Net production from Cadogan Petroleum’s oil and gas fields in western Ukraine averaged 116 barrels oil equivalent per day in 2016, which is 6% higher than the average for 2015.
Emissions to the atmosphere, measured in ton CO2/boe, were further reduced by 10% over 2015 levels.
The impact of this increased production on the company’s income statement is expected to be compounded this year by a reduction in the royalty rate for oil wells from 45% to 29%, which took effect from 1 January, and by the expected oil production from the re-entry of two old, suspended wells in the Monastyretska licence.
These re-entries, which are part of Cadogan’s strategy to sustain production while minimising capital expenditures, are planned for the first quarter of this year.
Cadogan also announced that its fully owned Dutch subsidiary had entered into a sale and purchase agreement and a shareholders’ agreement with the owners of Exploenergy Srl for the purchase of 90% of the company’s shares.
Exploenergy is an Italian company which has filed applications for two exploration licences located in the Po Valley, in close proximity to fields discovered by the former operator; two leads have been identified in these licences with combined, un-risked prospective resources estimated to be in excess of 60 BCF.
Both applications are in an advanced stage of their approval process. Exploenergy has also filed an application for a third licence which is not part of this transaction and will be returned to the sellers once they have established a company vehicle.
Cadogan Petroleum Guido Michelotti said: “This transaction gives Cadogan an opportunity to apply, outside of Ukraine, our successful business model of being an efficient operator of marginal fields. We will work closely with the former management of Exploenergy and the Italian stakeholders at large to complete the application process expeditiously.”
At 4:15pm: (LON:CAD) Cadogan Petroleum PLC share price was +0.38p at 9.75p
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