Energy Co. Has Buy Rating After Successful Artificial Lift Program
Research Report

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Disclosures for Research Capital Corp., Condor Energies Inc., October 16, 2024

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Research Capital Corp. analyst Bill Newman, in a research report published on October 16, 2024, maintained a Speculative Buy rating on Condor Energies Inc. (CDR:TSX.V) with a price target of CA$5.35. The report follows Condor's announcement of significant productivity improvements through its artificial lift program in Uzbekistan.

Newman highlighted the success of the program, stating, "The first three wells have achieved a 100% to 300% increase in gas flow rates compared to pre-workover levels, contributing an additional 330 boe/d of incremental production." He added, "Encouraged by these initial successes, Condor has contracted a second workover rig, with operations expected to commence in early November 2024."

The analyst viewed these developments positively, noting, "Condor is achieving strong operational performance through its artificial lift program in Uzbekistan, resulting in meaningful production gains. The adoption of advanced technologies and the scaling of its workover program provide a clear path for sustained growth."

Regarding Condor's operational update in Uzbekistan, Newman stated, "The ongoing low-risk field development program in Uzbekistan has successfully stabilized production by eliminating a 20% average decline rate, positioning the Company for substantial production growth in Q4/24."

The report also highlighted Condor's strategic initiatives, including the installation of in-line water separation units and the expansion of its workover program. Newman commented, "With a substantial inventory of wells for reactivation and optimization, Condor is well-positioned to continue expanding production."

Newman's valuation methodology for Condor Energies is based on a combination of cash flow multiple and risked Net Present Value (NPV). He explained, "We maintain our SPECULATIVE BUY recommendation and CA$5.35 target price, reflecting a 4.0x multiple of our 2025 debt-adjusted cash flow forecast from Uzbekistan and a 50% risked NPV value for the Alga LNG Project."

The analyst added, "Our target price does not yet factor in any potential value from Condor's second LNG project (Kuryk), its lithium projects in Kazakhstan, or the Poyraz natural gas field in Turkey."

Newman also outlined several risk factors, including liquidity risk, LNG facility construction risks, exchange rate risk, political risk, commodity risk, and credit risk.

In conclusion, Research Capital Corp.'s maintenance of a Speculative Buy rating and CA$5.35 price target reflects a positive outlook on Condor Energies' operational improvements and growth potential in Uzbekistan. The share price at the time of the report of CA$2.00 represents a potential return of approximately 167.5% to the analyst's target price, highlighting the significant upside potential if the company's operational and strategic plans continue to succeed.