Joint Venture with Oil and Gas Management Servi...

18 June 2013

               Cadogan Petroleum plc ("Cadogan" or "the Group")                

  Cadogan Announces Joint Venture with Oil and Gas Management Services Group   
 

Cadogan is pleased to announce that it has today signed a non-binding
Memorandum of Understanding ("MoU") and a Secured Loan Agreement (the "Loan")
with Oil and Gas Management Services Limited ("OAGSG") (www.oagsg.com).

OAGSG, which operates the largest Oil Country Tubular Goods (OCTG) business in
Kurdistan and runs a complete mill to well service, has been operating
successfully since 2008. It provides services to a blue-chip client list, which
includes Tenaris, Chevron, Exxon and other major operators. It also provides
management and consultancy services in the region.

Pursuant to the MoU OAGSG will assist Cadogan in developing a presence in the
Kurdistan region, while the parties will apply their respective resources to
developing their existing services businesses in Ukraine and Kurdistan. The
parties will commence negotiating formal, binding terms which will include
granting Cadogan an option to purchase up to 51% of the share capital of OAGSG
within 18 months at a fair market value, to be determined by the parties at the
relevant time. Cadogan will make a further announcement as and when binding
terms have been executed. 

In conjunction with the MoU Cadogan has agreed to lend OAGSG up to US$3m on a
fully secured basis against receivables due to OAGSG, subject to a maximum Loan
to Value of 75%. The term of the Loan is 24 months and interest is 15% p.a.,
payable on drawdown. The funds will be used to enable OAGSG to expand its
existing operations in Kurdistan, purchase new equipment and further capitalise
on growth in the industry in the region. The Loan contains standard events of
default. Amounts loaned will be repaid as funds are received by OAGSG on the
due receivables and to the extent any amounts still remain outstanding, repaid
in full after 24 months.

Bertrand des Pallieres, CEO of Cadogan, commented: "Cadogan has already seen
positive returns from its limited investment in resources in oilfield services
in Ukraine. For some time now we have been assessing options for accelerating
growth in this developing business area whilst at the same time seeking to
expand our global presence through the targeted use of funds. We see OAGSG,
with its premium client list and operational expertise, as a perfect fit for
our expansion plans and are excited about the potential new horizons for our
business."

Cadogan's interests in oilfield services in Ukraine include agreements with
Medes on the provision of mud treatment services and an Exclusive Cooperation
Agreement with AVA (Newpark Group) on drilling fluids services.

Enquiries to:

Cadogan Petroleum Plc [phone]

Bertrand des Pallieres

Chief Executive Officer


Cantor Fitzgerald Europe [phone]

David Porter

Richard Redmayne


Bankside Consultants [phone]

Simon Rothschild