CADOGAN PETROLEUM PLC: Interim Management Statement
Cadogan Petroleum plc ("Cadogan" or "the Group")
Interim Management Statement for the period since the release of the Half Yearly Report.
Cadogan published its Half Yearly Report for the six months to 30 June 2013 on 30 August 2013.
At 18 November 2013 the Group had current cash and cash equivalents of approximately $56.4 million (excluding $0.3 million of Cadogan's share of cash and cash equivalent in joint ventures). To date Oil and Gas Management Services Group has drawn $2.14 million under its secured loan facility with Cadogan.
2013 has been broadly positive for Cadogan encompassing settlement of the GPS litigation, continued progress on our shale gas joint venture with Eni SpA and completion of the overhaul of the Group's technical team. The Company remains in a strong financial position, with no debt and substantial cash resources.
The Group continued to operate safely and efficiently throughout the period.
Logs run in the upper part of the Borynya 3 well-site confirmed the presence of gas and condensates and porosity in the range of 10% to 15%. Two intervals have been tested so far, 2745-2685m and 2935-2890m. Gas was flared and liquid hydrocarbons were collected for analysis. Hydrocarbons were confirmed as oil (30 API) and condensate (48 API). In each case testing resulted in a flow of gas and condensate that was consistent but non-sustainable. There was an improvement in well performance following a light acid wash and further testing in the 2745-2685m range interval. Flaring and hydrocarbon samples were collected and oil, condensate and gas were evident. There was no evidence of formation water in the fluids produced.
Persistent completion brine leakage from annulus to bottom packer prevented sustainable production and following release of the work-over rig after re-completion, well testing is continuing in order to properly purge the formation without brine interference in production. Due to the clear presence of hydrocarbons, planned operations for information gathering on the production potential and assessment of future operations will continue. An acid-frac with suitable rig and equipment is planned for next year in order to obtain and support sustainable and commercial production. Entry of the deeper intervals, down to circa 4,300m, is also planned for 2014.
Pokrovskoe, Zagoryanska and Pirkovskoe
An evaluation of the current exploration potential in the Pokrovskoe area identified five new leads, with one, in particular, showing considerable potential. Further studies on Pokrovskoe focused on confirming drillable prospects with one defined so far where a new exploration well is planned. Work was undertaken to optimize the well location and drilling is anticipated to commence in summer 2014.
Steady progress continues to be made in evaluating the remaining exploration potential in the Zagoryanska and Pirkovskoe licences. Work-overs in Zagoryanksa 2 and 11 and Pirkovskoe 1 are ongoing with specialised local contractors in order to eventually start production through existing facilities. The precise scope and duration of the work will be further defined based on the results of each interval testing.
The Company established a wholly-owned, Swiss registered subsidiary, Cadogan Petroleum Trading Sagl. Dedicated to energy trading, this subsidiary will initially focus on sourcing transactions in central and eastern Europe.
Cadogan Petroleum Plc +380 44 584 4979 Bertrand des Pallieres, Chief Executive Officer
Cantor Fitzgerald Europe +44 (0) 20 7894 7000 David Porter Richard Redmayne
Bankside Consultants +44 (0) 207 367 8888 Simon Rothschild
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