Condor's $10M Uzbek Bet: Fueling Gas Ambitions with Convertible Debt

CALGARY, AB – December 09, 2025 – In the complex world of international energy development, capital is the ultimate accelerant. Condor Energies Inc. (TSX: CDR) just strapped a rocket to its Central Asian ambitions, announcing a brokered private placement of up to $10 million in convertible debentures. This isn't just another line item on a balance sheet; it's a strategic injection of capital designed to dramatically fast-track the company’s natural gas drilling program in Uzbekistan. The move signals a pivotal moment for the junior energy player, representing a calculated gamble to rapidly scale production and seize a compelling market opportunity.

The financing, led by a syndicate including Research Capital Corporation and Canaccord Genuity Corp., provides the dry powder needed to mobilize a second drilling rig and procure essential in-field compression facilities. For investors and industry observers, this transaction offers a fascinating case study at the intersection of corporate finance, operational strategy, and geopolitics, revealing how ambitious companies are navigating the evolving energy landscape of emerging economies.

The High-Stakes Acceleration Strategy

At its core, Condor's financing is about speed. The proceeds are earmarked to transform its previously methodical 12-well drilling program into an aggressive, dual-rig operation throughout 2026. This shift from a single-rig to a back-to-back drilling schedule is a clear statement of intent. The company aims to move from proving its concept—having already drilled the longest horizontal well in Uzbekistan—to full-scale commercial development at a pace that matches the urgency of the market.

Internal estimates project that each of the new horizontal wells could yield initial production rates between 13 to 20 million standard cubic feet per day (MMscf/d). While the first horizontal well is budgeted at $4.2 million, the company anticipates a “learning curve” effect will drive the average cost down to $3.3 million per well for the full program. This financing provides the critical mass of capital to realize those efficiencies. Furthermore, the plan includes a separate workover rig dedicated to optimizing production from existing wells, creating a three-pronged approach to maximizing output.

The second major component of the strategy is the investment in in-field compression facilities. Engineering studies suggest these units could boost base production by an impressive 25% to 55% by addressing rising pipeline pressures. This is not merely an operational upgrade; it's a fundamental enhancement of the asset's long-term cash-flow potential. With estimated costs for the compression project ranging from $12 million to $20 million, the current financing provides a crucial down payment on this vital infrastructure.

Navigating Uzbekistan's Energy Crossroads

Condor's aggressive expansion cannot be understood outside the context of Uzbekistan's unique energy predicament. The nation, historically a significant gas producer, is facing a stark reality: declining output from aging fields. Natural gas production has been on a downward trend for years, falling by 4% in the first eight months of 2025 alone. This has forced the country, where gas makes up nearly 80% of the energy supply, to become a net importer.

Simultaneously, the Uzbek government is pursuing an ambitious economic modernization agenda. It has initiated reforms to transition its state-dominated energy sector to a competitive, market-driven model, actively courting foreign direct investment through public-private partnerships. While there is a strong push towards renewables, the immediate need to stabilize the domestic gas supply and support industrial growth creates a significant opening for companies like Condor. The government's plan to phase out gas exports to feed its growing petrochemical industry further underscores the internal demand that foreign-operated projects can help meet.

This is the tightrope Condor is walking. It is stepping in with Western technology and capital to rejuvenate existing gas fields at a time when the country’s aging infrastructure is struggling to keep up. By boosting domestic production, Condor is not just building a business; it is aligning itself with Uzbekistan's national strategic priorities, a crucial factor for long-term success in any foreign jurisdiction.

The Convertible Advantage in a Capital-Hungry Sector

For a capital-intensive venture like this, the choice of financing instrument is as strategic as the operational plan itself. Condor opted for convertible debentures, a hybrid security that offers a compelling blend of debt and equity features. In a market characterized by high interest rates, this structure provides a distinct advantage. The 12% annual interest rate, payable in cash, is certainly robust, reflecting the project's risk profile. However, it is the conversion feature that is key.

The debentures can be converted into common shares at $2.00 per share, offering investors a direct stake in the company's potential upside. For Condor, this structure is less immediately dilutive than a straight equity offering and likely cheaper than securing traditional high-yield debt. It's a tool well-suited for the current financial climate, where the convertible bond market has remained remarkably strong. Investor appetite for these instruments is high, as they offer downside protection through their debt-like features while retaining the potential for equity-like returns if the company's stock performs well.

The deal's structure effectively allows investors to bet on Condor's operational execution. If the accelerated drilling program successfully boosts production and cash flow as planned, the resulting stock appreciation would make the conversion option highly attractive. This aligns the interests of the capital providers with those of the company's management and existing shareholders, all of whom stand to benefit from the successful deployment of these funds in the field.

With the financial machinery now in motion and the backing of reputable agents like Research Capital and Canaccord Genuity, the focus shifts squarely to execution on the ground in Uzbekistan. The coming year will be a critical test of Condor's ability to manage a complex, multi-rig operation and deliver the production growth this financing is designed to unlock. The results will not only determine Condor's future but will also serve as a key barometer for foreign investment in Central Asia's dynamic energy sector.