Cadogan Energy Solutions plc ("Cadogan"), the London Stock Exchange listed independent company is pleased to provide the following operational
update post year end.
2023 remained a highly challenging year for Cadogan due to the ongoing war situation in Ukraine and its consequences on the operational activities of the Company in the Country.
Despite these difficulties, the Company has been able to ensure the safety and the security of its employees and assets in Ukraine.
The Company could not avoid temporary shutdowns of its production during the Q1 2023 due to the severe constraints arising in the Country. The oil production grew by 1% above 2022 levels. In 2023, the net oil production was 119,057 bbl corresponding to an average of 326 bpd.
In 2023, the Company continued focusing on the subsoil study of Blazhiv field. Following the works on 2D seismic data processing and reinterpretation done in 2022, the Company conducted and completed full hydrodynamic surveys of Blazhiv-1, Blazhiv-3, Blazhiv-Monastyrets-3 and Blazhiv-10 wells, and updated the hydrodynamic model as well as the production indicators. In the second half 2023, the Company launched a new assessment, by an independent expert, of hydrocarbon reserves according to PRMS standards. This assessment is expected to be completed by the end of February 2024. The results will be presented in the Annual Financial Report 2023.
Cadogan has signed with PJSC Ukrnafta the extension of the lease agreement, for the wells Blazhiv-3 and Blazhiv-Monastyrets-3, for a 5-year period (previous contracts were for a 3-year period). This was done ahead the expiry period which allowed to avoid production stoppage and secure cash flows.
The Company completed the acquisition of the 5% of the share interest in Usenco Nadra LLC and now holds 100% of Usenco Nadra LLC.
Additionally, in Ukraine, Cadogan is expanding into the electricity generation activities while significantly reducing emissions to the atmosphere. The Company is currently developing the project which consists of capturing the non-commercial associated gas during oil production activities and using it to generate electricity which will be sold on the grid. This project will achieve a highly significant drop in the annual gas emissions of Cadogan as the intensity ratio will drop from 126 to 33 tons of CO2 e/Kboe. It is expected to be operational in Q1 2025.
All activities were executed without LTI or TRI, with a total of over 1,720,000 manhours since the last incident. Also, the Company has successfully passed the latest ISO audit while ISO 14001 and 45001 certifications were re-validated by respective authority for the new term.
Regarding the litigation between Cadogan and Proger PMP, Proger Ingegneria, MALO and TIFS (hereinafter "Proger"), concerning the Loan Agreement and the reimbursement of the amounts due (principal plus interest accrued), please find the most recent update below.
At the conclusion of the first arbitration held before "Arbitra Camera" in Rome which had been initiated by Proger in 2021, the arbitration award ("Award") was rendered end of July 2022. Cadogan introduced an appeal, still pending, before the Court of Appeal of Rome with a next hearing on 25 September 2025.
Meanwhile, having taken note of the content of the Award of July 2022, Cadogan has repeatedly invited Proger to implement the provisions of the Award.
When the invitation remained unsuccessful, Cadogan with a formal notice contested Proger's refusal, arguing that it was in direct contrast with the clear and unequivocal provision of the Award, which expressly subordinates the possible transfer of shareholdings to the prior fulfilment of the formalities required by English law and procedures related to Cadogan as a listed company on the London Stock Exchange; and also opposing Proger for having behaved and continuing to behave in a manner that has made it definitively impossible to the occurrence of the condition precedent referred to in the above-mentioned Award. Cadogan considers in any case impossible to enter into an enforceable contract of the conditional preliminary contract referred to above - the existence, classification and enforceability of which, in any case, Cadogan disputes - so that, according to the provisions of the aforementioned Award, the right to reimbursement of the amount covered by the Loan Agreement has arisen in favor of Cadogan, plus interest accrued, an amount of which Cadogan then demanded immediate payment.
Last November 2023, Cadogan had to initiate a second arbitration to assert its right to restitution and obtain Proger's condemnation of the consequent payment.
The parties are awaiting the nomination of the members of the Arbitration Board.
In Italy, Exploenergy, which is holding interests on the projects of Corsano and Reno Centese, got the approval to operate in the gas sector, thanks to the financial and technical support of Cadogan. The Ministry of the Environment asked the two corresponding Regions to release the permit agreement.