CAD Cadogan Energy Solutions Plc

 
TIDMCAD 
 
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 GBP22.9 million ($37.1 
million). Monthly revenue from all active fields is now running at GBP0.5 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 GBP4.0 million ($6.5 
million), although the income was accrued in the 2010 year end accounts. The 
litigation continues against the former Chief Operating Officer. 
 
Ends 
 
Enquiries 
 
Cadogan Petroleum Plc                                   +44 20 7487 8301 
Ian Baron, CEO 
Gordon Stein, CFO 
Stefan Bort, Company Secretary 
 
Matrix                                                  +44 20 3206 7000 
Robin Henshall 
James Pope 
 
Bankside Consultants                                    +44 20 7367 8888 
Simon Rothschild 
 
 
 
END 
 

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