Regulatory Green Light Signals Major Progress in Tumbes Basin
Condor Energy (ASX: CND) has secured a crucial extension from PeruPetro for its Technical Evaluation Agreement (TEA 86) in Peru's Tumbes Basin, reinforcing the company's strategic position in South America one of the most promising yet underexplored offshore oil and gas regions.
The Condor Energy extension in Tumbes Basin provides additional runway to advance technical and commercial preparations while progressing discussions with potential partners to unlock the basin's substantial resource potential, which includes:
- 3 billion barrels of unrisked oil prospective resources across five major prospects
- 1 trillion cubic feet of contingent 2C gas resources at the Piedra Redonda discovery
At the current share price of 2.3 cents, Condor's market capitalisation of $16.1 million and enterprise value of $12.9 million represent a modest valuation against the scale of resources under evaluation, potentially offering significant upside for investors as the company advances toward the exploration drilling phase.
"We are delighted to receive this extension from PeruPetro, which reflects the strong and collaborative relationship we've developed, and the excellent progress we have made in maturing our TEA. This extension provides us with the runway to prepare for the next stage of securing a partner and a future drilling campaign to test one of the most prospective underexplored oil plays in the region as well as progress the significant Piedra Redonda gas discovery towards commercialisation." – Serge Hayon, Managing Director
Technical Achievements Set Stage for Major Discoveries
Since acquiring TEA 86, Condor has made substantial progress in de-risking and maturing the basin's potential. The company has:
- Completed extensive reprocessing of vintage 2D seismic data
- Identified over 20 robust leads and prospects through regional studies
- Matured five large prospects with multi-billion-barrel oil potential
- Secured independent resource assessment confirming the scale of both oil prospects and gas discovery
The technical work completed to date has positioned Condor as a leader in frontier offshore exploration in Peru, with the Condor Energy extension in Tumbes Basin enabling further refinement of drilling targets and commercial strategies.
| Prospect | Status | Resource Type | Estimated Resource (Gross) |
|---|---|---|---|
| Raya, Salmon, Bonito, Caballa, Tiburon | Exploration Prospects | Prospective (Unrisked) | 3 billion barrels oil |
| Piedra Redonda | Discovered Field | Contingent (2C) | 1 trillion cubic feet gas |
Understanding Technical Evaluation Agreements in Peru
A Technical Evaluation Agreement (TEA) represents a critical first step in the Peruvian petroleum licensing system. Unlike standard exploration licences, a TEA grants the holder exclusive rights to evaluate an area's hydrocarbon potential and, importantly, the exclusive right to negotiate a full Licence Contract for the area.
This exclusivity provides Condor with a significant competitive advantage, as it allows the company to thoroughly assess the basin's potential while maintaining priority access to convert its technical findings into a production-sharing contract. The TEA structure encourages companies to invest in frontier exploration areas by providing a clear pathway from evaluation to development.
For investors, understanding the TEA framework is crucial as it represents a de-risked entry point into potentially world-class assets, with the Condor Energy extension in Tumbes Basin providing additional time to optimise its position before committing to a full exploration program.
Strategic Roadmap: Partnering and Pathway to Drilling
The 12-month extension provides Condor with a critical window to align its technical program with commercial milestones. The company's forward strategy includes:
- Completing high-impact regional mapping and basin modelling
- Enhancing understanding of charge and trap systems for targeted drilling
- Finalising work program design and licensing strategy
- Advancing commercial discussions through an active partnering process
Industry interest in the region has been building, with several new country entrants into surrounding basins. This increased attention reinforces the strategic value of Condor's position and potentially enhances partnering opportunities.
"We are excited about the path ahead as we align our technical, commercial and partnership workstreams to unlock the world class potential of our TEA in the Tumbes Basin." – Serge Hayon, Managing Director
About the Tumbes Basin TEA
The Condor Energy extension in Tumbes Basin covers an exploration area of 4,858km² in shallow to moderate water depths of between 50m and 1,500m. The TEA area encompasses almost all of the Peruvian offshore Tumbes Basin.
Condor holds an 80% interest in TEA 86, with partner Jaguar Exploration, Inc. holding the remaining 20%. The under-explored block is surrounded by multiple historic and currently producing oil and gas fields, indicating the proven petroleum system in the region.
A key asset within the TEA is the undeveloped shallow water Piedra Redonda gas field, which contains 'Best Estimate' Contingent Resources of 1 trillion cubic feet (100% gross) of natural gas. The exploration focus remains on the multiple prospects that have been identified, with an independent assessment confirming a combined best estimate gross unrisked 2U prospective resource of 3 billion barrels of oil across the Bonito, Raya, Salmon, Caballa and Tiburon prospect areas.
Why Investors Should Follow Condor Energy
Condor represents a compelling investment opportunity for several key reasons:
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Outsized Resource Potential: With independently verified prospective resources of 3 billion barrels of oil and 1 trillion cubic feet of gas, the scale of the opportunity far exceeds Condor's current market valuation.
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Strategic Position: As 80% holder of TEA 86, Condor controls access to almost the entire Peruvian offshore Tumbes Basin, an underexplored region surrounded by producing fields.
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De-Risked Approach: The company's methodical technical program and focus on securing partners before drilling demonstrates a capital-efficient strategy to manage exploration risk.
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Strong Cash Position: With $3.2 million cash and no debt, Condor is well-funded to complete its technical program and pursue partnership discussions.
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Regulatory Support: The success in securing the extension demonstrates positive relationships with Peruvian authorities, reducing political and regulatory risk factors.
For investors seeking exposure to high-impact oil and gas exploration with substantial upside potential, Condor Energy offers a rare combination of world-class resource potential, technical progress, and a clear pathway to value creation through partnering and future drilling campaigns.
Understanding Prospective Resources vs Contingent Resources
When evaluating oil and gas companies like Condor Energy, it's important to understand the distinction between different resource classifications:
Prospective Resources are estimated quantities of petroleum that may potentially be recovered from undiscovered accumulations. These resources have both discovery risk and development risk. The 3 billion barrels of oil identified across Condor's five major prospects fall into this category. While these numbers represent significant potential, they require successful exploration drilling to confirm.
Contingent Resources are discovered petroleum resources that are potentially recoverable but not yet commercial. The 1 trillion cubic feet of gas at Piedra Redonda is classified as a 2C Contingent Resource, meaning it has been discovered but requires further appraisal and development planning before commercialisation.
The "2C" designation indicates a best estimate of contingent resources, balancing conservative and optimistic assessments. This classification provides investors with a clearer picture of resource confidence levels and development stages.
With the secured extension providing runway for technical refinement and partnership discussions, investors should closely monitor developments as Condor Energy advances toward drilling decisions to unlock the substantial potential of its Tumbes Basin assets while maturing our TEA.
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