Operations Update

CADOGAN PETROLEUM PLC

Operations Update

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, is pleased to provide an update on its operations.

Exploration & Production Business

Production has continued throughout 2015 from Debeslavetska and Cheremkivska (gas) and Monastyretska (oil) licences in Western Ukraine and was 122 boepd (net) at the end of November 2015.

Management is of the opinion that the current in-house estimation of reserves and resources, set out in the table below, may conservatively represent the potential of some of the Western licences and has requested a third party independent evaluation of reserves and resources of its entire portfolio. The report is expected to be delivered in the coming weeks. The Company will make an announcement with regard to this update in due course.

In Eastern Ukraine, the Company continues to progress the renewal of the Pirkivska and Zagoryanska licences which are pending approval by the Ukraine authorities. The Company has developed an exploration work programme involving multiple well re-entries across its three licences in Eastern Ukraine, via a profit sharing agreement with local contractors.

							Reserves & Resources (MMboe) (gross)
	Licence	Type	Working interest	Area (km2)		Current net production (boepd)	3P reserves	2C contingent resources	Best estimate prospective resources
Eastern Ukraine	Pokrovska	Conventional gas	70.0	50		-	2.6	-	73.6
	Pirkivska	Conventional gas	100.0	72		-	11.3	6.6	67.9
	Zagoryanska	Conventional gas	100.0	50		-	1.6	2.2	-
Western Ukraine	Monastyretska	Conventional oil	99.8	26		48	2.7	-	3.0
	Debeslavetska (prod.)	Conventional gas	99.2	27		66	0.8	-	-
	Debeslavetska (exp.)	Conventional gas	99.2	218		-	-	-	1.0
	Cheremkhivska	Conventional gas	54.4	119		8	0.2	-
	Bitlyanska	Conventional oil	99.8	390		-	-	1.2	66.6
	Slobodo Rungurska	Conventional oil	100.0	101		-	-	-	8.0
			Total	1,052		122	19.2	10.1	220.0

The Sloboda-Rungurske and Pokrovska licences, both at the exploration stage and without production, have been suspended by the  Ukraine petroleum authority for two breaches of licence commitments. Cadogan is of the opinion that the licenses have been properly managed and that the breaches claimed have not occurred, and has submitted  supporting evidence of its position as well as the prescribed documents to the authority. Cadogan expects the suspensions to be revoked in due course.

Gas Trading & Services Business

The Company’s gas trading and services businesses in Ukraine have continued to perform well with the gas trading business now having sold over 250 million cubic metres of gas since commencement of trading in 2014. The businesses combined are expected to substantially supplement the Company’s free cash flows from its upstream operations in 2015 and support its strategy of becoming cash neutral in 2016.

Strategy Update

The Company continues to assess opportunities to leverage its strong cash position and take advantage of opportunities in the current oil price environment to source additional exploration and production assets, in order to diversify Cadogan’s portfolio both geographically and operationally. The Company’s strategy is premised upon:

• Sourcing additional producing assets to cover corporate overheads and provide free cash flow for exploration activities;
• Complement this with high impact exploration and near term development assets with further upside; and
• Minimise Ukraine expenditure through a farm-out for carry on legacy Ukrainian licences.

The Company has also continued to focus on reducing costs during 2015. Combined with these cost reductions, the cash flows generated from its exploration and production business, gas trading and services businesses have largely offset the Company’s corporate overheads thus making a substantial step towards cash neutrality in 2016.

Publication of Presentation

The Company is also pleased to advise that it has today published an updated Company presentation which is available on its website at: www.cadoganpetroleum.com

Enquiries:

Cadogan Petroleum plc	[phone]
Guido Michelotti, Chief Executive Officer Marta Halabala, Company Secretary
Cantor Fitzgerald Europe	[phone]
David Porter Sarah Wharry

Disclaimer

This announcement contains certain forward-looking statements.  These statements are made by the Company's Directors in good faith based on the information available to them up to the time of their approval of this announcement but such statements should be treated with caution due to inherent uncertainties, including both economic and business factors, underlying such forward-looking information.  This announcement has been prepared solely to provide additional information to shareholders to assess the Company's strategies and the potential for those strategies to succeed.  This announcement should not be relied on by any other party or for any other purpose.