the implications of that in the next paragraph. On another front, equipment that Condor believes will allow them to mitigate paraffin production in the Poyraz 3 well appears to be in country and on its way to site, as the company states that a service rig is on its way to Poyraz 3 to resume testing operations there. If your head is spinning with respect to the well names and intervals, you're probably not alone and I think that Condor would do well to put together an annotated structural cross section though the field for investors that shows the different intervals and their respective test results.

One of the disappointing data points from today's news in my eyes is the fact that the company was unable to establish gas flow from the Sogucak interval in the Poyraz 5 well. Previously, Condor had stated that the interpreted gas-water contact in the Sogucak was "confirmed to be located beneath Condor's mapped structural spill point". And while Condor says that the water recovered during the Sogucak test in Poyraz 5 was likely derived from "an open, near-vertical fault in the zone", that's likely not going to help them book additional Sogucak reserves that would have been expected based on petrophysical (well log) data and interpretation. Channeling water through a vertical fracture/fault isn't uncommon in fields like Poyraz that appear to have a lot of internal faulting, so I'm not sure that I can get too pessimistic on the field expansion potential right away, especially without knowing which Gazhanedere interval tested gas in that wellbore. Based on logs, Condor has interpreted some very thick net pay sections in its Poyraz program, but the key is going to be proving that gas can be flowed from those intervals in order to convert "log pay" into real additional booked reserves.

All in all, I would say that I'm on heightened alert with respect to pending Poyraz data points as it doesn't appear to be as straightforward as the log data would have initially suggested. Test results from Poyraz West 2 and Poyraz West 3 are going to need to be closely watched, but Condor has something shiny in its other hand that may capture some attention as well. To quote from Condor's press release today, "the Yakamoz [exploration] prospect could be more highly fractured and gas-rich than the reservoirs encountered at Poyraz Ridge". If that's proven by a wellbore and a flow test or two, that would be a welcome surprise for Condor holders who are, for the time being, blowing in the wind as they wait for additional data out of Poyraz.

Initial production facilities and pipeline construction for Poyraz seems to be on track with first gas from Poyraz slated for "mid-2017". I guess the real question is, "How much gas is there to produce?". Stay tuned.