LONDON (Alliance News) - Cadogan Petroleum PLC said Friday it has decided not to apply for the award of a new exploration licence for the Sloboda-Rungurska licence in the Ukraine.
The Sloboda licence had been suspended last year for alleged breaches, although this suspension was subsequently revoked, and the licence reached its natural expiry date last month.
Cadogan attributed its decision to the current energy price environment, combined with a hefty subsoil use tax for oil, meaning that the remaining exploration potential of the licence had become "economically unviable".
As the assets had already been impaired, this will not have an impact on its balance sheet.
The company said it has also begun revising its current logistic, organisation and staffing level in the west of Ukraine.
"We regret the decision to reduce the size of our Ukrainian portfolio, but we have to acknowledge that the current administrative and fiscal framework in Ukraine hinders the exploitation of marginal reserves such as those which might have been discovered in Sloboda," said Chief Executive Guido Michelotti in a statement.
Shares in Cadogan were untraded Friday. They last closed at 9.60 pence.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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Cadogan (CAD)