Cadogan Sees Dip in 1H Revenues

Ukraine-based producer Cadogan Petroleum saw an increase in oil and gas production but lost two major clients on the gas trading side in the first half of the year, leading to a drop in volume. The average price was also down, leading overall to a drop in revenues, it said in its trading update July 8.

Daily output averaged 115 barrels of oil equivalent/day, 5.5% more than the average production in the year to 31 December 2015 and 24% higher than the average production in the first six months of 2015. 

The volume of gas traded was lower than in the corresponding period of last year. The primary reason was a loss of two large clients switching to new suppliers. As well as its own production, Cadogan imports gas from Slovakia and Poland.

Krasnozayarske gas processing plant (Credit: Cadogan)

Cadogan has however made progress with the recovery of receivables and optimization of pre payments from the gas trading division since 31 December 2015 (which stood at $11.7mn). Net cash (cash and cash equivalents less short term borrowings) has increased from $36.5mn as of end-2015 to $40.6mn as of June 30 2016 “as a result of the optimization of working capital," it said.

Cadogan has looked at either buying into licences or accessing third parties' wells to be re-entered applying the same techniques which proved successful on the Monastyretska license. 

Cadogan CEO Guido Michelotti said oil and gas companies operating in Ukraine were exposed to uncertainties in the outcome of the licensing processes and to a tax regime which has remained punitive. It said it engaged the authorities at all levels to protect its expired licenses and to bring the royalties down.

However, "this has not distracted management and staff from the efforts to diversify and efficiently manage the existing portfolio. I am quite pleased by the increase of both production and net cash over the same period last year as we continue to focus on preserving our cash resources to pursue opportunities to add value to the portfolio," he said.

William Powell