REG-Cadogan Petroleum: Operations Update <Origin Href="QuoteRef">CADP.L</Origin>

Cadogan Energy SolutionsAnnouncement

08/07/2016 10:50

CADOGAN PETROLEUM PLC 
 
 Operations Update 
 
 8 July 2016 
 
 Cadogan Petroleum plc (“Cadogan” or the “Company”), an independent
oil and gas exploration, development and production company with onshore gas,
condensate and oil assets in Ukraine, is pleased to announce an update on its
operations in Ukraine.  
 
 Oil & Gas Production 
 The Company’s producing assets in Ukraine have continued with minimal
interruption. An accurate reservoir management program has kept the average
production in the first six months at 115 boepd which is slightly (5.5%)
higher than the average production in the year to 31 December 2015 and 24%
higher than the average production in the first six months of 2015.  Whilst
production levels have been marginally ahead of the level of last year,
revenues have dropped due to lower realised oil and gas prices. 
 
 Oilfield Services 
 Cadogan’s wholly owned service subsidiary, LLC Astro Service, has been
working on its portfolio of orders with a focus on the plugging & abandonment
of old wells and restoration of sites. Management expects a significant
contribution to the Group's full year results from this business segment. 
 
 Gas Trading 
 The volume of gas traded has been lower than in the corresponding period of
last year. The primary reason for the lower traded volumes was a loss of two
large clients switching to new suppliers. Cadogan has however made progress
with the recovery of receivables and optimization of pre payments from the gas
trading division since 31 December 2015 (which stood at $11.7 million), which
has had a net positive impact on the Company’s cash balances. 
 
 Outlook and Strategy 
 Through the first part of the year Cadogan has continued to actively review
opportunities to expand and to geographically diversify its portfolio of oil
and gas assets. In particular in Ukraine, Cadogan has looked at either buying
into licences or accessing third parties' wells to be re-entered applying the
same techniques which proved successful on the Monastyretska license. 
 
 Efforts to preserve cash have continued and have been successful. Net cash
(cash and cash equivalents less  short term borrowings) has increased from
$36.5 million as of 31 December  2015 to $40.6 million as of June 30 2016 as
a result of the optimization of working capital. 
 
 Guido Michelotti, Cadogan' CEO commented: 
 
 "The first half of 2016 has been another challenging period for oil and gas
companies operating in Ukraine as they have been exposed to uncertainties in
the outcome of the licensing processes and to a tax regime which has remained
punitive.  Cadogan has actively engaged the authorities at all levels to
protect its expired licenses and to bring the royalties down to pre-Maidan
level. 
 
 This has not distracted management and staff from the efforts to diversify
and efficiently manage the existing portfolio. I am quite pleased by the
increase of both production and net cash over the same period last year as we
continue to focus on preserving our cash resources to pursue opportunities to
add value to the portfolio." 
 

 Enquiries: 
 
  Cadogan Petroleum plc                                                          +380 (44) 594 5870     
  Guido Michelotti, Chief Executive Officer Marta Halabala, Company Secretary                           
  Cantor Fitzgerald Europe                                                       +44 (0) 20 7894 7000   
  David Porter Sarah Wharry                                                                             
 


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