CND to progress 1tcf gas discovery and 3.3BN barrel oil prospects

Our 2023 Energy Pick of The Year Condor Energy (ASX: CND) just completed all of its TEA commitments for its offshore block in Peru which has a:

• 1 trillion cubic feet (Tcf) existing gas discovery.
• ~3.3BN barrel prospective oil resources across multiple targets (with the single biggest target being Bonito at approx 1BN barrels)

AND surrounded by $259BN TotalEnergies:

CND is currently operating the block under a TEA (Technical Evaluation Agreement) - basically an agreement between CND and the Peruvian regulators to do desktop studies on a project AND negotiate the terms for an exploration license on a block.

We did a deep dive on the TEA when CND first announced its deal on the asset here.

Under the TEA, CND had a few years operating the asset under a low cost desktop study focused work program with obligations to do:

• Reprocess and reinterpretation of existing 2D seismic data across the block
• Desktop geological and geophysical evaluation studies
• Environmental baseline assessment studies

And today, CND confirmed that all of the work proposed in the TEA had been completed.

Here is how the block looked when CND first picked up the TEA and here it is now:

(source)

(source)

Now, CND could progress the project toward an exploration license application.

Exploration license will be where CND commits to a drilling well over a multi-year pre-determined commitment for the project.

Last year CND extended the TEA expiry by 12 months - so we should have until August to see if CND gets the licence granted or not.

(source)

CND is currently capped at ~$16M (at 2.2c) and given the block already has a discovery + multi billion barrel oil prospects.

We think that a conversion into an Exploration Licence could be a major catalyst on its own.

The flip side of this is also true, IF CND isn’t granted the block then it could be left with no core asset and the market cap could re-rate lower.

What else is happening around CND?

CND’s block is surrounded by some big players, with most of the block away from shore surrounded by $259BN capped TotalEnergies, plus other majors Chevron and Occidental also in the region:

TotalEnergies were first granted the TEA’s on their blocks AFTER CND entered the area (in May 2024). (source)

The Total TEA was for 24 months, so they should be getting close to having to make a decision on their block inside the next few months.

As for Chevron/Occidental - they completed a massive seismic survey on their block with results expected this year. (source).

There is also the Z-69 block (which has an oil producing asset on it) next door to CND which is currently going through a tender process. (source).

We think that the activity of these majors could also bring a lot of interest into CND - especially if the permit is granted into an exploration license.

What’s next for CND?

🔄 Convert the TEA into an exploration license

CND has now completed the final steps of its Technical Evaluation Agreement work program (focused on seismic reprocessing).

Next we want to see CND move forward and apply for a conversion of its TEA into the equivalent of exploration licenses.

Once that’s done, CND can apply to convert the TEA into an exploration Licence Contract, which is the critical step that gives CND the regulatory framework to drill exploration wells.

In a recent presentation CND made note that it is preparing the paperwork for this step, so we await for further updates on the timeline:

(source)