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CAD Cadogan Energy Solutions Plc

2.50
0.00 (0.00%)
18 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Cadogan Energy Solutions Plc LSE:CAD London Ordinary Share GB00B12WC938 ORD 3P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 2.50 2.40 2.60 2.50 2.50 2.50 0.00 08:00:00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Drilling Oil And Gas Wells 8.47M -1.56M -0.0064 -3.91 6.1M

CADOGAN PETROLEUM PLC - Half-yearly Report

27/08/2014 7:00am

PR Newswire (US)


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                             CADOGAN PETROLEUM PLC

           Half Yearly Report for the Six Months ended 30 June 2014
                          (Unaudited and Unreviewed)
______________________________________________________________________________

                                  Highlights

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, announces its unaudited results for the
six months ended 30 June 2014.

- Significant, further reductions to the Company's cost base to
maintain financial strength pending results from operations.

- Cadogan's shale gas joint venture Westgasinvest ("WGI") is
implementing the procurement and permitting with a view to field activity in
2015.

- Monastyretska production surpassed previous levels and continued
to rise further.

- Continued production from the Debeslavetska and Cheremkivska
licences at a combined rate of about 14 mcm/day of gas and on Blazhiv field of
the Bitlyanska licence about 45-50 bopd of oil.

- Coordinates for drilling in Debeslavetska have been determined
ahead of drilling, which is expected to commence November 2014, with a further
two wells to be drilled thereafter.

- Ukrainian Hryvnia, functional currency of the Group's Ukrainian
subsidiaries, depreciated against the USD, reporting currency of the Group, by
around 40%, resulting in significant decrease of USD reported values of
Exploration and Evaluation assets ("E&E") and Property Plant and Equipment
("PPE").

- Net cash and cash equivalents at 30 June 2014 of $47.9 million(31
December 2013: $56.5 million) excluding $1.0 million (31 December 2013:
$0.2 million) of Cadogan's share of cash and cash equivalents in joint ventures
and excluding $5.0 million of yield generating investment.

Enquiries:

Cadogan Petroleum Plc                              +380 (44) 591 0390

Bertrand des Pallieres   Chief Executive Officer
Laurence Sudwarts        Company Secretary

Cantor Fitzgerald Europe                           +44 (0) 20 7894 7000

David Porter
Richard Redmayne


Introduction

During the first half of 2014 the Group continued to focus on
developing and reassessing its assets in Ukraine, while remaining vigilant to
the continuing political uncertainty. Significant, further reductions were
made to the Company's cost base to maintain its financial strength pending
results from operations. Pursuant to management's focus on production
initiatives, the significant re-evaluation and re-assessment of our assets by
the Group's technical team has resulted in the identification of new prospects
and horizons in existing licences.

LLC Westgasinvest, a joint venture with Eni S.p.A. ("Eni") and NAK
Nadra ("Nadra") in which Cadogan has a 15% shareholding, currently holds
subsoil rights to nine unconventional (shale) gas licence areas in the Lviv
Basin of Ukraine, which cover approximately 3,800 square kilometres of
acreage. The Lviv Basin is considered to be one of the most attractive basins
in Europe for the exploration of unconventional gas. Procurement and
permitting activity continues in line with the agreed programme of activity
and drilling activity start-up is expected by mid 2015.

Cadogan remains the operator for its existing conventional
activities at Debeslavetska and Cheremkhivska and will retain the economic
benefit from the conventional activities on these two licences.

Operations

The Company is pleased to reiterate that there have been no
disruptions to its operations or to the effective management of its licences
during the recent period of instability. Recent changes to the fiscal regime
in Ukraine will not have any material impact on the Group's financial
position, operations or work programme.

The Company's eastern licences analysis showed great promise in the
upper intervals, in particular in Pirkovskoe. Following a thorough study of
Direct Hydrocarbon Indicators (DHI) and 3D Amplitude Versus Offset (AVO)
reconnaissance, a new lead has been identified and its characterization to a
drillable prospect is currently underway, showing good prospectivity and
significant potential size.

In the Pirkovskoe licence, following an initial period of rig-less
testing on Pirk 1, work-over activity - comprising deep, high pressure and
temperature testing, logging and shooting of intervals in the upper
Tournaisian interval down to 5,100m - commenced on 20th May 2014. Work-over
activity is expected to conclude in September 2014.

Over in the west of the country in Debeslavetska, all the updated
DHI reconnaissance technologies were similarly applied with interesting
results. Following minor delays due to instability in the region, planned 2D
seismic acquisition was completed at the end of March 2014. Four new drillable
prospects were identified with the best of these, comprising 3 different
levels down to a depth of approximately 350m, targeted for drilling to
commence in November 2014.

A second prospect was already selected and permitting for rig site
preparation is ongoing in parallel. If drilling on the first drillable
prospect proves successful, the Company anticipates drilling to commence
before the end of 2014. Analysis continues on the remaining 2 identified
prospects.

Some relatively deeper (circa. 600m) potential horizons also appear
likely and if the Company's analysis proves correct, these will significantly
improve potential resources in the area.

In Monastyretska the planned formation light stimulation was
successfully completed in mid March 2014, immediately increasing production from
20 to 30 bopd. Installation of a sucker rod pump on 13 May 2014 resulted in a
further increase in production to 40-45 bopd. Stable production subsequently
increased further to approximately 50 bopd. Performance tests continue and
options to further optimise production are being investigated.

Negotiations with local operators for the acquisition of two
additional, existing wells, are continuing with the intention being to bring them
back to production. Performance monitoring of these three wells is expected to
give the Company a better understanding of the reservoir characteristics and
behaviour, allowing it to formulate future plans to further increase
production.

Financial position

At the date of this report, the Group had cash and cash equivalents
of approximately $46.8 million excluding $0.9 million of Cadogan's share of
cash and cash equivalents in the joint ventures and excluding $5.0 million of
yield generating investment. The Directors believe that the capital available
at the date of this report is sufficient for the Company and the Group to
continue operations for the foreseeable future.

Outlook

Following extensive re-evaluation and de-risking of current assets
and work programmes allied to significant reductions to its cost base, the
Company maintains its strong financial position while Ukraine continues to
provide many opportunities for the Company to put its capital and expertise to
work. The Board remains confident that the democratic process in Ukraine will
overcome any short term obstacles and believes that the Group's established
presence in Ukraine, its skilled staff and its adherence to transparency and
the highest standards of corporate governance, leave it ideally positioned to
make full use of its existing human and financial resources. The Company
remains uniquely placed to afford international oil companies an opportunity
to commence or expand their presence in Ukraine in a secure environment
working alongside people who know and understand the country, its people and
its culture. At the same time the Company continues to leverage on its
expanding, international relationships and remains responsive to new
opportunities that continue to arise inside and outside of Ukraine.

At 30 June 2014 the Group held working interests in eight(2013:
nine) gas, condensate and oil exploration and production licences in the East
and West of Ukraine; out of those, Zagoryanska expired in April 2014 and the
Group is assessing possibilities to renew this licence. All these assets are
operated by the Group and are located in either the Carpathian basin or the
Dnieper-Donets basin, in close proximity to the Ukrainian gas distribution
infrastructures. The Group's primary focus during the period continued to be
on the re-evaluation of the existing assets to define the best drillable
prospects.

     Summary of the Group's licences (as of 30 June 2014)

   Working         Licence          Expiry     Licence type(1)
  interest (%)

Major licences

    70.0         Pokrovskoe      August 2016         E&D
    100.0        Pirkovskoe      October 2015        E&D
    99.8         Bitlyanska     December 2014        E&D

Minor licences

    99.2      Debeslavetska(2)  November 2026    Production

    99.2      Debeslavetska(2)  September 2016       E&D
    53.4      Cheremkhivska(2)     May 2018      Production
    100.0     Slobodo-Rungerska   April 2016         E&D
    99.2        Monastyretska   November 2014        E&D

(1) E&D = Exploration and Development.

(2) Debeslavetska and Cheremkhivska licences are held by WGI, in
which the Group has a 15% interest. The Group has 99.2% and 53.4% of economic
benefit in conventional activities in Debeslavetska and Cheremkhivska licences
respectively through Joint Activity Agreements ("JAA").

In addition to the above licences the Group has a 15% interest in
WGI, which holds the Reklynetska, Zhuzhelianska, Cheremkhivsko-Strupkivska,
Debeslavetska Exploration, Debeslavetska Production, Baulinska, Filimonivska,
Kurinna, Sandugeyivska and Yakovlivska licences for unconventional activities.

The following is an update to the full Operations Review contained in the
Annual Financial Report for 2013 published on 30 April 2014[1]:

Zagoryanska licence

The Group had a 40 per cent working interest in the Zagoryanska
licence area, the remainder held by Eni pursuant to a joint venture formed in
July 2011 (the "JV"). The exploration and development licence covers 49.6
square kilometres and expired in April 2014. The work obligations have been
fulfilled.

Following disappointing results in 2012, an extensive revision and
re-interpretation of the 3D seismic and Geology and Geophysics ("G&G") studies
is still on-going to assess and value all the possible reserves potential, as
well as the re-entry in the wells Zagoryanska 3 and 11, subject to licence
renewal. Cadogan is interested in re-entering the licence and further actions
are under evaluation.

Pokrovskoe licence

The Group holds a 70 per cent working interest in the Pokrovskoe
licence which holds 51.1 mmboe of 3P Total Prospective Resources (2012:
51.1 mmboe), with the remainder held by Eni pursuant to the JV. The exploration
licence covers 49.5 square kilometres and the initial licence was extended
until August 2016.

Our investigation of the area continues after the successful
conclusion of the 3D seismic re-interpretation. The Pokrovskoe licence shows
five interesting objects: one, already defined as a drillable prospect, is
2,200m deep, bearing 5 Bcf (P50) while the preliminary volumetric definition
of the other four identified leads amounts up to 18Bcf (P50).

Pirkovskoe licence

The Group has a 100 per cent working interest in the Pirkovskoe
licence which holds 2.5 mmboe of Proved and Probable Reserves. This
exploration and appraisal licence covers 71.6 square kilometres. Following the
promising results obtained in Pokrovskoe and the knowledge acquired by the
study of Direct Hydrocarbon Indicators (DHI) and 3D Amplitude Versus Offset
(AVO) reconnaissance our recent analysis shows great promise in the upper
intervals. A very attractive lead has been identified and its characterization
is currently underway to be proposed as a drillable prospect. Initial
volumetric estimation is quite exciting, in the range of over 2,000 Bscf in
place (P50). In Pirk 1 the well re-entry activity continues and currently the
work-over for testing the intervals around 5,000m depth is ongoing.

Bitlyanska licence area

The Bitlyanska exploration and development licence covers an area
of 390 square kilometres and the Group's interest approximates to 99.8 per
cent, varying with production. There are three hydrocarbon discoveries in this
licence area; namely Bitlyanska, Borynya and Vovchenska. The Borynya and
Bitlyanska fields hold 219.2 mmboe (100 per cent - 2013: 219.2 mmboe) and
117.3 mmboe (100 per cent - 2013: 117.3 mmboe) of Contingent Resources
respectively, while no Reserves and Resources have been attributed to the
depleted Vovchenska field.

Borynya 3 well re-entry and Krasno 1 interval testing confirmed the
presence of several interesting gas bearing zones. The decision was made to
put the fracturing job on hold due to lack of data from the previous drilling
activity.

Minor fields

The Group has a number of minor licence areas located in western
Ukraine. These include the following:

- Debeslavetska Production licence area

A production licence, containing 0.2 mmboe of Proved, Probable and
Possible (`3P') Reserves (2013: 0.2 mmboe). The field is currently producing
11,500 scm of gas per day (68 boepd). The new compressor unit and dehydration
facilities are reducing fuel consumption and air emissions.

- Debeslavetska Exploration licence area

An exploration licence surrounding the Debeslavetska Production
licence area is considered quite promising in shallow gas production
potential. Following the positive G&G results (AVO & Inversion Analysis), four
prospects at depths in the range of 150 to 350m have been identified, out of
which two are planned for drilling. Expected producible reserves per prospect
are in the range of 120 to 150 Million scm of gas. The first one is scheduled
for drilling by November 2014 and the second will be drilled immediately after
if the first proves successful.

- Cheremkhivska Production licence area

A production licence, containing 0.1 mmboe of 3P Reserves (2013:
0.1 mmboe). This licence is currently producing 3,000 scm of gas per day
(18 boepd).

This licence presents the same targets opportunities as
Debeslavetska and its further shallow gas exploration potential is under
evaluation.

- Slobodo-Rungerska licence area

This licence includes several old shallow oil wells, now abandoned
or temporarily shut-in. The same formation chemical wash technology
successfully applied in Blazh 1 seems appealing for the shallow depleted oil
reservoirs in Slobodo and possible candidates for intervention are under
scrutiny.

- Monastyretska licence area

An exploration and development licence, with no booked Reserves or
Resources (2013: nil). The Blazhiv 1 well was re-entered and a sucker rod pump
was installed; after a chemical wash intervention production increased to
45 bopd and following pump adjustments for production optimization it is
currently producing at a rate of 50 bopd, among the highest rate since
inception. To better understand the reservoir characteristics and eventually
plan further actions, negotiations with a local operator for the acquisition
of two further, existing wells, with the aim to bring them back to production,
are continuing.

(1)All reserves and Resources stated herein are made with reference to the
independent report by Gaffney Cline and Associates of February 2010, adjusted
for volumes produced and changes in working interest since the date of publication.

Service Company activities

Astroservice LLC, a 100 % owned subsidiary, successfully
participated in several tenders with local and major international companies.
Due to the uncertain political situation in Ukraine, operators' plans are
currently being kept on hold and are planned to restart during the next year.

AstroserviceLLC continues to develop its servicing and supporting
strategies to be competitive and proactive.

Overview

Income statement

Loss before tax was $3.7 million (30 June 2013: $2.0 million, 31
December 2013: $14.4 million). Revenues of $1.6 million (30 June 2013:
$1.9 million, 31 December 2013: $3.8 million) comprised sales of gas from the
Debeslavetska and Cheremkhivska fields, and oil sales from Monastyretska
field,operated by the Group and the service business. Cost of sales, which
represents production royalties and taxes, depreciation and depletion of
producing wells and direct staff costs amounted to $1.2 million (30 June 2013:
$1.3 million, 31 December 2013: $3.0 million)resulting in a gross profit of
$0.4 million (30 June 2013: $0.6 million, 31 December 2013: $0.8 million).

- Other administrative expenses of $3.6 million (30 June 2013:
$4.5 million, 31 December 2013: $8.9 million) comprise staff costs, professional
fees, Directors' remuneration, and depreciation charges on non-producing
property, plant and equipment.

- Share of losses in joint ventures of $0.9 million (30 June 2013:
$1.9 million, 31 December 2013: $6.6 million) relates to the result of
operations of joint ventures LLC Astroinvest-energy, LLC Gazvydobuvannya and
LLC Westgasinvest, which have been accounted for using the equity method in
accordance with IFRS 11: it was previously accounted for using the
proportionate consolidation method.

- Other operating loss of $1.1 million (30 June 2013: income of
$3.7 million, 31 December 2013: loss of $0.3 million) mainly relates to net
foreign exchange losson the translation of the USD denominated monetary assets
of the Group's UK entities which have GBP as the functional currency and UAH
denominated monetary assets of the Group's Ukrainian assets.

Cash flow statement

Net cash outflow from operations was $1.3 million during the six
months ended 30 June 2014 (30 June 2013: inflow of $29.7 million, 31 December
2013: inflow of $25.6 million mainly as a result of the cash received from
settlement with GPS in April 2013).

Capital expenditures were $0.3 million (30 June 2013: $0.3 million,
31 December 2013: $3.0 million) on intangible Exploration and Evaluation
assets (E&E) and $0.7 million (30 June 2013: $0.4 million, 31 December 2013:
$0.8 million) on Property, plant and equipment (PP&E). In addition, the Group
invested $2.8 million (30 June 2013: $4.3 million, 31 December 2013:
$4.7 million) into its joint ventures LLC Astroinvest-energy and LLC
Gazvydobuvannya. A large proportion of the funds invested into the Joint
Ventures were used to repay to the Group the outstanding management charges.
During the reported period the Group has made a yield generating investment of
$5.0 million which amortises during 2 years from the investment date. The
outstanding principle and interest receivable from OAGSG in the amount of
$1.3 million was repaid in full during six months ended 30 June 2014.

Balance sheet

As at 30 June 2014 intangible E&E assets of $4.6 million (30 June
2013: $3.4 million, 31 December 2013: $6.0 million) represent the carrying
value of the Group's investment in exploration and appraisal assets, mainly
for the Bitlyanska licence. The PP&E balance of $31.1 million (30 June 2013:
$44.3 million, 31 December 2013: $43.9 million), comprised of the cost of
developing fields with commercial reserves and bringing them into production
and mainly includes the Pirkovskoe, Debeslavetskoe and Cheremkhivske licences.
The decrease in both E&E and PP&E assets is mainly a result of the local
currency in Ukraine devaluation and subsequent translation from UAH, the
functional currency of the Ukrainian subsidiaries, into USD which is the
reporting currency of the Group. Investments in joint ventures of $52.5
million (30 June 2013: $70.7 million, 31 December 2013: $66.0 million)
represents Group's share of net assets of joint ventures LLC
Astroinvest-energy, LLC Gazvydobuvannya and LLC Westgasinvest, that the Group
jointly owns with its partner, Eni. The decrease in Investments in joint
ventures is mainly a result of the Ukrainian local currency devaluation and
subsequent translation of JVs E&E and PP&E assets from UAH, the functional
currency of the Ukrainian subsidiaries, into USD which is the reporting
currency of the Group. Other financial assets of $3.7 million represent the
non-current portion of the yield generating investment made during the
reported period. Trade and other receivables of $5.3 million (30 June 2013:
$6.8 million, 31 December 2013: $6.9 million) includes $2.1 which is a current
portion of a yield generating investment and $1.8 million receivables from the
joint ventures. The Group had net cash and cash equivalents of $47.9 million
(30 June 2013: $63.4 million, 31 December 2013: $56.5 million), this amount
excludes the funds held by the jointly controlled entities which are accounted
using equity method.$2.5 million of trade payables and other payables include
trade payables, payables to the JV and other current liabilities.

Related party transactions

From 1 January 2013, the Group has implemented the new IFRS 11
standard, under which joint ventures must be accounted for using the equity
method. This resulted in disclosing operations with LLC Astroinvest-energy and
LLC Gazvydobuvannya as transactions with related parties (for details please
refer to note 9 of this report).

Commitments

There has not been any significant change to the commitments and
contingencies reported as at 31 December 2013 (refer to page 86 of the Annual
Report).

Key performance indicators

The Group monitors its performance in implementing its strategy
with reference to clear targets set out for four key financial and one key
non-financial performance indicators (`KPIs'):

- to increase oil, gas and condensate production measured on number
of barrels of oil equivalent produced per day (`boepd');

- to increase the Group's oil and gas reserves by de-risking
possible resources and contingent reserves into 2P Reserves. This is measured
in million barrels of oil equivalent (`mmboe');

- to increase the realised price per 1,000 cubic metres;

- to increase the Group's basic and diluted earnings per share; and

- to reduce the number of lost time incidents.

The Group's performance during the six months ended 30 June 2014
against these targets is set out in the table below, together with the prior
year performance data. No changes have been made to the source of data or the
calculation used in the period/year.

                                      Unit    30 June 2014  30 June 2013  31 December 2013
Financial KPIs

Average production (working
interest basis) (1)                   boepd             93            90                88

2P reserves (2)                       mmboe            2.6           2.6               2.6

Realised price per 1,000 cubic          $            418.1         485.4             483.8
metres (3)

Basic and diluted loss per share      cent            (1.6)         (0.9)             (6.3)
(4)

Non-financial KPIs

Lost time incidents (5)             incidents            -             -                 -

(1) Average production is calculated as the average daily
production during the period.

(2) Quantities of 2P reserves as at 30 June 2014 and 31 December
2013 are based on Gaffney, Cline & Associates' independent reserves report on
2P Reserves as at 31 December 2009, dated 16 March 2010, as adjusted for the
actual production until 30 June 2014, 30 June 2013 and 31 December 2013
respectively.

(3) This represents the average price received for gas sold during
the period (including VAT), the realised price in May and June went back up to
the level of $460/mcm including VAT.

(4) Basic and diluted loss per Ordinary share is calculated by
dividing the net loss for the period attributable to Ordinary equity holder of
the parent by the weighted average number of Ordinary shares during the
period.

(5) Lost time incidents relate to injuries where an employee/contractor is
injured and has time off work.

Treasury

The Group continually monitors its exposure to currency risk. It
maintains a portfolio of cash and cash equivalent balances mainly in US
dollars (`USD') held primarily in the UK. Production revenues from the sale of
hydrocarbons are received in the local currency in Ukraine (`UAH'), however
the hydrocarbon prices are linked to the USD denominated gas and oil prices.
To date funds from such revenues have been held in Ukraine for further use in
operations rather than being remitted to the UK. Funds are transferred to the
Company's subsidiaries in USD to fund operations at which time the funds are
converted to UAH.

Going concern

After making enquiries, the Directors have a reasonable expectation
that the Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. Accordingly, they continue
to adopt the going concern basis in preparing the Condensed Consolidated and
Company Financial Statements. For further detail refer to the detailed
discussion of the assumptions outlined in note 2(a) to the Condensed
Consolidated Financial Statements.

There are a number of potential risks and uncertainties inherent in
the oil and gas sector which could have a material impact on the long-term
performance of the Group and which could cause the actual results to differ
materially from expected and historical results. The Company has taken
reasonable steps to mitigate these where possible. Full details are disclosed
on pages 14 to 15 of the 2013 Annual Financial Report. There have been no
changes to the risk profile during the first half of the year. These are
summarised below:

Operational risks

- Health, safety, and environment

- Drilling operations

- Production and maintenance

- Work over and abandonment

- Subsurface risks

Financial risks

- Recoverability of the Group's assets

- Liquidity risk, management and going concern assumption

- Regulatory and tax compliance risk

- Fraud risk

- Foreign exchange risk

- Inflation risk

- Credit risk

- Commodity price risk

Corporate risks

- Regulatory and licence issues

- Ukrainian political risk - Ukraine has experienced heightened
political instability in recent months. These events have not affected the
Group's operations to date

- Insurance risk

We confirm that to the best of our knowledge:

(a) the Condensed set of Financial Statements has been prepared in
accordance with IAS 34 `Interim Financial Reporting';

(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events during the
first six months and description of principal risks and uncertainties for the
remaining six months of the year);

(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R(disclosure of related parties' transactions
and changes therein); and

(d) the condensed set of financial statements, which has been
prepared in accordance with the applicable set of accounting standards, gives
a true and fair view of the assets, liabilities, financial position and profit
or loss of the issuer, or the undertakings included in the consolidation as a
whole as required by DTR 4.2.4R.

This Half Yearly Report has been approved by the Board and signed on its behalf by:


Laurence Sudwarts
Company Secretary
26 August 2014




Cautionary Statement

The business review and certain other sections of this Half Yearly
Report contain forward looking statements that have been made by the directors
in good faith based on the information available to them up to the time of
their approval of this report. However they should be treated with caution due
to inherent uncertainties, including both economic and business risk factors,
underlying any such forward-looking information and no statement should be
construed as a profit forecast.


                                                          Six months ended  Year ended
                                                                   30 June 31 December
                                                          2014        2013        2014
                                                         $'000       $'000       $'000

                                             Notes (Unaudited) (Unaudited)   (Audited)
CONTINUING OPERATIONS

Revenue                                                 1,573       1,919       3,772

Cost of sales                                          (1,215)     (1,281)     (3,019)

Gross profit                                              358         638         753

Administrative expenses:
Other administrative expenses                          (3,585)     (4,451)     (8,919)

Reversal of impairment /(Impairment) of                   609        (112)        234
other assets
                                                       (2,976)     (4,563)     (8,685)

Share of losses in joint ventures                        (834)     (1,854)     (6,630)

Other operating (expenses)/income                4     (1,136)      3,746        (266)

Operating loss                                         (4,588)     (2,033)    (14,828)

Investment revenue                                        179          87         434

Finance income/(costs)                                    667          (7)         (6)

Loss before tax                                        (3,742)     (1,953)    (14,400)

Tax credit/(charge)                                       112        (144)       (289)

Loss for the period/year                         5     (3,630)     (2,097)    (14,689)

Attributable to:
Owners of the Company                                  (3,609)     (2,079)    (14,660)

Non-controlling interest                                  (21)        (18)        (29)

                                                       (3,630)     (2,097)    (14,689)

Loss per Ordinary share                                   cent       cent        cent

Basic and diluted                                6       (1.6)       (0.9)       (6.3)



                                                         Six months ended  Year ended
                                                                  30 June 31 December
                                                         2014        2013        2013

                                                        $'000       $'000       $'000
                                                   (Unaudited) (Unaudited)   (Audited)

Items that may be reclassified subsequently to
profit and loss

Loss for the period/year                               (3,630)     (2,097)    (14,689)

Unrealised currency translation differences           (29,590)     (7,121)     (3,551)

Total comprehensive loss for the period/year          (33,220)     (9,218)    (18,240)

Attributable to:
Owners of the Company                                 (33,199)     (9,200)    (18,211)

Non-controlling interest                                  (21)        (18)        (29)

                                                      (33,220)     (9,218)    (18,240)


                                                          Six months ended  Year ended
                                                                   30 June 31 December
                                                            2014      2013        2013
                                                           $'000     $'000       $'000

                                        Notes         (Unaudited) (Unaudited) (Audited)
ASSETS

Non-current assets

Intangible exploration and
evaluation assets                                          4,637       3,367     5,958

Property, plant and equipment                             31,169      44,316    43,886

Investments in joint ventures                             52,522      70,741    65,965

Other financial assets                                     3,763           -         -

                                                          92,091     118,424   115,809
Current assets
Inventories                                                2,196       3,164     2,951

Trade and other receivables           7                    5,329       6,761     6,879

Cash and cash equivalents                                 47,908      63,426    56,484

                                                          55,433      73,351    66,314

Total assets                                             147,524     191,775   182,123

LIABILITIES

Non-current liabilities

Deferred tax liabilities                                    (447)     (534)      (675)

Long-term provisions                                        (512)     (573)      (195)

                                                            (959)   (1,107)      (870)
Current liabilities
Trade and other payables                                  (2,475)   (4,308)    (3,442)

Current provisions                                           (12)      (58)      (513)

                                                          (2,487)   (4,366)    (3,955)

Total liabilities                                         (3,446)   (5,473)    (4,825)

Net assets                                               144,078   186,302    177,298

EQUITY

Share capital                                             13,337    13,337     13,337

Retained earnings                                        279,262   295,341    282,871

Cumulative translation reserves                         (150,428) (124,408)  (120,838)

Other reserves                                             1,589     1,682      1,589

Equity attributable to equity                            143,760   185,952    176,959
holders of the parent
Non-controlling interest                                     318       350        339

Total equity                                             144,078   186,302    177,298



                                                                        Six months ended   Year ended
                                                                                 30 June  31 December
                                                                      2014          2013         2013
                                                                     $'000         $'000        $'000

                                                          Note  (Unaudited)  (Unaudited)    (Audited)

Net cash (outflow)/inflow from operating activities        8        (1,339)       29,667      25,554

Investing activities

Investments in joint ventures                                       (2,800)       (4,267)     (4,687)

Purchases of property, plant and equipment                            (670)         (439)       (783)

Purchases of intangible exploration and evaluation assets             (310)         (349)     (3,069)
Proceeds from sale of property, plant and equipment                     108           15         127

Acquisition of financial assets                                     (5,000)       (1,666)     (2,590)

Proceeds from financial assets                                        1,295            -       1,030

Interest received                                                       179           87         434

Net cash used in investing activities                                (7,198)      (6,619)     (9,538)

Net (decrease)/increasein cash and cash equivalents                  (8,537)       23,048      16,016

Effect of foreign exchange rate changes                                 (39)          (99)         (9)

Cash and cash equivalents at beginning of period/year                56,484        40,477      40,477

Cash and cash equivalents at end of period/year
period/year                                                          47,908        63,426      56,484




                                                                 Other reserves

                                             Cumulative
                             Share Retained translation  Share-based          Re-  Non-controlling
                           capital earnings    reserves      payment organisation         interest           Total
                             $'000    $'000       $'000        $'000        $'000            $'000           $'000

As at 1 January 2013        13,337  297,438   (117,287)           93        1,589              368        195,538
Net loss for the period          -  (2,079)          -             -            -              (18)        (2,097)
Exchange translation
differences on foreign
operations                       -        -     (7,121)                         -                -         (7,121)
As at 30 June 2013          13,337  295,359   (124,408)           93        1,589              350        186,320
Net loss for the period          -  (12,581)         -             -            -              (11)       (12,592)
Exchange translation
differences on foreign
operations                       -        -      3,570             -            -                -          3,570
Share-based payments             -       93          -           (93)           -                -              -
As at 1 January 2014        13,337  282,871   (120,838)            -        1,589              339        177,298
Net loss for the period          -   (3,609)         -             -            -              (21)        (3,630)
Exchange translation
differences on foreign
operations                       -        -    (29,590)            -            -                -        (29,590)
As at 30 June 2014          13,337  279,262   (150,428)            -        1,589              318        144,078



1. General information

Cadogan Petroleum plc (the `Company', together with its
subsidiaries the `Group'), is incorporated in England and Wales under the
Companies Act 2006. The address of the registered office is 1st Floor, 40 Dukes
Place, London, EC3A 7NH. The nature of the Group's operations and its
principal activities are set out in the Operations Review on pages 4to 6 and
the Financial Review on pages 7 to 9.

The financial information for the year ended 31 December 2013 does
not constitute statutory accounts as defined in section 434 of the Companies
Act 2006, but is derived from those accounts. Statutory accounts for the year
ended 31 December 2013 have been delivered to the Registrar of Companies. The
auditor's report on those accounts was not qualified. The auditor's report did
not contain a statement under section 498(2) (unable to determine whether
adequate accounting records had been kept) or 498(3) (failure to obtain
necessary information and explanations) of the Companies Act 2006. The report
of the auditor on those accounts was unqualified and contained an emphasis of
matter paragraph relating to significant uncertainty over political and
economic turmoil in Ukraine.

This Half Yearly Report has not been audited or reviewed in
accordance withthe Auditing Practices Board guidance on `Review of Interim
Financial Information'.

A copy of this Half Yearly Report has been published and may be
found on the Company's website.

2. Basis of preparation

The annual financial statements of the Group are prepared in
accordance with International Financial Reporting Standards (`IFRS') as issued
by the International Accounting Standards Board (`IASB') and as adopted by the
European Union (`EU'). These Condensed Financial Statements have been prepared
in accordance with IAS 34 Interim Financial Reporting, as issued by the IASB.

The same accounting policiesandmethods of computation are followed
in the condensed financial statements as were followed in the most recent
annual financial statements of the Group, which were included in the Annual
Report issued on 28 April 2014.

The Group has not early adopted any amendment, standard or
interpretation that has been issued but is not yet effective. It is expected
that where applicable, these standards and amendments will be adopted on each
respective effective date.

A number of other amendments to accounting standards issued by the
International Accounting Standards Board also apply for the first time in
2014. These do not have a significant impact on the accounting policies,
methods of computation or presentation applied by the Group.

The nature and the impact of each new amendment, standard or
interpretation are described below:

(a) Going concern

The Directors have continued to use the going concern basis in
preparing these condensed financial statements. The Group's business
activities, together with the factors likely to affect future development,
performance and position are set out in the Operations Review on pages 4to6.
The financial position of the Group, its cash flow and liquidity position are
described in the Financial Review on pages 7 to 9.

The Group's cash balance as at 30 June 2014was $47.9 million
(31 December 2013: $56.5 million) excluding $1.0 million (31 December 2013:
$0.2 million) of Cadogan's share of cash and cash equivalents in joint ventures
with no external debt and the Directors believe that the funds available at the
date of issue of this financial information is sufficient for the Group to
manage its business risks successfully.

The Group's forecasts and projections, taking into account
reasonably possible changes in operational performance, start dates and flow
rates for commercial production and the price of hydrocarbons sold to
Ukrainian customers, show that there are reasonable expectations that the
Group will be able to operate on funds currently held and those generated
internally, for the foreseeable future, without taking into account
receivables from litigation and without the requirement to seek external
financing.

After making enquiries and considering the uncertainties described
above, the Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence for the
foreseeable future and consider the going concern basis of accounting to be
appropriate. Thus they continue to adopt the going concern basis of accounting
in preparing the financial information.

(b) Foreign currencies

The individual financial statements of each Group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). The functional currency of the Company is pounds
sterling. For the purpose of the consolidated financial statements, the
results and financial position of each Group company are expressed in US
dollars, which is the presentation currency for the consolidated financial
statements.

The relevant exchange rates used were as follows:

                                                                 Year ended
1 US$ = £                              Six months ended 30 June 31 Dec 2013
                                                   2014    2013

Closing rate                                     1.7048  1.5216      1.6491

Average rate                                     1.6692  1.5449      1.5648

                                                                 Year ended
1 US$ = UAH                            Six months ended 30 June 31 Dec 2013
                                                   2014    2013

Closing rate                                    11.8333  8.2992      8.3920

Average rate                                    10.6536  8.2332      8.2545

The effect of foreign currency sensitivity on shareholders' equity
is equal to that reported in the statement of comprehensive income. During the
six months ended 30 June 2014, the Ukrainian Hryvnia depreciated against the
USD by 41.0%. As a result, during the six months ended 30 June 2014 the Group
recognized a net foreign exchange loss in the amount of $29.6 million in the
consolidated statement of comprehensive income, which arose mostly on
translation of E&E and PP&E assets from functional currency UAH to the Group's
reporting currency USD in the amount of $14.1 million and on translation of
E&E and PP&E assets of JV from functional currency UAH to the Group's
reporting currency USD in the amount of $15.5 million.

(c) Dividend

The Directors do not recommend the payment of a dividend for the
period (30 June 2013: $nil;31 December 2013: $nil).

3. Business and geographical segments

The Directors continue to consider there to be only one business
segment, the exploration and development of oil and gas revenues and only one
geographical segment, being Ukraine.

4. Other operating (expenses)/income

                                             Six months ended 30  Year ended
                                                            June 31 December
                                                 2014       2013        2013
                                                $'000      $'000       $'000

Out of court settlements                            -          -          65

Transactions with JV partner                      321       (362)        (60)

Net foreign exchange (losses)/gains            (1,457)     4,108        (271)

                                               (1,136)     3,746        (266)

Net foreign exchange loss of $1.5 million mainly relates to the
revaluation of the USD-denominated monetary assets of the Group's UK entities
which have GBP as a functional currency.

5. Profit/(Loss) for the period/year

The profit/(loss) for the period/year is stated after
crediting/(charging):

                                                       Six months ended 30  Year ended
                                                                      June 31 December
                                                          2014        2013        2013
                                                         $'000       $'000       $'000

Depreciation of property, plant and equipment             (394)       (562)     (1,352)

Loss on disposal of property, plant and equipment         (157)       (427)       (227)

Reversal of impairment of other assets                     609         394         234

Staff costs                                             (2,103)     (2,441)     (4,790)

Net foreign exchange (loss)/gain                        (1,457)       4,108       (271)


6. Loss per Ordinary share

Loss per Ordinary share is calculated by dividing the net loss for the
period/year attributable to Ordinary equity holders of the parent by the
weighted average number of Ordinary shares outstanding during the period/year.
The calculation of the basic and diluted loss per share is based on the
following data:

                                           Six months ended 30 June  Year ended
                                                                    31 December
                                                     2014      2013        2013
Loss attributable to owners of the Company          $'000     $'000       $'000

Loss for the purposes of basic profit per share
being net loss attributable to owners of the
Company                                            (3,609)   (2,079)    (14,660)

                                                    Number   Number       Number
Number of shares                                      `000     `000         `000

Weighted average number of Ordinary shares for
the purposes of basic loss per share               231,092  231,092      231,092
Effect of dilutive potential ordinary shares:
Options and warrants outstanding                         -       88            -
Weighted average number of Ordinary shares for the
purposes of diluted profit per share
                                                   231,092  231,179      231,092

                                                      cent     cent         cent
Loss per Ordinary share

Basic                                                 (1.6)    (0.9)        (6.3)

Diluted                                               (1.6)    (0.9)        (6.3)


7. Trade and other receivables

                                            Six months ended 30       Year ended
                                                           June      31 December
                                               2014        2013             2013
                                              $'000       $'000            $'000

Loans issued                                  2,185       1,666            1,559

Receivable from joint venture                 1,798       3,667            4,077

Other receivables                               682         881              591

Prepayments                                     322         381              401

VAT recoverable                                 342         166              251

                                              5,329       6,761            6,879


Loans issued of $2.2 million as at 30 June 2014 includes:

- $0.3 million of the loan issued in June 2013 to Oil and Gas
Management Services Group Limited ("OAGSG"), as part of $3 million Loan
Facility on a fully secured basis against receivables due to OAGSG with the
term of loan of 24 months and annual interest of 15%. This loan has been
repaid in full on 9 July 2014.

- $1.9 million of the present value of short-term portion of a $5
million fully secured 24 month term loan made in April 2014 to a third party
in the European energy sector. The loan bears a fixed coupon plus a
production-linked return based on certain minimum annual production targets.
The Group has accounted for the loan as financial asset at amortised cost.
Long-term portion of the loan is recognised as non-current other financial
asset in the amount of $3.8 million. Effective interest rate is 19%.

$1.8 million (30 June 2013: $3.7 million, 31 December 2013: $4.1
million) of receivables from joint venture relate to the recharged costs from
the Group to the joint ventures, LLC Astroinvest-energy and LLC
Gazvydobuvannya.

$0.3 million prepayments (30 June 2013: $0.4 million, 31 December
2013: $0.4 million) mostly relate to prepayments made to contractors in
Ukraine in the course of the Group's operational activity.

The Directors consider that the carrying amount of the remaining
other receivables approximates their fair value and none of which are past
due.


8. Notes to the condensed cash flow statement
                                                              Six months ended 30  Year ended
                                                                             June 31 December
                                                                 2014        2013        2013
                                                                $'000       $'000       $'000

                                                          (Unaudited) (Unaudited)   (Audited)

Operating loss                                                (4,588)     (2,033)    (14,828)
Adjustments for:

Depreciation of property, plant and equipment                     394         562       1,201

Share of losses in joint ventures                                 834       1,924       6,630

Reversal of impairment/(Impairment) of inventories                 32         (25)        (97)

Reversal of impairment of VAT recoverable                        (641)       (369)       (137)

Loss on disposal of property, plant and equipment                 157         427         103

Effect of foreign exchange rate changes                          (243)     (5,620)     (1,571)

Operating cash flows before movements in working capital       (4,055)     (5,134)     (8,699)
Decrease in inventories                                           882         343         628

Decrease in receivables                                         2,803      32,072      34,439

(Decrease)/Increase in payables and provisions                   (967)       2,538       (645)

Cash (used in)/received from operations                        (1,337)      29,819      25,723

Income taxes paid                                                  (2)        (152)       (169)

Net cash (outflow)/inflowfrom operating activities             (1,339)      29,667      25,554


9. Related party transactions

Transactions between the Group and its subsidiaries, which are
related parties, have been eliminated on consolidation and are not disclosed
in this note.The application of IFRS 11 has resulted in the existing joint
venturesLLC Astroinvest-energy, LLC Gazvydobuvannya and LLC Westgasinvest
being accounted for under the equity method and disclosed as related parties.
During the period, Group companies entered into the following transactions
with related parties who are not members of the Group:

                                                          Six months ended 30       Year ended
                                                                         June      31 December
                                                             2014        2013             2013
                                                            $'000       $'000            $'000

Revenues from services provided and                           460       1,332            1,892
sales of goods

Purchases of goods                                             16          75               22

Amounts owed by related parties                             1,798       3,667            4,077

Amounts owed to related parties                               110         130              801

The amounts outstanding are unsecured and will be settled in cash.
No provisions have been made for doubtful debts on the amounts owed by related
parties.


10. Post balance sheet events

No post balance sheet events requiring adjustment or disclosure in
these consolidated financial statements have taken place after 30 June 2014.

11. Commitments and contingencies

There have been no significant changes to the commitments and
contingencies reported on page 86 of the Annual Report.

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