LONDON (Alliance News) - Cadogan Petroleum PLC on Friday said its producing assets in Ukraine have continued with minimal interruption, despite uncertainties in the outcome of the licensing processes and the tax regime which has remained punitive, though noted its revenue came in lower than a year earlier.
The oil and gas exploration company with onshore gas, condensate and oil assets in Ukraine said an accurate reservoir management program has kept the average production in the first six months at 115 barrels of oil per day which is 5.5% higher than the average production in 2015 and 24% higher than the average production in the first six months of 2015.
However, Cadogan noted that its revenue has dropped in its first half ended June 30 when compared with a year earlier, despite production levels being marginally ahead of the level of last year due to lower realised oil and gas prices.
The volume of gas traded has been lower than in the same period a year earlier, after two of Cadogan's large clients switched to new suppliers, the company said, though noted it has made progress with the recovery of receivables and optimisation of pre-payments from the gas trading division.
Cadogan said it expects a significant contribution to its full year results from its subsidiary LLC Astro Service, which has been working on its portfolio of orders with a focus on the plugging and abandonment of old wells.
Cadogan said it has continued to actively review opportunities to expand and to geographically diversify its portfolio of oil and gas assets in the first six months of 2016, and has looked at either buying licencing or assessing third parties' wells to be re-entered in Ukraine in particular.
"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," said Chief Executive Guido Michelotti.
Shares in Cadogan were up 0.4% at 6.90 pence on Friday.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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Cadogan (CAD)