The Company, through its local subsidiary, commenced operations of the PEC Project on March 1, 2024 and March 2024 production was 11,167 boe/d comprised of 65,416 Mcf/d (10,903 boe/d) of natural gas and 264 bopd of condensate. Although restricted in April and May for 18 days due to downstream infrastructure maintenance, production from April 1 to May 14, 2024 was 9,996 boe/d, comprised of 58,548 Mcf/d (9,758 boe/d) of natural gas and 238 bopd of condensate.

To enhance production, the Company plans to introduce proven modern technologies and operating techniques that include artificial lift, workover programs, infill and extension drilling programs along with investigating deeper horizons which are productive in other fields and regions of the country. Reservoir and production data is being collected and analyzed to confirm near-term capital efficient enhancement opportunities. Seismic reprocessing and a 3-D seismic program are also planned to support these efforts and a reserve report compliant with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities will be completed for 2024 year-end reporting purposes. The existing pipeline and facilities infrastructure is also under evaluation for optimization of water handling, field compression and the field gathering network. Production guidance will be provided once the baseline production, decline rates and field operating parameters are confirmed.

LNG in Kazakhstan

In January 2024, the Company received a natural gas allocation from the Government of Kazakhstan to be used as feed gas for the Company’s first modular LNG production facility. The feed gas will be liquefied to produce up to 350 Tonnes per day (210,000 gallons per day) of LNG, which can fuel approximately 125 rail locomotives or 215 large mine haul trucks (150 Tonne haul capacity) while contributing to carbon emissions reductions by displacing diesel fuel usage. Discussions are underway with end-users to confirm LNG volume commitments and the Company is reviewing project funding alternatives before proceeding with construction. Front-end engineering and design are complete and detailed engineering will commence in 2024. The Company has secured the land required for construction of the first two modular LNG production facilities.

The Company’s LNG initiative fully supports the strategy of the Government of Kazakhstan to materially expand the Trans-Caspian International Transport Route (“TITR”) which links a major Asian trade route with Europe. LNG will be used as a domestically produced low-carbon substitute to diesel fuel to address the increased usage of rail locomotives and transport trucks between China and the Caspian Sea and the marine vessels used to cross the Caspian Sea.

Lithium License in Kazakhstan

The Company holds a 100% working interest in the contiguous 37,300-hectare area which provides the subsurface exploration rights for solid minerals for a six-year term (the “Lithium License”). Given its strategic access to Asian and European lithium markets, this region is ideally suited for the rapid deployment of emerging Direct Lithium Extraction (“DLE”) technologies to generate lithium for EV batteries and other electricity storage applications.

Since the Lithium License is not associated with legacy oil wells nor any reported presence of hydrogen sulphide, a less complex and less capital intensive modular DLE technology is envisioned for the separation of lithium from the brine when compared with lithium extraction projects targeting oilfield brines, as are being advanced in Canada. By applying proven DLE production technologies, the Company expects to have a much smaller environmental footprint than existing lithium production operations which use open-pit mining or brine evaporation ponds. The Company is also evaluating the construction of a renewable power generation project to achieve net-zero emissions for its lithium production.

The Company’s initial development plan for the Lithium License includes drilling and testing two wells to verify deliverability rates, confirm the lateral extension and concentrations of lithium in the tested and untested intervals, conduct preliminary engineering for the production facilities, and prepare a mineral resources or mineral reserves report compliant with National Instrument 43-101 Standards of Disclosure for Mineral Projects.

Convertible Debentures issued in March 2024

On March 22, 2024, the Company issued convertible debentures (the “Debentures”) convertible into 2,950,336 common shares for gross proceeds of USD $4.8 million (CAD $6.5 million) less debt issue costs of CAD $0.2 million for net proceeds of CAD $6.3 million. The Debentures are unsecured, bear interest at 9% payable in cash semi-annually in arrears, mature in three years, and the principal amount is convertible at any time on or before the maturity date at a conversion price of USD $1.61676 per common share. The Debentures, and any common shares issued upon conversion, cannot be sold or transferred without an exemption from applicable securities laws for four months and a day after March 22, 2024. After the initial four month and a day hold period, the Company can force conversion of the Debentures if the 20-day volume weighted average trading price of the Company’s shares on the TSX exceeds CAD $3.00. The proceeds are available for general corporate purposes. The Debentures have no associated financial covenants.

RESULTS OF OPERATIONS

MESSAGE FROM CONDOR’S CEO

Don Streu, President and CEO of Condor commented: “Commencing with field operations only one month after signing the Production Enhancement Services Agreement was a remarkable achievement and we greatly appreciate the collaborative efforts of the Government of Uzbekistan and its national companies in assisting our team. Several key milestones critical to increasing gas production have already been attained, including:

• Artificial lift equipment to remove water from the gas wells is now in-country and installation will commence in the early part of the second half of 2024. These systems have yielded gas production increases in North American wells but are not commonly utilized in Central Asia.

• Design work of Field “in-line” water separation units is underway with installation planned in the second half of 2024. These systems have removed up to 99% of the liquids in gas pipelines in North America but are not commonly utilized in Central Asia.

• A workover program is scheduled to begin in the third quarter of 2024 that targets shut-in and poor performing wells.

• An extensive Field well metering and pressure data gathering program is also underway to mature redevelopment opportunities.

• Proven surfactants have been introduced that allow wells to be produced without surface venting, thereby increasing gas production and reducing GHG emissions.
  

In addition, we have increased the size of the national staff by 22%, established offices in both Tashkent and Bukhara, and are constructing a field camp to enhance the living conditions of our staff while at the work site. We remain confident that gas volumes will increase materially as a result of these and other planned production enhancement initiatives.

Strong progress is also being made on our LNG initiative in Kazakhstan. An agreement outlining LNG off-take volumes, delivery locations and delivery scheduling is being finalized with the country’s national railroad in conjunction with a locomotive manufacturer. Detailed engineering for the Company’s first modular LNG facility will commence shortly”.

BARRELS OF OIL EQUIVALENT ADVISORY

References herein to barrels of oil equivalent (“boe”) are derived by converting gas to oil in the ratio of six thousand standard cubic feet (“Mcf”) of gas to one barrel of oil based on an energy conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf to 1 barrel, utilizing a conversion ratio at 6 Mcf to 1 barrel may be misleading as an indication of value, particularly if used in isolation.

FORWARD-LOOKING STATEMENTS

Certain statements in this MD&A constitute forward-looking statements under applicable securities legislation. Such statements are generally identifiable by the terminology used, such as “expect”, “plan”, “estimate”, “may”, “will”, “should”, “could”, “would”, “increase”, “introduce”, “provide”, “generate”, “envision”, “apply”, “include”, “conduct”, “prepare”, “require”, “continue”, “reduce”, or other similar wording. Forward-looking information in this news release includes, but is not limited to, information concerning: the timing and ability to execute the Company’s growth and sustainability strategies; the timing and ability to operate and increase production and overall recovery rates at eight gas fields in Uzbekistan; the timing and ability to increase domestic gas supply and contribute to carbon emissions reductions; the timing and ability to conduct production enhancement services, produce natural gas and realize domestic gas sales proceeds; the timing and ability to be responsible for all capital and operating costs and receive a percentage of revenues less prescribed royalties from the PEC Project while also contributing to carbon emission reductions; the timing and ability to increase production by implementing artificial lift, workover and drilling programs; the timing and ability to investigate deeper horizons; the timing and ability to reprocesses seismic data and conduct a 3-D seismic program; the timing and ability to collect reservoir and production data; the timing and ability to complete a report in compliance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities; the timing and ability to evaluate existing pipeline and facilities infrastructure for optimization of water handling, field compression and the field gathering network; the timing and ability to provide production guidance; the timing and ability to use the gas allocation from the Government of Kazakhstan as feed gas for the Company’s first modular LNG production facility; the timing and ability to liquefy the gas to produce LNG; the timing and ability to fuel rail locomotives and large mine haul trucks; the timing and ability to contribute to carbon emissions reductions by displacing diesel fuel usage; the timing and ability to conduct detailed engineering; the timing and ability to confirm LNG volume commitments with end-users; the Company’s expectations in respect of the future uses of LNG; the timing and ability to obtain funding and proceed with construction; the potential for the Lithium License area to contain commercial deposits; future lithium testing results; the timing and ability to fund, permit and complete planned activities including drilling two additional wells and conduct preliminary engineering for the production facilities; the timing and ability to optimize the planned method for direct lithium extraction; the timing and ability to generate a report in compliance with National Instrument 43-101 Standards of Disclosure for Mineral Projects; the timing and ability to produce the lithium by utilizing closed-looped DLE production technologies; the timing and ability to have a much smaller environmental footprint than existing lithium production operations; the timing and ability to evaluate the construction of a renewable power generation project to achieve net-zero emissions; the timing and ability to install artificial lift equipment and the timing and ability to subsequently remove water from gas wells; the timing and ability to design and install in-line water separation units; the timing and ability to conduct well workovers; the timing and ability to establish well metering and pressure data gathering programs; the timing and ability for surfactants to be introduced and allow wells to be produced without surface venting, thereby increasing gas production and reducing GHG emissions; the timing and ability to construct a field camp to enhance the field staff’s living conditions; the timing and ability to execute an agreement outlining LNG off-take volumes, delivery locations and delivery scheduling; projections and timing with respect to natural gas and condensate production; expected markets, prices and costs for future gas and condensate sales; the timing and ability to obtain various approvals and conduct the Company’s planned exploration and development activities; the timing and ability to access natural gas pipelines; the timing and ability to access domestic and export sales markets; anticipated capital expenditures; forecasted capital and operating budgets and cash flows; anticipated working capital; sources and availability of financing for potential budgeting shortfalls; the timing and ability to obtain future funding on favourable terms, if at all; general business strategies and objectives; the timing and ability to obtain exploration contract, production contract and operating license extensions; the potential for additional contractual work commitments; the ability to meet and fund the contractual work commitments; the satisfaction of the work commitments; the results of non-fulfilment of work commitments; projections relating to the adequacy of the Company’s provision for taxes; the expected impacts of adopting amendments to IFRS accounting policies; and treatment under governmental regulatory regimes and tax laws.

This news release also includes forward-looking information regarding health risk management including, but not limited to: travel restrictions including shelter in place orders, curfews and lockdowns which may impact the timing and ability of Company personnel, suppliers and contractors to travel internationally, travel domestically and to access or deliver services, goods and equipment to the fields of operation; the risk of shutting in or reducing production due to travel restrictions, Government orders, crew illness, and the availability of goods, works and essential services for the fields of operations; decreases in the demand for oil and gas; decreases in natural gas, condensate and crude oil prices; potential for gas pipeline or sales market interruptions; the risk of changes to foreign currency controls, availability of foreign currencies, availability of hard currency, and currency controls or banking restrictions which restrict or prevent the repatriation of funds from or to foreign jurisdiction in which the Company operates; the Company’s financial condition, results of operations and cash flows; access to capital and borrowings to fund operations and new business projects; the timing and ability to meet financial and other reporting deadlines; and the inherent increased risk of information technology failures and cyber-attacks.

By its very nature, such forward-looking information requires Condor to make assumptions that may not materialize or that may not be accurate. Forward-looking information is subject to known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such information. Such risks and uncertainties include, but are not limited to: regulatory changes; the timing of regulatory approvals; the risk that actual minimum work programs will exceed the initially estimated amounts; the results of exploration and development drilling and related activities; prior lithium testing results may not be indicative of future testing results or actual results; imprecision of reserves estimates and ultimate recovery of reserves; the effectiveness of lithium mining and production methods including DLE technology; historical production and testing rates may not be indicative of future production rates, capabilities or ultimate recovery; the historical composition and quality of oil and gas may not be indicative of future composition and quality; general economic, market and business conditions; industry capacity; uncertainty related to marketing and transportation; competitive action by other companies; fluctuations in oil and natural gas prices; the effects of weather and climate conditions; fluctuation in interest rates and foreign currency exchange rates; the ability of suppliers to meet commitments; actions by governmental authorities, including increases in taxes; decisions or approvals of administrative tribunals and the possibility that government policies or laws may change or government approvals may be delayed or withheld; changes in environmental and other regulations; risks associated with oil and gas operations, both domestic and international; international political events; and other factors, many of which are beyond the control of Condor. Capital expenditures may be affected by cost pressures associated with new capital projects, including labour and material supply, project management, drilling rig rates and availability, and seismic costs.

These risk factors are discussed in greater detail in filings made by Condor with Canadian securities regulatory authorities including the Company’s Annual Information Form, which may be accessed through the SEDAR+ website (www.sedarplus.ca).

Readers are cautioned that the foregoing list of important factors affecting forward-looking information is not exhaustive. The forward-looking information contained in this news release are made as of the date of this news release and, except as required by applicable law, Condor does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained in this news release is expressly qualified by this cautionary statement.

ABBREVIATIONS

The following is a summary of abbreviations used in this news release:

The TSX does not accept responsibility for the adequacy or accuracy of this news release.

For further information, please contact Don Streu, President and CEO or Sandy Quilty, Vice President of Finance and CFO at 403-201-9694.