Cadogan Petroleum : Operational update

Operational Update

Released : 17/01/2017 11:23 Tuesday, 17 January 2017

Cadogan Petroleum plc ("Cadogan" or "the Company") Operational update

Cadogan Petroleum plc announces an update of its operational activities at its oil and gas fields in Western Ukraine. Net production for 2016 averaged 116 boepd, which is 6% higher than the average for 2015 notwithstanding the maturity of the producing assets; while production increased by 6%, 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 is effective as from January 1st, 2017, and by the expected oil production from the re­entry of two old, suspended wells in the Monastyretska licence. These re­entries, which are part of Cadogan's strategy to sustain production while minimizing capital expenditures, are planned for the first quarter of this year.

Cadogan is also pleased to announce that its fully owned Dutch subsidiary has entered into a Sale and Purchase Agreement and a Shareholders Agreement with the owners of Exploenergy Srl ("Exploenergy") 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, un­risked 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.

Upon the award of each licence the sellers will receive a lump sum payment, notionally corresponding to past costs adjusted for debt, receivables and payables, and will be carried for their 10 % holding until first commercial gas.

Guido Michelotti, Cadogan Petroleum CEO, commented "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".

The transaction represents the first step of Cadogan's strategy of reloading and geographically diversifying its portfolio of licences. The shares of Exploenergy will be transferred to Cadogan once the transaction has been registered at Milan Chamber of Commerce, which is expected to occur in the next couple of weeks.

The information contained within this announcement may contain inside information stipulated under the Market Abuse Regulation (EU) No. 596/2014. ENDS

For further information, please contact:

Cadogan Petroleum Plc [phone] Guido Michelotti

Chief Executive Officer

Marta Halabala Company Secretary

Cantor Fitzgerald Europe [phone] David Porter