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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 Half-yearly Report

27/08/2014 7:00am

UK Regulatory



 
TIDMCAD 
 
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$ = GBP                              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. 
 
 
 
END 
 

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