New seismic data incoming for CND’s offshore prospect in Peru
Yesterday, our 2024 Energy Pick of the Year, Condor Energy (ASX: CND) announced the results of new seismic interpretation studies over its Tumbes Basin project offshore Peru.
The result was a significantly upgraded level of prospectivity at the Raya prospect.
We see this as a major positive ahead of a resource estimate.
The announcement also noted that leading seismic interpretation firm e-Seis has completed lithology and amplitude vs offset (AVO) studies on legacy 3D seismic data over CND's Tumbes project area.
Below shows the areas selected for 3D seismic reprocessing (blue boxes):
We think CND has now significantly de-risked the Raya prospect, which is now shaping up as a high-quality drilling target within their large Tumbes project area.
The seismic interpretation results align with our investment thesis of CND sitting on a potentially giant opportunity in this underexplored but prolific basin offshore Peru.
CND’s project is huge, covering ~4,858km^2 offshore Peru.
The project sits across two basins - Talara and Tumbes - where multiple existing discoveries have been made and ~1.6 billion barrels of oil have been produced.
Getting more granular, here is the Raya structure map:
All these “squiggles” are actually really important to geos, who are tasked with interpreting where the best place to drill is.
Given the costs involved in drilling, you want to get this process right.
So we’re seeing great progress from CND since it initially entered Peru.
In addition to this, we think the macro theme of underinvestment in new oil and gas supply, coupled with increasing demand, makes CND's exploration activities in Peru highly relevant.
We’re Invested in CND to eventually prove out a commercial discovery that could rapidly re-rate the company given its modest ~$18M market cap and leverage to rising energy prices.
How does this affect our CND Investment Memo?
Objective #1: Reprocessing of 3D seismic data across the highest priority areas.
As part of its first year work program, CND plans to process 1,000km^2 of 2D seismic data. We want to see CND pick the highest priority areas of its block for this reprocessing work.
Milestones
✅ Pick highest priority targets
✅ Start reprocessing 3D seismic data
🔄 Results from the reprocessed data
Source: “What do we expect CND to deliver?” Section - CND Investment Memo 5th Dec 2023
What is Next for CND?
Yesterday’s announcement said that CND is getting closer to “resource estimates for Raya and several other features.”
We think a large prospective resource estimate would act as an excellent calling card for CND in any commercial discussions it may have - noting that TotalEnergies will be doing exploration in the same geological basins as where our Investment CND has acreage.
The French energy giant signed 3x Technical Evaluation Agreements (TEA) in northwest Peru with the state owned PeruPetro.
(Source)
The company's near term objectives are to continue de-risking the project through low-cost studies, while working towards securing a farm-in partner or funding to drill an initial exploration well.
Key upcoming catalysts could include:
🔄Resource estimates for Raya and other prospects
🔲Potential farm-in deal to fund drilling
🔲Progressing towards an exploration drilling campaign
Read more about CND and Total Energies in our latest CND note:
Oil & Gas Supermajor TotalEnergies picks up ground next to CND
