(Disclosure: The following represents my opinions only. I am not receiving any compensation for writing this article, nor does Hydra Capital have any business relationship with companies mentioned in this post.)
Condor Will Plug and Abandon the KN-501 Exploration Well
This morning CPI announced that the KN-501 exploration well in Kazakhstan failed to find any commercial hydrocarbon reservoirs and the well will be plugged and abandoned. Perhaps the most impressive thing about the well was that CPI drilled it for just $8 million (that's pretty impressive for what was a technically challenging well, having drilled through a huge salt section). See the full press release here: http://www.condorpetroleum.com/pdf/s%20KN-501%20Primary%20Basin%20well%20reaches%20total%20depth.pdf
While the well will provide data critical to the calibration of the seismic for future primary basin and sub-salt wells, there really isn't any more discussion warranted at this time. Condor has $48 million in cash, which is about 13.5 cents/share and has somewhere around 1000-1500 bopd of productive capacity behind pipe at Shoba. The stock closed at 10 cents today so it's more or less already washed out in my mind, but with no definable near-term catalyst for investors to focus on, CPI may be stuck in the doldrums for a while. At this time of year, the tax loss will likely be of more value to most investors than the intrinsic value of the underlying shares.
Such is the exploration game. KN-501 was a high-risk shot, but it was a shot that I'd take every time. Sometimes you can make the right bet and still lose -- the key is sizing the bet properly so that you can stay in the game when the cards don't fall in your favour.