Last checked at 19 Nov 2012 07:00
Cadogan Petroleum plc ("Cadogan" or "the Group")
Interim Management Statement for the period from 1 July to 16 November 2012
Financial position
At 16 November 2012 the Group had current cash and cash equivalents of approximately $42.7 million.
Operations
The Group continued to operate safely and efficiently throughout the period.
The Zagoryanska 11 well was spudded on 7 March 2012 and reached its 5,180m total depth on 21 July 2012. Visean formation levels 24, 22, 19, 18 and 17 were tested with no commercial gas result. The V 17 level is still being tested, with the results expected by mid-December. The Zagoryanska 2 and 8 work-overs were not successful due to technical problems. The Zagoryanska 3 well continues to produce at around 25mcm/day of gas and 3 tons/day of condensate. The presence of hydrocarbons, though not commercial, suggests that a re-analysis of the stratigraphic potential of the area may prove worthwhile.
As planned, monitoring of the Pokrovskoe 1 well continues. The indications of hydrocarbons during the drilling of Pokrovskoe 2a well initiated a re-evaluation of the remaining exploration potential in the area. Cadogan will consider its options for re-entering the well to assess the potential of the Upper Visean in the licence.
Efforts continue to farm-out the Group's highly attractive Bitlyanska asset in western Ukraine; marketing of the asset is ongoing with interest being shown by a number of parties. A plan for well re-entry is under evaluation for recovering one well that tested a significant volume of gas. The Group intends to review possible work-over projects for the Pirkrovskoe field in eastern Ukraine and evaluate the stratigraphic exploration potential in the area.
Cadogan management are evaluating the use of innovative technologies to be used for monitoring the shallow gas fields in Debeslevetska, aimed at stimulating production. Borehole formation cleaning in Monastyretska increased oil production encouraging artificial lift for further production enhancement.
Unconventional Gas transaction
On 3 November 2012, the Company completed its Share Purchase Agreement with Nak Nadra Ukrayny and Eni for the exploration and development of Unconventional Gas in Ukraine.
Under the Share Purchase Agreement, Eni acquired a stake in the joint venture established by Nak Nadra and Cadogan, LLC Westgasinvest.
LLC Westgasinvest holds subsoil rights to nine unconventional (shale) gas licence areas in the Lviv Basin of Ukraine, totalling approximately 3,800 square kilometres of acreage.
This Agreement was developed within the framework of the Cooperation Agreement with Eni, signed in 2011. Cadogan retains ownership of 15% of LLC Westgasinvest. The Board believe that this transaction will allow the Company to benefit from the exciting Ukrainian shale gas opportunity only available so far to the largest global oil and gas companies without the risks implicit in the exploration phase.
Litigation
The Group is owed $30 million by Global Process System Inc ('GPS') of Dubai under the settlement agreement entered into in October 2009. The settlement was based on the sale of two gas plants, which were manufactured by GPS but not required by the Group. Under the agreement GPS undertook to take the plants back into stock and resell them. Cadogan retains title over the plants and is pursuing legal remedies to recover the outstanding debt, whilst continuing to assist GPS in its attempts to sell the plants.
Enquiries:Cadogan Petroleum Plc +380 44 584 4979 Bertrand des Pallieres Chief Executive Officer Bankside +44 (0) 207 397 8888 Simon Rothschild
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