Cadogan Regulatory News (CAD)

CADOGAN PETROLEUM PLC - Operational Update

PR Newswire

London, May 20

CADOGAN PETROLEUM PLC

Operational update

20 May 2016

Cadogan Petroleum plc (“Cadogan” or the “Company”), an independent oil and gas exploration, development and production company with onshore gas, condensate and oil assets in Ukraine, announces its decision not to apply for the award of a new exploration licence for the Sloboda-Rungurska licence (“Sloboda”) in Ukraine. The Sloboda licence had been suspended last year for alleged breaches; the suspension had subsequently been revoked and the licence reached its natural expiry date last month. The current energy price environment combined with a subsoil use tax (a tax on production at the well head) set at 45% for oil, has resulted in the remaining exploration potential becoming economically unviable. The decision not to apply for a new licence has no impact on the Company’s balance sheet, as all assets had already been impaired at 31 December 2015.

In conjunction with this decision, Cadogan has commenced a revision of its current logistic, organization and staffing level in the west of Ukraine in order to align them to the new scope of activity and maintain the highest possible level of efficiency.

Guido Michelotti, CEO, commented:

“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.”

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About

Cadogan is an independent oil and gas company. Cadogan operates exploration and production licenses in Ukraine, conducts gas trading operations, and provides services to E&P companies.