Cadogan Share News (CAD)

(Sharecast News) - Independent oil and gas company Cadogan Petroleum reported a 27% year-on-year improvement in its average oil production to 297 barrels of oil equivalent per day in its first half on Tuesday, which was also 19% higher than 2018 average production.
The London-listed firm said the result made for the sixth consecutive semester of production growth, with average daily oil production in June standing at 387 barrels per day.

Production revenues increased by 15.7% for the six months ended 30 June, compared to the same period in 2018, notwithstanding a 15.6% reduction in the average realised oil price.

Overall revenues were down by 37.5% year-on-year, however, due to a lower volume of gas traded.

The company said it leveraged its cash position during the period, in line with its strategy, with the Blazh-10 well drilled and put on production and a €13.385m convertible loan agreement signed with one of the shareholders of the parent company of Proger - an Italian-based international engineering company.

Cadogan said the loan, which had a principal that was secured, carried an entitlement to interest at a rate of 5.5% per year, or had an option to convert into an indirect participating interest in Proger of 25%.

The company booked a $2.56m (£2.09m) profit for the six months ended 30 June, which was reportedly driven by a €4.21m ($4.8m) increase in the fair value of the €13.385m convertible loan since its signature in February, as a result of a competitive conversion price and of Proger's growth of EBITDA over the last year.

Cadogan's board said that confirmed that the loan agreement offered the company's shareholders exposure to "realisable growth".

As a result of those initiatives, the firm said net cash at period-end totalled $13.7 million, down from $41.4m year-on-year and $35.1m at the end of December.

The board said that level of cash was "more than sufficient" to sustain ongoing operations, however, with cash-flow from operating activities positive at $1.2m.

On the operational front, Cadogan said its "excellence" was confirmed by another accident-free period, and by the drilling of the successful Blazh-10 well.

The board said the well set a regional benchmark for drilling, and delivered "one of the highest" initial production rates ever recorded from the Yamna reservoir in the Carpathian basin, at 385 barrels per day during clean-up.

It also confirmed that the approvals required to file an application for a 20-year production licence for the Monastyretska licence were received, and the application was filed on 2 July.

The pilot production scheme on the Vovche-2 well was approved by the authorities, Cadogan also reported, and thus all commitments had been fulfilled on the Bitlyanska licence.

Trading of gas was described as "limited", with gas prices seeing an "unprecedented nosedive", with prices in January and February dipping below the level seen the previous summer.

In that scenario, Cadogan some of its stored gas in January with a small loss, and kept the remaining balance in storage.

On that volume, Cadogan booked a $0.65m loss on the expectation that prices would recover in the second half of the year when the gas was expected to be sold, though not to the levels seen in 2018.

"Overall, the first half of 2019 saw a robust operational performance and confirmed the positive profitability trend started in 2018, albeit the 2019 performance was partially masked by one-off negative effects, such as the loss in value of the gas inventory," the board said in its statement.

"The company looks with confidence to the second part of the year, which has started on the tail of higher production, should benefit from the seasonality of gas trading and will see renewed efforts to successfully monetize the legacy assets."