Cadogan Petroleum has announced its unaudited results for the six months ended 30 June 2020.

• Average production was 230bpd in H1 2020 (297 boepd in H1 2019), a 23% decrease versus H1 2019. This was mainly due to the shut-down during this period of the Blazhiv-3 and Blazhiv-Monastyrets-3 wells for 5,5 months.
• License authority of Ukraine (State Geological Service) rejected in May 2020 the Biltyanska 20-year exploration and production license application notwithstanding full compliance and timely submission. The Company introduced a claim before the Kiev District Administrative Court to challenge the decision of non granting the license.
• In Ukraine from January to July 2020, hydrocarbon prices decreased significantly compared to the same period in 2019, the price of natural gas decreased by more than 45% and more than 30% for oil and gas condensate.
• Cadogan decided not to sell its stored gas acquired during 2019 waiting for appropriate market prices.
• The services business continued to support the Group’activities, thus retaining funds within the Group.
• Production revenues decreased by 46 % versus the same period in 2019, due to a 33% reduction in the average realized oil price and a 23% decrease  of the production volumes. Overall revenues were down by 62% versus the same period in 2019 due to the absence of sales of gas. Cost saving initiatives have been taken to mitigate the negative effects.
• As a result of the above initiatives, cash  position at the period end was $11.6 million (30 June 2019: $13.7 million). This level of cash is sufficient to sustain on-going operations.

Overall, the first half of 2020 was impacted by the global impact of covid-19 pandemic, extreme price volatility in oil market, a severe drop down of gas prices, and the shut-down for 5,5 months of the production of Blazhiv-3 and Blazhiv-Monastyrets-3 wells. This affected Cadogan’s strategy in 2020 and constrained the Group to review and partly postpone its investment strategy (including new drilling). Looking ahead, the Company is confident that strong management and competent staff will ensure a positive outcome for the company in such uncertain and challenging environment.

Operations

E&P activity remained focused on maintaining and securing its licenses for the new term and safely and efficiently producing from the existing wells within the Blazhiv oil field. During H1 2020, the average gross production rated at 230 bpd, which is 23% lower than in H1 2019 (297 boepd). The production decrease in the reported period was caused by the shut-down of the Blazhiv-3 and Blazhiv-Monasterets-3 wells due to the expiry of the lease agreements with Ukrnafta and the necessary needed time for their renewal. Production in these wells has been resumed on June 19th. In order to mitigate oil price volatility and in preparation of the future strategy for the increase of the production, the Company installed on the Blazhiv field additional 350 m³ oil storage tanks .

Regarding the Bitlyanska 20-year exploration and development license, given the delay to award the license by the State Geological Service (SGS) beyond the regular timeline provided by legislation and the further rejection of the application on the basis of the new regulatory framework that took effect on 25 February 2020, Cadogan launched a claim before the Administrative Court to challenge the non-granting of the license by the Licensing Authority.

In Italy, given the on-going moratorium for the approval of new licenses, activity was focused on maintaining liaisons with the local authorities and fulfilling the mandatory license requirements.

KeyFacts Energy: Cadogan Petroleum Ukraine country profile