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Oil Capital
EPIC: CAD
Market: LSE
52-week High/Low: 10.35p / 6.91p
Sector: Energy
Market Cap: 18.27M

Cadogan Petroleum is an independent oil & gas company with established revenue streams from producing assets and subsidiary operations, access to exploration potential and a strong balance sheet to support the pursuit of shareholders’ value via the acquisition of underpriced asset across a variety of geographies. The Company is listed on Main Market of the LSE.

Cadogan Petroleum

www.cadoganpetroleum.com

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Big picture - Why invest in Cadogan Petroleum

Cadogan Petroleum Snapshot

Strategy Overview

Cadogan’s strategy is to leverage the strength of its existing balance sheet and revenues to make select asset acquisitions that will support its long term financial position and create upside opportunity to drive additional shareholder value, while diversifying the portfolio and overall risk profile.

The focus of the Company’s asset acquisition strategy is to create a geographically diversified portfolio of assets, with the following objectives:

  • Increase production to support the Company’s long term financial position
  • Create exposure to additional upside potential by pursuing select exploration assets

The Group’s aim is to acquire distressed assets and assets disposed of as part of other companies portfolio optimization programs, with the following characteristics:

  • On-shore and conventional assets, as  the Company has the competence and the resources to operate them.
  • Located in Africa, Eastern Europe, Middle East and Central Asia,  countries which are well known to the Company’s management.

In pursuit of its strategy, the Company will lever its existing strengths, which include:

  • a strong balance sheet
  • a lean organization
  • a proven record of being a low cost, efficient operator of marginal fields with strong HSE credentials
  • a Board and management with proven industry and finance experience

While redeveloping the E&P asset portfolio, the Group will continue to operate its subsidiary businesses, which are gas trading and oil services, to supplement E&P revenue streams and cash generation.

The Group holds working interests in four conventional gas, condensate and oil exploration and production licenses located in Western Ukraine and a 90% interest in Exploenergy, an Italian company, which has filed applications for two exploration licences in the Po Valley, in Northern Italy.

In Ukraine, the Group’s assets are located in the prolific Carpathian basin in close proximity to gas distribution infrastructure. The four licences (Monastryetska, Bytlyanska, Debeslavetska and Cheremkivsko-Strupkivska) are all operated by the Group. The licences produce oil and gas and hold upside potential.

The Po Valley is a proven oil & gas basin in Northern Italy. The exploration licences are in close proximity to existing field discoveries, with two leads having been identified with combined, un-risked prospective resources estimated to be in excess of 60 BCF.

Reserves and resources associated with the Group’s licenses were evaluated and delivered in a final report dated March 2016. The evaluation was conducted in accordance with SPE Petroleum Resources Management System (‘PRMS’). A summary of the report is presented below in a final report dated March 2016.

 

 

Monastyretska License area

The core Monastyretska License combines existing oil production with significant upside potential. It is located in the Lviv region in West Ukraine.

The 25.9Km2 exploration license is part of the Carpathian fold belt (Skuba unit). It is surrounded by long standing oil producing fields, including Starosambirske, one of the largest oil fields in the region with cumulative production exceeding 22 million barrels.

The Monastyreskaya license has tested and produced oil from several wells in the Paleocene Jamna Formation. One of these wells, Blazhiv 1, was re-entered and is constantly producing 47 bopd. Two further wells have been successfully re-entered, adding a combined 30 bopd under natural flow. Workover plans are in place to further enhance production by installing sucker rod pumps.

The produced oil has a negligible gas and water content and so is treated locally and trucked by the buyer to the final destination.

The Group holds a 100 per cent working interest in the license, with the State company NAK Nadra holding a 0.17% beneficial interest and the right to receive dividends.  The license validity was recently extended to November 2019, after which an application for a 20 years’ production licence will be filed. 

The licence has been attributed 2P reserves of 1.4 Million bbl, 3P reserves are 4.5Million bbl and contingent resources 2C 0.6 Million bbl.

 

Bitlyanska Licence area

Located in West Ukraine, Bitlyanska is an exploration licence in a proven and mature hydrocarbon system (outcrop and wells) within the Carpathian Krosno tectonic fold. It is surrounded by oil and gas producing fields (see figure). and close to existing infrastructure.

The license, which covers an area of 390Km2, contains the Bitlya, Borynya and Vovchenska hydrocarbon discoveries. During testing, hydrocarbons were found in low permeability / high pressure formations. The Borenya 3 well, which was re-entered in 2013, tested a significant influx of gas, oil and condensate but was not stable enough for production. The well is suspended pending fracturing and possible re-entry to the deeper layers.

The licence has been attributed 2P and 3 P reserves of 0.8 Mboe and 3.2 Mboe respectively, with significant upside 2C potential of 14.8 Mboe. The Borynya licence is estimated to hold 4.5 Mboe P50 prospective resources. The licence is valid till December 2019.

 

Debeslavetska Field License

Debeslavetska is a gas production licence located in Western Ukraine. It is a marginal gas field, with production of 9,200 scm/day (c. 57 Boepd). Gas is piped to a gas treatment plant from where it is delivered to the Magistral Pipeline via a boost compressor.The licence covers an area of 27 Km2. Cadogan operates the field and holds a 99.2% working interest. The licence is valid till 2026.

 

Cheremkivsko-Strupkivska field

Cheremkivsko-Strupkivska is a marginal gas field in Western Ukraine. The field is producing 4,500 scm/day, (c. 28 Boepd) which is delivered locally. Cadogan operates the field and has a 54.2% participating interest.

 

Shale gas

In addition to its conventional licences, Cadogan has a 15% interest in Westgasinvest LLC, which holds 7 licences for unconventional activities in Western Ukraine, near the Polish boarder. The licenses are operated by eni and Cadogan is carried through the exploration phase.

The 7 licences include: Cheremkhivsko-Strupkivska, Debeslavetska Production, Baulinska, Filimonivska, Kurinna, Sandugeyivska and Yakovlivska.

 

 

Exploenergy

Cadogan holds a 90% interest in Exploenergy s.r.l. (“Exploenergy”), an Italian Company which has filed applications for two exploration licenses located in the Po Valley region, a proven hydrocarbon basin. The licences are near to existing field discoveries. Two leads have been identified on the licenses, with combined, un-risked prospective resources estimated to be in excess of 60 bcf of gas. Both applications are in an advanced stage of their approval process.

 

Gas Trading

Cadogan utilises its balance sheet position to support revenue and cash generation by trading gas. The Group imports gas from Poland and Slovakia, acquires it from local producers and sells it to Ukrainian clients.

The Group entered gas trading in 2014, pioneering the reverse flow, (the import of gas via Europe using pipelines designed to deliver Russian gas to Europe) and captured the benefits of being an early entrant in a developing market.

The market has subsequently matured, with an increasing number of entrants. Nonetheless, there remains an opportunity for the Group to continue to benefit from trading operations, with revenues contributing to achieving cash neutrality and the commercial competences acquired helping maximise the value of its own production.

The cash used to back-up credit lines in Ukraine remains in UK banks and can be released at very short notice if required to support the Company’s core strategy of acquiring select E&P assets.

 

Oil Services

Utilising existing equipment, skills and established partnerships with internationally recognized service providers, Cadogan provides services to oil and gas producers in Ukraine. The provision of these services supplements the Group’s other revenue streams and supports additional cash generation.

The services are offered via the Group’s wholly owned subsidiary, Astro-Service LLC, a fully licensed entity, which is networked with local engineering-design bureaus, state hygienic/ecological institutes and materials suppliers. A distinctive feature of this Company is its ability to conjugate western standard and processes, including HSE, with a deep knowledge of the local context.

Services provided involve innovative technological solutions, international experience and highly-skilled in-house personnel and include:

  • Well Permitting & Land Allotment
  • Well-Pad and Roads Design & Construction
  • Wells’ Drilling, Work-over and Servicing
  • Wastes Management & Cuttings/ Fluids Disposal
  • Warehouse, Logistics & Customs Support

 

 

Zev Furst - Independent Non-executive Chairman

Appointed to the Board on 2 August 2011, Mr Furst is a leading global business and communications strategist who has advised political leaders, foreign principals and corporate executives of Fortune 100 companies. He is the Chairman and CEO of First International Resources, an international corporate and political consulting firm he founded in 1992. Mr Furst specialises in providing strategic counsel on crisis management, market entry, corporate positioning and personal reputational issues. In recent years, he has also advised and consulted with candidates running for national office in Israel, Japan, Mexico and Ukraine.

In 1986, Mr Furst was a founding partner of Meridian Resources and Development Ltd, an international commodities trading company specialising in chemicals and petroleum products.

Mr Furst currently serves as Chairman of the International Board of the Peres Center for Peace and is a member of the Advisory Board of the Kennan Institute in Washington, DC. He has written and lectured extensively on international affairs, business and political strategy and the role of media in politics and diplomacy.

Mr Furst is Chairman of the Company’s Nomination Committee and a member of the Remuneration Committee.

Guido Michelotti - Chief Executive Officer

Mr Michelotti was appointed to the Board of Directors as Chief Executive Officer on 25 June 2015. An Oil & Gas executive with over 30 years of international experience across the entire E&P cycle, he spent more than 10 years in senior executive roles with Eni, leading E&P companies as well as managing major capital projects.

Prior to joining Cadogan he was CEO of a Luxembourg-based private equity fund investing in E&P.

Mr Michelotti is a Senior Advisor to the Energy Practice of the Boston Consulting Group, a member of the Society of Petroleum Engineers (SPE) and a former member of SPE’s Industry Advisory Council.

 

Gilbert Lehmann - Senior Independent non-executive Director

Mr Lehmann was appointed to the Board on 18 November 2011. He is currently acting as an adviser to the Executive Board of Areva, the French nuclear energy business, having previously been its Deputy Chief Executive Officer responsible for finance. He is also a former Chief Financial Officer and deputy CEO of Framatone, the predecessor to Areva, and was CFO of Sogee, part of the Rothschild Group. Mr Lehmann is also Deputy Chairman and Chairman of the Audit Committee of Eramet, the French minerals and alloy business. He is Deputy Chairman and Audit Committee Chairman of Assystem SA, the French engineering and innovation consultancy. He was Chairman of ST Microelectronics NV, one of the world’s largest semiconductor companies, from 2007 to 2009, and stepped down as Vice Chairman in 2011.

Mr Lehmann is currently Chairman of the Company’s Audit Committee and a member of the Remuneration and Nomination Committees.

Enrico Testa - Independent non-executive Director

Appointed to the Board on 1 October 2011, Mr Testa has a long and varied background in the energy market. He was Chairman of the Board of ACEA (the Rome electricity and water utility company) from 1996 to 2002 and Chairman of the Board of Enel S.p.A, the major Italian electricity supplier, during its privatisation. From 2005 to 2009 he was Chairman of Roma Metropolitane, the Rome Council-owned company constructing new underground lines. He was also Chairman of the Organising Committee for the 20th World Energy Congress held in Rome in November 2007, Senior Partner at the Franco Bernabè Group, which owns several investments in the IT sector. From 2002 to 2005 he was member of the Advisory Board of Carlyle Europe and has been Chairman of the Italian Nuclear Forum since 2010. In addition, between 2004 and August 2012 Mr Testa was Managing Director of Rothschild S.p.A.

He is currently Chairman of the AIM-listed telecommunications company Telit Communications Plc, Vice Chairman of Intecs S.p.A and Chairman of E.VA – Energie Valsabbia S.p.A. – a company developing hydropower and solar generating plants.

Mr Testa is Chairman of the Company’s Remuneration Committee and a member of the Audit and Nomination Committees.

Michel Meeus - Non-Independent non-executive Director

Mr Meeùs was appointed as a Non-executive Director on 23 June 2014. Mr. Meeùs is currently acting as Chairman of the Board of Directors of Theolia, an independent international developer and operator of wind energy projects, of which he is a major shareholder. Since 2007, he has been a director within the Alcogroup SA Company (which gathers the ethanol production units of the Group), as well as within some of its subsidiaries. Before joining Alcogroup, Mr Meeùs carved out a career in the financial sector, at Chase Manhattan Bank in Brussels and London, then at Security Pacific Bank in London, then finally at Electra Kingsway Private Equity in London.

 

Adelmo Schenato - Non-executive Director

Mr Schenato was appointed to the Board as Chief Operating Officer on 25 January 2012. He joined the Company after a 35 year career at Eni S.p.A (“Eni”), the Italian integrated energy business, where he served in senior global and regional positions.

His global roles at Eni included Well Operations Research and Development and Technical Management, and Vice President HSE & Sustainability. His regional roles include General Manager of Tunisia, Gabon and Angola as well as CEO of Eni’s Italian gas storage company.

Mr Schenato is a member of the Health, Safety and Environment Committee.

 

 

Major Shareholder Number of shares held % of total voting rights
SPQR Capital Holdings SA 67 298 498 29,12
Mr Pierre Salik 40 550 000 17,55
Mr Michel Meeùs 26 000 000 11,25
CA Indosuez (Switzerland) SA 18 683 000 8,08
Kellet Overseas Inc.  14 002 696 6,06
Cynderella Trust 7 657 886 3,31

 

48/50A Zhylyanska Street
BC “Prime”, 8th floor
01033 Kyiv, Ukraine

Email us at [email protected]

Tel:  +38 (044) 594-58-70
Fax: +38 (044) 594-58- 71

Advisors

Brokers

Cantor Fitzgerald Europe
One Churchill Place
Canary Wharf
London E14 5RB

Lawyers to the Company

Baker & McKenzie LLP
100 New Bridge Street
London EC4V 6JA

Asters
Leonardo Business Center, 14th Fl.
19-21 Bohdana Khmelnytskoho St.
Kyiv 01030, Ukraine

Auditors and Reporting Accountants

BDO London
55 Baker Street
London, W1U 7EU
Office phone number 020 7486 5888
Fax 020 7487 3686

Petroleum Consultants
GM & P Gas Mediterraneo & Petrolio S.r.l.
Via Triulziana 10,
20097, San Donato Milanese (MI)

LLC "BREND-VIK LTD"
Postal Address: 4/8 Kurenivskiy lane,
Kyiv, 04073, Ukraine

Company Secretary

Ben Harber
+44 0207 264 4366

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