Interim Management Statement

RNS Number : 4398I

Cadogan Petroleum PLC

19 November 2008

 



19 November 2008

Cadogan Petroleum Plc

 ('Cadogan' or 'the Group')

Interim Management Statement and Licence Update

Cadogan (LSE: CAD), an independent oil and gas exploration, development and production company with onshore gas and condensate assets in Ukraine, today announces its interim management statement for the period from 1 July to 19 November 2008.

HIGHLIGHTS

• On track to commence commercial production from two major fields in early 2009 
• An intensive development programme funded from the proceeds from initial public offering 
• The Company has made clear progress in its drilling programme to date, including: 

• • Pirkovskoe #1 well has been drilled to target depth ('TD') and testing is in progress; production is expected to commence in January 2009

  • Pirkovskoe #2 is drilling and is expected to reach TD in January 2009

  • Pirkovskoe #460 workover produced gas and condensate under test. Water producing zones will now be isolated and a further stimulation with acid will be carried out in H1 2009 (TD: 5,850 metres) before being put into production with a focus on enhancing condensate production

  • Pokrovskoe #1 well is drilling at 4,689 metres and a test on the Upper Visean (Carboniferous) will be carried out in December 2008. If successful, the well be then be drilled on to TD to test lower horizons (TD: 5,400 metres) by mid 2009

  • Pokrovskoe #2 well is being prepared to drill to TD at 5,400 metres. The testing of the Upper Visean (Carboniferous) planned for this well will now be carried out in the Pokrovskoe #1 well

  • Zagoryanska #3 well is now at TD with initial tests indicating flow rates  in line with expectations and a total net pay of 30 metres. Further testing now being carried out on additional horizons and commercial production is expected to commence in Q1 2009

  • Borynya #3 is currently drilling at 3,255 metres and it is expected that the well will enter the top of the upper target horizon during December 2008. If productive, a test is expected to be carried out on this horizon. The well will then be drilled onto the base of the reservoir, which is expected in Q1 09. The production facilities are expected to be in place to allow production from this well in Q3 2009

FINANCIAL

Cadogan has £93 million of cash on the balance sheet as at the date of this statement.

LICENCES

On 7 October 2008, Cadogan was successful in its challenge against the nullification of its Pirkovskoe and Zagoryanksa licences (the 'Licences') by the Ministry of Environmental Protection. Following this, there was a one month period where parties were entitled to appeal against the decisions.  

Cadogan has been informed that appeals have been lodged with the Kharkiv Administrative Appeals Court in relation to the Licences, though it has yet to receive written confirmation or information as to the substance of such appeals.

On 16 October 2008, Cadogan signed an agreement with the Ministry for Environmental Protection (the 'Ministry'), which outlines future co-operation and the Ministry's support for Cadogan's rights to the Licences.

  OPERATIONAL REVIEW

As noted above, our operational plans are materially on track. However, in light of the current economic and financial markets backdrop we are taking steps to manage our cash resources and cost base while maintaining our focus on optimising the potential of our most attractive assets. We are therefore undertaking a full review of our development plans and will report on any material changes in due course.

OUTLOOK

• Production from four major fields targeted to commence in 2009
• A total of 9 wells are currently being drilled, or will be drilled during the course of 2009
• Gaffney Cline and Associates assigned to reassess reserves with a view to converting contingent resources to reserves to reflect results from drilling and testing with a report expected early 2009
• Continued vigorous pursuit of a satisfactory and timely conclusion to any further legal challenges against the validity of our Licences

Mark Tolley, Chief Executive commented:

'Cadogan has achieved good operational results since its listing on the London Stock Exchange, setting us on track to begin first commercial production in the coming months. These results demonstrate the attractiveness of our portfolio and the near term opportunity to increase our reserve base. We have also taken quick and decisive action to protect our licences and we remain confident that we will be able to defend our rights to our licences in any renewed challenge.'

Enquiries

Cadogan Petroleum	[phone]
Mark Tolley/ Peter Biddlestone
Pelham PR
James Henderson	[phone]
Alisdair Haythornthwaite	[phone]
Evgeniy Chuikov	[phone]

 

END

 

 

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