Cadogan Energy Announces Annual Results for Year Ended 31 December 2023

Source: 5/8/2024, Location: Asia

The Board of Cadogan Petroleum plc, ("Cadogan"), is pleased to announce the Company's annual results for the year ended 31 December 2023.

Key Financial Highlights of 2023:
- Profit for the year: $1.3 million (2022: loss of $1.6 million)
- Average realised price[1]: $59.32/boe (2022: $73.4/boe)
- Gross revenues[2]: $7.6 million (2022: $8.5 million)
- G&A[3]: $3.6 million (2022: $3.4 million)
- Profit per share: 0.5 cents (2022: loss of 0.6 cents)
- Cash at year end: $14.2 million (2022: $13.9 million)

Key Operational Highlights of 2023:
- Production: 119,057 bbl (2022: 117,793 bbl), a 1% increase year-on-year; No LTI/TRI[4];
- ISO 14001 and 45001 certifications were re-validated by respective authority for one year;
- Extension of Blazhiv-3 and Blazhiv-Monastyrets-3 wells' lease contracts for a 5-year period;
- Qualification of Exploenergy as gas operator in Italy by the Ministry of Environment and Energy Transition; and
- Launch of the gas-to-power investment in Ukraine with the aim of being an electricity producer in 2025.

Group overview
In 2023, the Group continued to maintain exploration and production assets, and to operate an oil services business in Ukraine. Cadogan's assets are concentrated in the West of the country. The oil services business focuses on workover operations, civil works services and other services to satisfy Cadogan intra-group operational needs.

Our business model

We aim to increase value through:
- Maintaining a robust balance sheet, monetising the remaining value of our Ukrainian assets and supplementing E&P cash flow with revenues from gas trading and oil services
- Developing new activities along the energy value chain with a lower impact on environment
- Diversifying Cadogan's portfolio, both geographically and operationally

Chairman's Statement
2023 was another year of unprecedented challenges for Ukraine, as the invasion of Ukraine by Russia continued to cause damages in the country and impact the European stability. The continuous escalation of hostilities and the geopolitical uncertainties still presented significant obstacles for our operations and were threats to the assets of the Group in Ukraine.

Despite these challenges, Cadogan remained steadfast in its commitment to operational excellence, safety, and sustainability. We continued implementing rigorous risk management to safeguard our operations and ensure the well-being of our workforce. The safety of our people is our highest priority. The Group is taking all possible actions to preserve the safety of its employees and meet their needs.

As for existing operations in Ukraine, Cadogan has demonstrated robust performance in oil production maintaining steady output levels exceeding 2022 results. Moreover, the Group has launched an investment in the power generation, showcasing its resilience and commitment to growth and diversification despite stormy weathers adversity in the country.

In 2023, despite the volatility in the oil and gas markets, Cadogan has adapted its strategies to manage these uncertainties. By implementing agile measures, the Group has effectively mitigated the impact of market volatilities, ensuring continuity of its oil production and sales which allowed to minimize the temporary shutdowns of its production activities.

Looking ahead, we recognise that the geopolitical uncertainties and security risks will continue to be high challenges. However, we remain committed to advance through these challenges with resilience, integrity, and determination. This is possible thanks to the commitment of all with a competent and strong management. The Board remains focused on maximizing value from our assets and on our strategy based on the future diversification of our activities towards sectors providing lower impacts on environment along the energy value chain.

Michel Meeůs
Non-Independent Non-Executive Chairman
07 May 2024

Chief Executive's Review
With the ongoing war resulting from the Russian invasion of Ukraine in 2022, the Group was compelled to adapt to a drastically altered operating and economic environment. We swiftly implemented measures to mitigate risks, ensuring the safety of personnel and assets while facing the operational, economic, and financial challenges posed. Following these events, in 2023, Cadogan had to operate in a highly complex environment characterised by air shelling of oil & gas and energy infrastructures, oil & gas prices volatilities, martial law restrictions on the financial transactions as well as other associated risks.

The ongoing war and the unpredictable air strikes continue to impact the sector of oil and gas in Ukraine, with uncertainties surrounding production, distribution, and market dynamics. The bombing naturally affected the oil and gas production in the country. Oil refineries as well as energy infrastructure suffer constant air attacks and remain severely damaged.

Cadogan employees in Ukraine have been operating in a combined remote and office work mode, prioritising both safety and productivity. We are pleased to report that all our employees remain safe and uninjured since the beginning of the invasion in February 2022.

The imposition of legislative restrictions on oil and gas exports due to war time has significantly impacted the operations of the industry. This restriction has created challenges for companies operating in the country, limiting their ability to access international markets.

The government pursued the efforts for the modernization of its oil and gas regulatory framework, in particular, by enforcing law #4187 which deregulates the subsoil sector, introduces a free market of licenses and simplifies access to the land.

Against this challenging background, Cadogan's operational activities performed as following:

- a 1% increase in production, from 117,793 bbl in 2022 to 119,057 bbl in 2023;
- a robust balance sheet, with $14.2 million of net cash;
- a significant diversification in electricity generation business by developing a new project in Ukraine;
- the extension of Blazhiv-3 and Blazhiv-Monastyrets-3 wells' lease contracts for a 5-year period; and
- another year without LTIs'.

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