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LONDON (Alliance News) - Cadogan Petroleum PLC Tuesday said its reserves and resources have been re-evaluated and delivered considerably more possible and contingent resources than what management was expecting, but its prospective resources have plummeted.
The company also revealed production has remained broadly flat since November, with its licences in Ukraine only managing to increase production by two barrels of oil equivalent per day since then.
The oil, gas and condensate company said the latest report has "broadly confirmed" that the company has total net 1P reserves, also known as proven reserves, of 400,000 barrels of oil equivalent.
The amount of 3P reserves, or possible reserves, totals 23.0 million barrels of oil equivalent whilst 2C resources, otherwise known as contingent resources, amounts to 38.9 million barrels of oil equivalent.
Cadogan had provided internal resource and reserve estimates back in December, but they were notably lower than the results unveiled Tuesday. The company had forecast possible reserves of 19.2 million barrels of oil equivalent and contingent resources of 10.1 million barrels.
That means possible reserves came in 20% higher than expected whilst contingent resources were 3.8 times larger than Cadogan had anticipated.
"This increase is primarily concentrated in the Monastyretska and Bitlyanska licenses in Western Ukraine. This is offset by a downward revision of the best estimate prospective resources across the portfolio which is primarily concentrated in the three Eastern Ukraine licenses," said Cadogan.
Best estimate prospective resources only amount to 14.5 million barrels of oil equivalent in the Tuesday update, 93% lower than Cadogan's 220.0 million barrel estimate back in December.
The majority of those prospective resources were expected to come from the Pokrovska, Pirkovska and Bitlyanska licenses, but the update Tuesday showed the prospective resources at the Pokorovska licence were 99% lower than expected whilst the resources at the other two licenses were 93% lower than what what management had anticipated.
"This downward revision is principally a result of the low oil price environment and a more conservative interpretation of the available geological and geophysical data," said the company.
The report has established the Monastyretska licence has possible reserves of 4.5 million barrels compared to Cadogan's 2.7 million barrel estimate. Cadogan had not expected any contingent resources to be declared in the licence, but the report has estimated there are contingent resources of 600,000 barrels.
Cadogan's forecast in December suggested there would be no possible reserves at the Bitlyanska licence, but the report has declared the licence has possible reserves of 3.2 million barrels of oil equivalent and contingent resources of 14.8 million barrels, compared to Cadogan's low 1.2 million barrel estimate.
"We are pleased with the significant upward revision of the Monastyretska and Bitlyanska reserves against previous management estimates, which will prolong the life of the Company?s producing fields and provide access to further production upside. Cadogan intends to work towards exploiting this upside while maintaining our focus on exercising financial discipline, in order to preserve our cash resources for further growth opportunities in the current oil price environment," said Guido Michelotti, chief executive of Cadogan.
Importantly, those possible, contingent and prospective resources and reserves will have to be upgraded before they can be seen viable to be included in any production plans.
Cadogan's current net production figures were also included within the reserve and resource update, showing three licenses are currently producing 124 barrels of oil equivalent per day net to the company.
That can be compared to the 122 barrels of oil equivalent being produced daily from the same licenses at the end of November 2015.
Cadogan shares were trading up 1.4% to 9.0 pence per share on Tuesday.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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