Cadogan Energy Solutions Plc

("Cadogan" or the "Company")

 

New Investments in Power Generation

 

 

Cadogan Energy Solutions plc announces that it has decided to accelerate its business diversification in the Electricity sector. The Group will invest in new power generation opportunities in Ukraine, totalling an installed capacity of around 10 MW. The Group is launching several projects with the objective of being operational in Q4 2025. At the same time, Cadogan is completing its gas-to-power project on Blazhiv field which will be operational in Q1 2025.

 

 

About

Cadogan is an independent, energy company, which operates an exploration and production license in Western Ukraine, conducts gas trading operations, and provides services to E&P companies. The aim of the Company is to be a diversified energy group making investments offering energy solutions and alternative services with a lower environmental impact.

For further information, please contact:

Cadogan Energy Solutions plc Fady Khallouf Chief Executive Officer  f.khallouf@cadogan-es.comBen Harber  Company Secretary  +44 0207 264 4366

 

 

 

CADOGAN ENERGY SOLUTIONS PLC

Half Yearly Report for the Six Months ended 30 June 2024

(Unaudited and unreviewed)

 

Highlights

 

Cadogan Energy Solutions plc ("Cadogan" or the "Company"), an independent oil & gas company, listed on the main market of the London Stock Exchange, aiming to be a diversified energy company, is pleased to announce its unaudited results for the six months ended 30 June 2024.

 

The first half of 2024 remained challenging for Ukraine and its energy sector due to the ongoing Russian invasion. The conflict has led to disrupted energy supplies, significant infrastructure damage, and numerous operational challenges. Despite these severe conditions during reported period, the Group successfully maintained its oil production without shutdowns. H1 2024 has been another semester without LTI and TRI. All employees and assets have been secured. In H1 2024, the average production was 370 bpd in (298 bpd in H1 2023), a 25% increase versus H1 2023, and the highest ever for Cadogan. The Group completed the assessment by an independent expert of Blazhiv oil field hydrocarbon reserves, according to PRMS standards. The expected volumes of 1P reserves are higher than the ones shown in the previous assessment. The project to convert non-commercial associated gas into electricity is ongoing and the completeness of the installation of the 0,85 MW gas-to-power generator and the related infrastructure is expected for the end of 2024. The ISO 14001 and ISO 45001 certifications have been revalidated for a new 3-year term. In H1 2024, the services segment was dedicated totally to supporting the production activities in Ukraine. Production entities activities together with services entity activities are presented as Exploration and Production segment results.  The production revenues increased by 105 % versus the same period in 2023, mainly due to a 65% increase in the average realised oil price and a 25% increase of the production volumes. In November 2023, Cadogan initiated a second arbitration procedure to assert its right to restitution of the Loan plus the accumulated interests, and obtain Proger's condemnation of the consequent payment. The first audiences took place in May and June 2024 and were dedicated by the Arbitrators to find an amicable settlement to the controversy. The cash position at the period end was $15.1 million (30 June 2023: $14.2 million). This level of cash is sufficient to sustain on-going operations and business development initiatives.

Overall, Cadogan continued operating in an environment with tremendous challenges caused by the ongoing war in Ukraine. The Company is currently developing new initiatives to continue to improve its performance.

Key performance indicators

During H1 2024, the Group has monitored its performance in conducting its business with reference to a number of key performance indicators (`KPIs'):

to maintain stable oil production measured on the barrels of oil produced per day (`bpd'); to decrease administrative expenses, to increase the Group's basic earnings per share, to maintain no lost time incident, to grow and geographically diversify the portfolio, and to secure its staff and operations.

The Group's performance during the first six months of 2024, measured against these targets, is set out in the table below, together with the prior year performance data. No changes have been made to the sources of data or calculations used in the period/year. The positive trend in the HSE performances continues with zero incidents. 

 

Unit

30 June 2024

30 June 2023

31 December 2023

 

 

 

 

 

Average production (working interest basis) (a)

Boepd

370

298

326

Administrative expenses

$million

1.5

1.6

3.6

Basic profit/(loss) per share (b)

Cent

0.1

(0.1)

0.5

Lost time incident (c)

Incidents

-

-

-

Geographical diversification

New assets

-

-

-

 

Average production is calculated as the average daily production during the period/year Basic profit/loss per ordinary share is calculated by dividing the net profit/loss for the year attributable to equity holders of the parent company by the weighted average number of ordinary shares during the period Lost time incident relate to injuries where an employee/contractor is injured and has time off work (IOGP classification)

 

 

Enquiries:

 

Cadogan Energy Solutions Plc

 

Fady Khallouf

Chief Executive Officer

f.khallouf@cadogan-es.com

Ben Harber

Company Secretary

+44 (0) 207 264 4366

 

Operations Review

Introduction

First semester 2024 was another dramatic period for Ukraine. Russia continued focusing its efforts on industrial infrastructure destruction, in particular, oil refineries and energy infrastructure. The ongoing missile attacks and the destruction of power generation plants have caused a severe shortage of electricity within Ukraine's energy system. This relentless targeting of critical infrastructure has significantly diminished the Country's power generation capacity, leading to frequent and prolonged electricity shortages.

Despite these challenges, the Group has managed to ensure oil production from the Blazhiv field without shutdowns. Through proper planning, robust safety measures, and efficient resource management, we have maintained consistent output levels, demonstrating our resilience and commitment to operational stability even in these circumstances.

In H1 2024, Cadogan employees in Ukraine continued to operate in the combined (remote/ office) work mode.  To date, all our employees are safe. Local operating companies of the Group in Ukraine are qualified as of critical importance for Ukraine's economy functioning.

 In this context, the Group has continued to focus on safely and efficiently operating the existing wells, on controlling its costs and on cash preservation while continuing to look for opportunities to grow and diversify its portfolio of activities.

Operations

E&P activity remained focused on maintaining and securing its activities for the new term and safely and efficiently producing from the existing wells within the Blazhiv oil field. During H1 2024, the average gross production rated at 370 bpd, which is 25% higher than in H1 2023 (298 bpd). Such significant increase in production is attributed to the fact that operations were not halted, unlike during H1 2023.

Operational excellence of the Group has been confirmed again by zero LTI or TRI1, with a total over 1,809,000 manhours since the last incident, and the renewal of ISO 14001 & 45001 certifications for a new 3-year term.

CO2 emissions level in H1 2024 increased to the level of 147,26 tons of CO2,e/boe produced compared to 125,08 tons of CO2,e/boe for the same reporting period of the last year. The increase of the emissions level is caused by the increase of oil production and the CH4 conversion factor increase as established by UK government. The Company expects a significant decrease of annual gas emissions after commissioning of its gas-to-power plant.

In Italy, Exploenergy, was approved as a qualified gas operator for its projects (Reno Centese and Corsano) and is awaiting the go authorisation for its projects.

Trading

The Company had no operations for the first half of 2024. Cadogan continues to monitor the gas markets in Europe and Ukraine.

Proger

In February 2019, the Group entered in a 2-year loan agreement with Proger Management & Partners Srl ("PMP") with an option which Cadogan could exercise, with no obligation, to get a 33% equity interest in Proger Ingegneria Srl which in turn held at 31 December 2020 a 75.95% equity interest in Proger Spa. Proger is an Italian engineering company providing services in Italy and in different international areas. 

Cadogan did not exercise the Call Option. In February 2021, Cadogan notified PMP that according to the Loan Agreement, the Maturity Date occurred on 25 February 2021, and as the Call Option was not exercised, PMP must fulfill the payment of EUR 14,857,350, being the reimbursement of the Loan in terms of principal and the accumulated interest at this Maturity Date. PMP is in default since 25 February 2021. End of March 2021, PMP requested an arbitration to have the Loan Agreement recognized as an equity investment contract, which is rejected by Cadogan as the terms of the Loan Agreement are clear and include the right to repayment at maturity if the Call Option is not exercised.  

The Arbitration proceeding ended in July 2022. 

The Arbitral Committee:

-          Rejected Proger's principal claim, and declared that the Loan Agreement is valid and effective,

-          Deemed to qualify the Call Option as a preliminary contract under condition, but

-          Rejected Proger's claim ex art. 2932 Italian Civil Code, stating that it is impossible to give an award producing the same effects of a final contract ex art. 2932 Italian Civil Code,

-          This is because of the duties established by the rules of the London Regulatory Authority and because of the need, possibly by both parties, to comply with the due proceedings before the formalization of the entry of Cadogan into the capital of Proger Ingegneria,

-          Subordinated the stipulation of the final contract to the precedent completion of the proceeding and bureaucratic process as per the British rules, stating that, otherwise,

-          There is the obligation on Proger Ingegneria to return the money received under the Loan Agreement.

Cadogan introduced an appeal, still pending with a next hearing on September 2025, on the qualification of the Call Option as a preliminary contract. Meanwhile, having taken note of the content of the Award of July 2022, Cadogan 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 definitely impossible to the occurrence of the condition precedent referred to in the above-mentioned Award.

According to the provisions of the aforementioned Award, the right to reimbursement of the amount covered by the Loan Agreement has arisen in favour of Cadogan, plus interest accrued, and 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 first audiences took place in May and June 2024 and were dedicated by the Arbitrators to find an amicable settlement to the controversy.

Financial position

Cash at 30 June 2024 was $15.1 million ($14.2 million at 30 June 2023). The Group continuously monitors its exposure to currency risk. It maintains a portfolio of cash mainly in US Dollars ("USD") and EURO held primarily in the UK.

The Directors believe that the capital available at the date of this report is sufficient for the Group to continue its operations for the foreseeable future.

In H1 2024, the Group held working interests in an oil production licence in the West of Ukraine. It is operated by the Group and is located in the prolific Carpathian basin, close to the Ukrainian oil & gas distribution infrastructure.  

The Group's primary focus during the period continued to be on cost optimisation and enhancement of current production, through the existing well stock and new drilling.

 

Summary of the Group's licences (as of 30 June 2024)

Working

interest (%)

Licence

Expiry

Licence type

100

Blazhiv

November 2039

Production

 

Below we provide an update to the full Operations Review contained in the 2023 Annual Report published on 07 May 2024.

Blazhiv licence

Through the reporting period the Group has been working to safely and efficiently producing from the existing wells located in the Blazhiv licence area. At the end of the reporting period, the average gross production rated at 370 bpd vs 298 bpd in H1 2023. All wells have been operational during the reported period without unscheduled stoppages.

In H1 2024, an independent expert completed Blazhiv field reserves re-assessment. As reported, the field contains 3.05 million boe of 3P reserves and additionally 0,64 million boe of 2C contingent resources associated with Blazhiv licence. The results of this assessment indicate a strong reserves base, highlighting our robust position and revealing significant potential for new development drilling.

In H1 2024, efforts were accelerated on the implementation of the gas-to-power project. The Group has placed a contract for a 0.85 MW gas-driven generator with a European producer, which is expected to be ready by the end of the year. This initiative is a strategic step towards enhancing our energy efficiency and sustainability, leveraging our gas resources to generate power and support our operations more effectively.

Service Company activities 

In H1 2024, Astro Service LLC, focused its activities on serving intra-group operational needs in wells' work-over/ re-entry operations, wells' survey as well as field on-site activities. Production and service activities will be presented solely as Exploration and Production segment result.

Financial Review

 

Overview

 

Income statement

In H1 2024, revenues increased to $5 million (H1 2023: $2.4 million) due to the increase of the realised price by 65% and the increase in the produced volumes of oil by 25%.

Trading business had no activities during the first half of 2024.

The cost of sales of the production segment consists of $1.5 million of production royalties ($1.0 million), $0.7 million of operating costs ($0.7 million), $0.4 million of depreciation and depletion of producing wells ($0.3 million), and $0.07 million of direct staff costs for production ($0.07 million).

Half year gross profit from production activities increased to $2.3 million (30 June 2023: decreased to $0.32 million), driven by increase in production and higher oil prices.

The Group recorded a $0.75 million interest on Proger Loan. Due to expected delays in the loan reimbursement, the Group recognised additional provision of $370 thousand. Please refer to note 11 for details.

Other administrative expenses were kept under control at $1.5 million (30 June 2023: $1.6 million). They comprise other staff costs, professional fees and expenses, Directors' remuneration and depreciation charges on non-producing property.

Balance sheet

At 30 June 2024, the cash position of $15.1 million (30 June 2023: $14.2 million) increased compared to the $14.2 million as at 31 December 2023.

The Property, Plant and Equipment ("PP&E") balance of $5.2 million at 30 June 2024 (30 June 2023: $6.4 million, 31 December 2023: $5.8 million) includes the development and production assets on the Blazhyvska licence and other PP&E of the Group.

Trade and other receivables of $0.4 million (30 June 2023: $0.2 million, 31 December 2023: $0.3 million) includes recoverable VAT of $5 thousand (30 June 2023: $0.2 million, 31 December 2023: $0.2 million), $0.35 million of other receivables and prepayments (30 June 2023: $0.1 million, 31 December 2023: $0.1 million).

The $1.5 million of trade and other payables as of 30 June 2024 (30 June 2023: $1.9 million, 31 December 2023: $1.4 million) represent $0.8 million (30 June 2023: $1.5 million, 31 December 2023: $0.6 million) of other creditors and $0.7 million of accruals (30 June 2023: $0.4 million, 31 December 2023: $0.8 million).

Cash flow statement

The Consolidated Cash Flow Statement shows positive cash-flow from operating activities of $1 million (30 June 2023: positive $0.1 million, 31 December 2023: negative $0.6 thousand). Cashflow, before movements in working capital, shows an outflow of $1.2 million (30 June 2023: inflow $0.9 million, 31 December 2023: inflow $0.6 million).

Group capital expenditure was $0.3 million of investment in electricity generating facilities on Blazhyv field.

Commitments

There has been no material change in the commitments and contingencies reported as at 31 December 2023 (refer to page 83 of the Annual Report).

Treasury

The Group continually monitors its exposure to currency risk. It maintains a portfolio of cash mainly in US dollars ("USD") in the UK and in Hryvnia (local currency) in Ukraine due to the obligations deriving from the martial law. Production revenues from the sale of hydrocarbons are received in the local currency in Ukraine, however, the hydrocarbon prices are linked to the USD denominated gas and oil prices. The martial law in Ukraine significantly limits the transfer of cash outside of Ukraine.

The cash held in Ukraine is held in the local currency (Hryvnia) and placed to deposits in subsidiaries of reputable international banks.

Going concern

The Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Interim Financial Statements. For further details, refer to the detailed presentation of the assumptions outlined in note 2(a) of the Interim Financial Statements.

 

Cautionary Statement

The business review and certain other sections of this Half Yearly Report contain forward looking statements that have been made by the Directors in good faith based on the information available to them up to the time of their approval of this report. However they should be treated with caution due to inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information and no statement should be construed as a profit forecast.

 

Risks and Uncertainties

 

There are a number of potential risks and uncertainties inherent in the oil and gas sector which could have a material impact on the long-term performance of the Group and which could cause the actual results to differ materially from expected and historical results. The Company has taken reasonable steps to mitigate these where possible. Full details are disclosed on pages 9 to 12 of the 2023 Annual Financial Report. There have been no changes to the risk profile during the first half of the year. The risks and uncertainties are summarised below.

War risks

Missile attacks Occupation of territories Forced evacuations Cyber attacks

Operational risks

Health, safety, and environment Climate change Drilling and work-over operations Production and maintenance

Subsurface risks

Financial risks

Changes in economic environment Counterparty Default on the Proger loan repayment Commodity price

Country risk

Regulatory and licence issues Emerging market

Other risks

Risk of losing key staff members Risk of entry into new countries Risk of delays in projects related to dialogue with local communities

 

Directors' Responsibility Statement

 

We confirm that to the best of our knowledge:

(a) the Interim Financial Statements have been prepared in accordance with the UK-adopted IAS 34 `Interim Financial Reporting';

(b) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year);

(c) the interim management report includes a fair review of the information required by DTR 4.2.8R  (disclosure of related parties' transactions and changes therein); and

(d) the condensed set of financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole as required by DTR 4.2.4R.

 

Cadogan Energy Solutions plc (the "Company")

Board Changes

Further to the AGM Result announcement released on 21st June 2024 the Company confirms that Charles Mack and Thibaut de Gaudemar have been appointed to the Board as Independent Non-Executive Directors.

In accordance with LR 9.6.13 of the Listing Rules it is disclosed that:-

Charles Mack is both an advocate and a certified insolvency practitioner focused on cross-border restructuring cases. He has been appointed as administrator, liquidator and CRO manager in several national/international medium size as well as large companies. He is a member of the bar in both Munich and Padova and a Registered European Lawyer at the Bar of England & Wales. Charles has been with Studio Legale Trabucchi since he passed his law examinations and a partner since 2000 and has been a partner with White & Case as well as Brinkmann Partners in Germany. Charles is currently a member of the board of TMA Europe and Corestate Capital Holdings S.A. and a former president of Insol Europe.

Thibaut de Gaudemar has more than 35 years of experience in investment banking working for prominent international financial institutions in London. His last position was Vice Chairman of Capital Markets for EMEA at Credit-Suisse. He previously co-managed the Global Markets Solution Group, which encompassed Equity Capital Markets, Debt Capital Markets, Leveraged Finance and Derivatives. He was a member of the Global and the European Investment Banking Committees. Prior to joining Credit-Suisse in 2005, he was a Managing Director at Deutsche Bank and Bankers Trust in charge of the Strategic Equity Derivative Business in Europe.

There are no additional details to disclose under this Listing Rule provision.

-ENDS-

About

Cadogan is an independent, energy company, which operates an exploration and production license in Western Ukraine, conducts gas trading operations, and provides services to E&P companies. The aim of the Company is to be a diversified energy group making investments offering energy solutions and alternative services with a lower environmental impact.

For further information, please contact:

Cadogan Energy Solutions plc Fady Khallouf                 Chief Executive Officer                 f.khallouf@cadogan-es.comBen Harber                       Company Secretary                       +44 0207 264 4366

Cadogan Energy Solutions plc

The Annual General Meeting of Cadogan Energy Solutions plc was held today at 12.00pm at the offices of Shakespeare Martineau LLP, 6th Floor, 60 Gracechurch Street, London EC3V 0HR.

The Directors of the Company wish to announce that resolutions 1 to 12 and 15 proposed at the AGM were passed and that resolutions 13, 14 and 16 to 21 were defeated.  All resolutions were proposed by way of a poll vote.  The results of the poll vote are set out below:

Resolution Ordinary/ Special For Against WithheldVotes Total votes cast No. of votes % No. of votes % 1. To receive the Annual Financial Report Ordinary 120,876,746 63.30 70,088,000 36.70 6,908,137 190,964,746 2. To approve the Directors' Annual Report on Remuneration Ordinary 120,854,549 63.29 70,110,197 36.71 6,908,137 190,964,746 3. To approve the Remuneration Policy Ordinary 120,854,549 63.29 70,110,197 36.71 6,908,137 190,964,746 4. To re-elect Michel Meeùs as a Director of the Company Ordinary 190,938,814 96.50 6,934,069 3.50 0 197,872,883 5. To re-elect Fady Khallouf as a Director of the Company Ordinary 120,850,141 61.07 77,022,742 38.93 0 197,872,883 6. To re-elect Lillia Jolibois as a Director of the Company Ordinary 120,850,141 61.07 77,022,742 38.93 0 197,872,883 7. To re-elect Gilbert Lehmann as a Director of the Company Ordinary 120,850,141 61.07 77,022,742 38.93 0 197,872,883 8. To elect Charles Mack as a director of the Company Ordinary 120,862,814 61.08 77,010,069 38.92 0 197,872,883 9. To elect Thibaut de Gaudemar as a director of the Company Ordinary 120,862,814 61.08 77,010,069 38.92 0 197,872,883 10. To re-appoint Moore Kingston Smith LLP as auditor Ordinary 190,955,549 96.50 6,917,334 3.50 0 197,872,883 11. To authorise the Directors to determine the auditor's fees. Ordinary 190,955,549 96.50 6,917,334 3.50 0 197,872,883 12. To authorise the Directors to allot shares. Ordinary 120,849,814 61.07 77,023,069 38.93 0 197,872,883 13. To authorise the Directors to disapply pre-emption rights. Special 120,837,359 61.07 77,023,524 38.93 12,000 197,860,883 14. To authorise the Company to purchase its own shares. Special 127,784,883 64.58 70,088,000 35.42 0 197,872,883 15. To authorise calling of a general meeting on 14 clear days' notice. Special 197,872,883 100 0 0 0 197,872,883 16. To remove Fady Khallouf as a director of the Company Ordinary (Requisitioned Resolution) 77,083,396 38.96 120,788,487 61.04 1,000 197,871,883 17. To remove Lilia Jolibois as a director of the Company Ordinary (Requisitioned Resolution) 77,083,396 38.96 120,788,487 61.04 1,000 197,871,883 18. To remove Gilbert Lehmann as a director of the Company Ordinary (Requisitioned Resolution) 70,175,259 36.75 120,788,487 63.25 6,909,137 190,963,746 19. To elect Jacques Mahaux as a director of the Company Ordinary (Requisitioned Resolution) 70,175,259 35.46 127,696,624 64.54 1,000 197,871,883 20. To elect Nicole Serruya as a director of the Company Ordinary (Requisitioned Resolution) 70,166,062 35.46 127,696,624 64.54 10,197 197,862,686 21. To elect Mischael Modrikamen as a director of the Company Ordinary (Requisitioned Resolution) 70,175,259 35.46 127,696,624 64.54 1,000 197,871,883

A vote withheld is not a vote in law and is not counted in the calculation of votes validly cast for or against a resolution.

Further details in respect of compliance with LR9.6.13R following the appointment of Charles Mack and Thibaut de Gaudemar will be announced in due course.

Ben Harber

Secretary

21 June 2024

Cadogan Energy Solutions plc (the "Company")

2023 Annual Financial Report and Notice of 2024 Annual General Meeting

Cadogan Energy Solutions plc advises that the following documents were mailed to the Company's shareholders today:

Annual Financial Report 2023 Notice of Annual General Meeting and Proxy Form

A full pdf version of the glossy Annual Financial Report 2023 together with the Notice of Annual General Meeting will be available for download from the Investor Centre section on the Company's website www.cadoganenergysolutions.com shortly.

Copies of the Annual Financial Report 2023 and the Notice of Annual General Meeting and Proxy Form are being submitted to the National Storage Mechanism and will shortly be available for inspection at https://www.fca.org.uk/markets/primary-markets/regulatory-disclosures/national-storage-mechanism. The Annual Financial Report will also be filed with the Registrar of Companies in due course and copies can be obtained from the Company Secretary, Cadogan Energy Solutions plc, 60 Gracechurch Street, London EC3V 0HR.

The Annual General Meeting will be held on Friday 21st June 2024 at 12.00pm at the offices of Shakespeare Martineau LLP, 60 Gracechurch Street, London, EC3V 0HR.

-ENDS-

About

Cadogan is an independent, energy company, which operates an exploration and production license in Western Ukraine, conducts gas trading operations, and provides services to E&P companies. The aim of the Company is to be a diversified energy group making investments offering energy solutions and alternative services with a lower environmental impact.

For further information, please contact:

Cadogan Energy Solutions plc Fady Khallouf                 Chief Executive Officer                 f.khallouf@cadogan-es.comBen Harber                       Company Secretary                       +44 0207 264 4366

Cadogan Energy Solutions plc (the "Company")

Consolidated report on payments to governments

Cadogan Energy Solutions plc presents below its consolidated report on payments to governments for the year ended 31 December 2023, for activities related to exploration, development and extraction of oil and gas resources.

The Company has prepared the following consolidated report in accordance with DTR 4.3A of the Financial Conduct Authority Disclosure and Transparency Rules and in compliance with the Reports on Payments to Governments Regulations 2014 (SI 2014/3209), as amended by the Reports on Payments to Governments (Amendment) Regulations 2015 (SI 2015/1928).

Basis of preparation

The Company discloses below payments made to governments of the Group's subsidiaries involved in extractive activities. The term 'government' includes a department, agency or entity that is controlled by the government authority.

Reporting currency

Where payments have been made in currencies other than the reporting currency (USD), the exchange rate existing at the time the payment is made has been used.                             

Payment types disclosed at project level

"Project" is defined as "operational activities governed by a single contract, license, lease, concession or similar legal agreements and form the basis for payment liabilities with a government". Where multiple such agreements are substantially interconnected, this was considered a project for the purpose of this report.

The payments are presented on a cash basis, net of any interest and penalties on late tax payments or on underpaid tax.

There were no payments in kind made to a Government during the year.

The following payment types are disclosed for legal entities involved in extractive activities for the year ended 31 December 2023:

Production taxes

Payments to governments in relation to revenue or production generated under hydrocarbon (oil) production license agreements.      

Excluded amounts

Taxes levied on consumption such as value added taxes, personal income taxes, sales taxes, property and environmental taxes have not been included in this report.

Payments summary

Payments to governments made during the year ended 31 December 2023: Production taxes Total Governments $'000 $'000 Ukraine State treasury: State budget 2 505 2 505 Total Ukraine 2 505 2 505 Grand Total 2 505 2 505 Payments to governments by project type made during the year ended 31 December 2023: Production taxes Total $'000 $'000 Ukraine Blazhivske license area 2 505 2 505 Total Ukraine 2 505 2 505 Grand Total 2 505 2 505

ENDS

About

Cadogan is an independent, energy company, which operates an exploration and production license in Western Ukraine, conducts gas trading operations, and provides services to E&P companies. The aim of the Company is to be a diversified energy group making investments offering energy solutions and alternative services with a lower environmental impact.

For further information, please contact:

Cadogan Energy Solutions plc Fady Khallouf                 Chief Executive Officer                 f.khallouf@cadogan-es.comBen Harber                       Company Secretary                       +44 0207 264 4366

CADOGAN ENERGY SOLUTIONS PLC

Annual Results for the year ended 31 December 2023

The Board of Cadogan Petroleum plc, ("Cadogan" or "the Company"), 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

Ukraine

2023 remained a highly challenging year for Cadogan due to the ongoing invasion of Ukraine by Russia and its consequences on the operational activities of the Group.

West Ukraine

The Group continued to produce oil from its production Blazhiv license located in the West of Ukraine. The Group could not avoid temporary shutdowns of its production during in the Q1 2023 due to the severe constraints arisen in the country.  Notwithstanding this, production grew up by 1% above the production of 2022. Net oil production was 119,057 bbl corresponding to an average of 326 bpd.

Cadogan has signed with PJSC Ukrnafta the extension of the wells Blazhiv-3 and Blazhiv-Monastyrets-3 lease contracts for a 5-year period (previous contracts were for a 3-year period) ahead the expiry period which allowed to avoid production stoppage and secure cash flows.

In 2023, the Company continued focusing on the subsoil study of Blazhiv field. Cadogan conducted and completed full hydrodynamic surveys of Blazhiv-1, Blazhiv-3, Blazhiv-Monastyrets-3 and Blazhiv-10 wells. The hydrodynamic model as well as the production forecast were updated. In the second half 2023, the Company launched a new assessment of hydrocarbon reserves, by an independent expert, according to PRMS standards. The assessment was completed at the end of February 2024.

Cadogan is expanding into the electricity generation business by using the gas emissions related to oil production. This will allow to significantly reduce atmospheric emissions and ensure additional cash-flow. The Company launched the project to capture non-commercial associated gas during oil production at the Blazhiv field, which will then be used to generate electricity for sale on the grid. This project is anticipated to result in a substantial decrease in Cadogan's annual gas emissions, with the intensity ratio estimated to drop from 126 to approximately 33 tons of CO2 e/Kboe. The project is scheduled to be operational in Q1 2025.

The Company completed the acquisition of the 5% of the share interest in Usenco Nadra LLC and now holds 100% of Usenco Nadra LLC.

 

Subsidiary businesses

Due to high market volatility caused by military escalation in Ukraine, Cadogan has kept its trading activity low. Despite this, the Company managed to execute few deals, and kept in storage 0.7 million m3 of gas to secure resources.

Astroservice LLC, the oil services subsidiary, continued to support Blazhiv license wells' operations.

 

Italy

The Group owns a 90% interest in Exploenergy s.r.l., an Italian company, which controls two exploration areas (Reno Centese and Corzano), located in the Po Valley region (Northern Italy).

In February 2022, the Plan for the Sustainable Energy Transition of Suitable Areas ("PITESAI") was approved by the Ministry for Environment and Energy Transition. It delivers a new framework for the possible resumption of exploration and production activities on land and at sea. Exploenergy was notified in 2022 that its projects were located in compatible areas identified by the PITESAI.  In November 2023, Exploenergy was notified by the Ministry for Environment and Energy Transition, that the procedure for verification of the technical, organizational and economic capacity of Exploenergy as a qualified gas operator resulted in a successful decision. In February 2024, the Regional Administrative Court rejected the PITESAI. Exploenergy is awaiting the decision of the Ministry for Environment and Energy Transition to indicate the way forward. The Italian national interest in the development of gas fields remains confirmed.

 

In February 2019, the Group entered in a 2-year loan agreement with Proger Management & Partners Srl ("PMP") with an option which Cadogan could exercise, with no obligation, to get a 33% equity interest in Proger Ingegneria Srl which in turn held at 31 December 2020 a 75.95% equity interest in Proger Spa. Proger is an Italian engineering company providing services in Italy and in different international areas. 

Cadogan did not exercise the Call Option. In February 2021, Cadogan notified PMP that according to the Loan Agreement, the Maturity Date occurred on 25 February 2021, and as the Call Option was not exercised, PMP must fulfill the payment of EUR 14,857,350, being the reimbursement of the Loan in terms of principal and the accumulated interest at this Maturity Date. PMP is in default since 25 February 2021. End of March 2021, PMP requested an arbitration to have the Loan Agreement recognized as an equity investment contract, which is rejected by Cadogan as the terms of the Loan Agreement are clear and include the right to repayment at maturity if the Call Option is not exercised.  

The Arbitration proceeding ended in July 2022. 

The Arbitral Committee:

-          Rejected Proger's principal claim, and declared that the Loan Agreement is valid and effective,

-          Deemed to qualify the Call Option as a preliminary contract under condition, but

-          Rejected Proger's claim ex art. 2932 Italian Civil Code, stating that it is impossible to give an award producing the same effects of a final contract ex art. 2932 Italian Civil Code,

-          This is because of the duties established by the rules of the London Regulatory Authority and because of the need, possibly by both parties, to comply with the due proceedings before the formalization of the entry of Cadogan into the capital of Proger Ingegneria,

-          Subordinated the stipulation of the final contract to the precedent completion of the proceeding and bureaucratic process as per the British rules, stating that, otherwise,

-          There is the obligation on Proger Ingegneria to return the money received under the Loan Agreement.

Cadogan introduced an appeal, still pending with a next hearing on September 2025, on the qualification of the Call Option as a preliminary contract. Meanwhile, having taken note of the content of the Award of July 2022, Cadogan 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 definitely impossible to the occurrence of the condition precedent referred to in the above-mentioned Award.

According to the provisions of the aforementioned Award, the right to reimbursement of the amount covered by the Loan Agreement has arisen in favour of Cadogan, plus interest accrued, and 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.

Strategic Report

The Strategic Report has been prepared in accordance with Section 414A of the Companies Act 2006 (the "Act") and presented hereunder. Its purpose is to inform stakeholders and help them assess how the Directors have performed their legal duty under Section 172 of the Act to promote the success of the Company.

Section 172 Statement

The Company's section 172 statement is presented on page 36 and 37 and forms part of this strategic report.

Principal activity and status of the Company

The Company is registered as a public limited company (registration number 05718406) in England and Wales. Its principal activity is oil and gas exploration, development and production; the Company also conducts gas trading and provides services. In November 2022, the shareholders approved the change of name and the strategy to expand its activities along the energy value chain to new forms of energy with a reduced impact on the environment. In December 2023, the Company stepped in the electricity generation sector by launching the investment in the gas-to-power project on the Blazhiv field in Ukraine.

The Company's shares have a standard listing on the Official List of the UK Listing Authority and are traded on the Main Market of the London Stock Exchange.

Key performance indicators

The Group monitors its performance through five key performance indicators ("KPIs"):

-          to increase oil, gas and condensate production measured on the number of barrels of oil equivalent produced per day ("boepd");

-          to decrease administrative expenses;

-          to increase the Group's basic earnings per share;

-          to maintain no lost time incidents; and

-          to grow geographically and operationally diversify the portfolio.

The Group's performance in 2023 against these KPI's is set out in the table below, together with the prior year performance data.

 

Unit

2023

2022

2023 vs 2022

Average production (working interest basis) 1

boepd

326

323

+1%

Overhead (G&A)

$ million

(3.6)

(3.4)

+6%

Basic profit/(loss) per share 2

cents

0.5

(0.6)

+183%

Lost time incidents 3

incidents

-

-

-

Geographic diversification

new assets

  -

-

-

Average production is calculated as the average daily production during the year Basic profit/(loss) per ordinary share is calculated by dividing the net profit/(loss) for the year attributable to equity holders of the parent company by the weighted average number of ordinary shares during the year Lost time incidents relate to the number of injuries where an employee/contractor is injured and has time off work (IOGP classification)

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 Meeùs

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'.

 

Core operations

Cadogan has continued to safely produce from its Blazhiv field in the West of Ukraine. Oil production has increased by 1% compared to the previous year despite the temporary production shutdowns caused by severe constraints in the country. This was largely due to our focus on operational efficiency and effective planning and timely implementation of production support measures.

In 2023 Cadogan extended lease contracts with PJSC Ukrnafta for the Blazhiv-3 and Blazhiv-Monastyrets-3 wells, prolonging the agreement from 3 to 5 years ahead of the expiry period. This important move ensured uninterrupted production and allowed securing cash flows. By proactively extending these contracts, the company demonstrates its commitment to stability and long-term sustainability in operations.

In 2023, the company maintained its focus on studying the subsoil of the Blazhiv field. Full hydrodynamic surveys of Blazhiv-1, Blazhiv-3, Blazhiv-Monastyrets-3, and Blazhiv-10 wells were conducted and completed, leading to updates of the hydrodynamic model and production indicators. Additionally, in the latter half of 2023, the company initiated a new reserves assessment conducted by an independent expert, in accordance with PRMS standards. This assessment was successfully completed in February 2024, enhancing the Company's understanding of hydrocarbon reserves and informing strategic decision-making.

Cadogan is expanding its operations into electricity generation activities. The Company has initiated a project focused on capturing non-commercial associated gas during oil production at the Blazhiv field and converting it into electricity for sale on the grid. Expected to be operational in Q1 2025, this project is anticipated to significantly decrease Cadogan's annual gas emissions, with the intensity ratio projected to drop from 126 to approximately 33 tons of CO2 e/Kboe. This project holds significant importance for Ukraine, particularly due to country's shortage of balancing electricity generating facilities caused by the destruction of infrastructure during the war. Cadogan's initiative to convert non-commercial associated gas into electricity will make its contribution to mitigate the gap in generating capacity.

High operational standards of the Group have been confirmed again by zero LTI or TRI, with a total over 1,720,000 manhours since the last incident, and re-validation off ISO 14001 & 45001 certifications by respective authority for the one year.

Exploenergy srl was notified, in November 2023, by the Ministry for Environment and Energy Transition, that the procedure for verification of the technical, organisational, and economic capacity of Exploenergy as a qualified gas operator resulted in a successful decision. This is a significant move for Cadogan. It will allow a geographical diversification of its assets and a significant value creation. In February 2024, the Regional Administrative Court rejected the PITESAI. Exploenergy is awaiting the decision of the Ministry for Environment and Energy Transition to indicate the way forward. The Italian national interest in the development of gas fields remains confirmed.

Non E&P operations

Due to the high market volatility resulting from military escalation in Ukraine, Cadogan has maintained its trading activity at a low level. The Company has cautiously executed few deals in the market while strategically positioning itself for future trading seasons. In preparation for the upcoming 2024 trading season, Cadogan purchased 0.7 million m3 of gas at the end of 2023, The oil services activities were used primarily to serve the Group's wells' operations.

Proger

In February 2019, Cadogan used part of its cash (Euros 13.385 million) to enter into a 2-year Loan Agreement with Proger Managers & Partners, together with a Call Option Agreement which could be exercised by Cadogan, with no obligation, between September 2019 and February 2021, and subject to shareholders' approval, into a 33 % equity interest in Proger Ingegneria which in turn held, a 75.95% equity interest in Proger as at 31 December 2020, and a 96.48% equity interest in Proger as of 31 December 2021.

As at 25 February 2021, being the Maturity Date, the Call Option was not exercised by Cadogan and accordingly to its previous notification Cadogan demanded repayment of the Loan together with the accumulated interest which in total amounted Euro 14,857,350. After five business days, PMP was in default and asked for an additional term that ended on 19 March 2021. The terms of the Loan Agreement provide for an additional default interest of 2%. End of March 2021, PMP contested the default situation and the obligation to reimburse and asked for an Arbitration according to the said Loan Agreement to get the Loan Agreement recognised as an equity investment contract. Cadogan consider PMP's arguments as groundless and consider that they are intended to delay PMP reimbursement obligations. The Arbitration proceeding ended in July 2022.  

The Arbitral Committee:

-          Rejected Proger's principal claim, and declared that the Loan Agreement is valid and effective,

-          Deemed to qualify the Call Option as a preliminary contract under condition, but

-          Rejected Proger's claim ex art. 2932 Italian Civil Code, stating that it is impossible to give an award producing the same effects of a final contract ex art. 2932 Italian Civil Code,

-          This because of the duties established by the rules of the London Regulatory Authority and because of the need, possibly by both parties, to comply with the due proceedings before the formalization of the entry of Cadogan into the capital of Proger Ingegneria,

-          Subordinated the stipulation of the final contract to the precedent completion of the proceeding and bureaucratic process as per the British rules, stating that, otherwise,

-          There is the obligation on Proger Ingegneria to return the money received under the Loan Agreement.

Cadogan introduced an appeal, still pending with a next hearing on September 2025, on the qualification of the Call Option as a preliminary contract.

Meanwhile, having taken note of the content of the Award of July 2022, Cadogan repeatedly invited Proger to implement the provisions of the Award. When the invitation remained unsuccessful, Cadogan with a formal notice contested Proger's refusal. This refusal 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. Furthermore, Proger behaved and continue to behave in a manner that has made it definitely impossible to the occurrence of the condition precedent referred to in the above-mentioned Award.

According to the provisions of the aforementioned Award, the right to reimbursement of the amount covered by the Loan Agreement has arisen in favour of Cadogan, plus interest accrued, and of which Cadogan then demanded immediate payment.

Last November 2023, Cadogan had to initiate a second arbitration, with a first audience fixed for the 3rd May 2024, to assert its right to restitution and obtain Proger's condemnation of the consequent payment.

 

Cadogan Energy Solutions Plc

("Cadogan" or the "Company")

Cadogan Energy Solutions plc announces that it has not been able to publish its audited financial results for the year ended 31 December 2023 ("FY23 Accounts") as required by the Financial Conduct Authority's Disclosure Guidance and Transparency Rule 4.1.3R. As a result, the Company has requested the suspension of its Ordinary Shares of £0.03 from 7.30am on 1 May 2024. The Company's FY23 Accounts are delayed due to continuing challenges in Ukraine.

The Company expects to publish its FY23 Accounts in early May 2024 and will request a restoration of the Ordinary Shares at that time.

About

Cadogan is an independent, energy company, which operates an exploration and production license in Western Ukraine, conducts gas trading operations, and provides services to E&P companies. The aim of the Company is to be a diversified energy group making investments offering energy solutions and alternative services with a lower environmental impact.

For further information, please contact:

Cadogan Energy Solutions plc Fady Khallouf                        Chief Executive Officer      f.khallouf@cadogan-es.comBen Harber                             Company Secretary            +44 0207 264 4366

Cadogan Energy Solutions Plc

("Cadogan" or the "Company")

Cadogan Energy Solutions plc announces that with immediate effect Jacques Mahaux has resigned as Chairman and Non-Executive Director of the Company.  Michel Meeus, Non-Executive Director and previous Chairman of the Company, has been appointed by the Board as Interim Chairman of the Company.

About

Cadogan is an independent, energy company, which operates an exploration and production license in Western Ukraine, conducts gas trading operations, and provides services to E&P companies. The aim of the Company is to be a diversified energy group making investments offering energy solutions and alternative services with a lower environmental impact.

For further information, please contact:

Cadogan Energy Solutions plc Fady Khallouf                        Chief Executive Officer      f.khallouf@cadogan-es.comBen Harber                             Company Secretary            +44 0207 264 4366

Cadogan Energy Solutions Plc

("Cadogan" or the "Company")

Director Dealings - Market Share Sale

Cadogan Energy Solutions plc ("Cadogan" or the "Company") today announces that its Non-Executive Director, Mr. Michel Meeus, has terminated a financial agreement with collateral over 15,800,000 ordinary shares of £0.03 each, in the capital of the Company, at a price of £0.026 each.

Following this transaction, Mr Michel Meeus holds in total 10,200,000 shares representing 4.18% of the Company.

About

Cadogan is an independent, energy company, which operates an exploration and production license in Western Ukraine, conducts gas trading operations, and provides services to E&P companies. The aim of the Company is to be a diversified energy group making investments offering energy solutions and alternative services with a lower environmental impact.

For further information, please contact:

Cadogan Energy Solutions plc Fady Khallouf                        Chief Executive Officer      f.khallouf@cadogan-es.comBen Harber                             Company Secretary            +44 0207 264 4366

Appendix

The notification detailed above and summarised in the table below is made in accordance with the requirements of the EU Market Abuse Regulations as follows:

Mr Michel Meeus, Non-Executive Director, has terminated on 15 March 2024 a financial agreement with collateral over 15,800,000 ordinary shares of £0.03 each, in the capital of the Company.

1. Details of PDMR/ person closely associated with them (`PCA') a) Name Michel Meeus 2. Reason for the notification a) Position/status Non-Executive Director b) Initial notification / Amendment Initial notification of sale of shares 3. Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor a)  Name Cadogan Energy Solutions plc b) LEI 213800JIBKL29FAK1213 4. Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted Description of the financial instrument, type of instrument Identification code Ordinary shares of 3 pence each GB00B12WC938 b) Nature of the transaction Termination of a financial agreement with collateral over 15,800,000 shares c) Price(s) and volume(s) Price(s)                                     Volume(s)£0.026                                    15,800,000       Aggregated information Aggregated volume Price

15,800,000

£0.026

e) Date of the transaction 15 March 2024 f) Place of the transaction OTC