Further to the announcement of 15 June 2012, Cadogan confirms that, together with its joint venture partner Ukrainian state-owned National Joint Stock Company Nak Nadra Ukrayny (Nadra), it has entered into a Share Purchase Agreement with Eni S.p.A (Eni), the Italian integrated energy company, whereby Eni has acquired a stake in the joint venture established by Nadra and Cadogan, Ukrainian company LLC Westgasinvest. LLC Westgasinvest currently holds subsoil rights to nine unconventional (shale) gas license areas in the Lviv Basin of Ukraine, totalling approximately 3,800 square kilometres of acreage.
The Lviv Basin is considered to be one of the most attractive basins in Europe for the exploration of unconventional gas, being a continuation of the Lublin Basin in Poland which has already attracted substantial interest from the hydrocarbon industry.
This Agreement was developed within the framework of the Cooperation Agreement with Eni, signed in 2011.Under the transaction, Eni will acquire 50.01% of LLC Westgasinvest from the joint venture parties and will fund an initial exploration program. Cadogan had already transferred ownership of its two west Ukraine licences, Debeslavetska and Cheremkhivska to the joint venture. Following the conclusion of the transaction Cadogan will retain ownership of 15% of LLC Westgasinvest.
The transaction remains conditional on achieving certain conditions precedent including Ukraine anti monopoly clearance over the next 90 days. Cadogan remains the operator for its existing conventional activities at Debeslavetska and Cheremkhivska and will keep the economic benefit from the conventional activities on these two licenses.
Commenting on the transaction, Bertrand des Pallieres, Cadogan Chief Executive Officer said: "This transaction typifies the opportunities available to Cadogan. Using the Company's local presence, a portfolio of assets has been assembled which are attractive enough to encourage overseas investment. This is a low risk opportunity for Cadogan to benefit from the exciting Ukrainian shale gas opportunity only available so far to the largest global oil and gas companies. Our achievement to have re-risked the exploration phase will allow us to continue expanding our activities".