Last checked at 17 May 2011 07:00
17 May 2011
Cadogan Petroleum plc ("Cadogan" or "the Group")
Interim Management Statement for the period from 1 January to 16 May 2011
Introduction
Cadogan published its financial report for 2010 on 27 April 2011. On 13 April 2011 the Group announced a significant transaction with Eni S.p.A ("Eni"), the major integrated Italian energy company. The transaction is conditional on the approval of shareholders and the relevant Ukraine authorities. Under the proposed transaction Eni will acquire a 60 per cent interest in the Zagoryanska field and an initial 30 per cent interest in the Pokrovskoe field with an option to acquire a further 30 per cent interest in the latter. Since the announcement good progress has been made in meeting the conditions precedent to the transaction and Cadogan intends to issue a shareholder circular and notice of general meeting by the end of May to seek shareholder approval to the transaction. Completion of the transaction is on track for early July 2011.
Operations
The Group continues to operate safely and efficiently and there were no lost time incidents during the period under review.
Commercial production at the Zagoryanska 3 well in eastern Ukraine continues with flow rates of approximately 42 mcm/day of gas and 8 tonne per day of condensate during the period under review. As part of the licence settlement with NSJC Nadra Ukraine, a state-owned company, the Group purchased five deep wells on the Zagoryanska field and the development of this field now forms part of the agreed work plan with Eni. Suitable workover rigs have been identified in-country and it is hoped to award a contract and commence operations on site during Q3 2011.
The Group intends to award a drilling rig and services contract for a one-year period to a major company operating in Ukraine. The rig will initially deepen the Pok 1 well (suspended in December 2010) and subsequently either side-track the existing well or drill a new well at the Pok 2 location. These operations will be funded under the terms of the proposed transaction with Eni. Operations at Pok 1 are expected to commence on site in July 2011.
The 2D seismic data for the Bitlyanska licence area in western Ukraine, acquired at the end of 2010, is currently being processed. Once complete the data will be interpreted and the results will be used to re-activate the farm-out campaign for the Borynya and Bitlya fields on the licence area. The Borynya and Bityla fields have contingent resources, independently certified, of 211.54 mmboe and 113.92 mmboe respectively. The Group has an obligation to drill a further well on the Bitlyanksa licence during 2012 and it will seek a partner to undertake the project in joint venture as part of its continuing plan to de-risk its assets.
Global Process Systems Inc . ("GPS") Payment
As previously advised, the payment due from GPS on February 14 of $10 million was not received. Discussions continue with GPS on rescheduling the payment of the outstanding $30 million due from them under the settlement agreement put in place in October 2009. Legal title to the plant remains with Cadogan until the final payment is made by GPS.
Finance
Cadogan's cash balance at the date of this announcement is £22.9 million ($37.1 million). Monthly revenue from all active fields is now running at £0.5 million ($0.8 million) per month.
Litigation
The litigation, which commenced in June 2009 against the former Chief Executive Officer, Chief Operating Officer and certain third parties including individuals and suppliers, has yet to come to trial. However, a number of settlements have been concluded and, in the period covered by this statement, Cadogan has received settlement cash payments totalling £4.0 million ($6.5 million), although the income was accrued in the 2010 year end accounts. The litigation continues against the former Chief Operating Officer.
EndsEnquiriesCadogan Petroleum Plc +44 20 7487 8301Ian Baron, CEOGordon Stein, CFOStefan Bort, Company SecretaryMatrix +44 20 3206 7000Robin HenshallJames PopeBankside Consultants +44 20 7367 8888Simon Rothschild
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