Cadogan Petroleum has reached an agreement with Eni and PJSC “National Joint Stock Company “Nadra Ukrayny” (“Nadra Ukrayny”) on the terms and conditions of Eni’s exit from Westgasinvest LLC (WGI).

Under the terms of the agreement, Cadogan will receive consideration of $1.715 million from Eni and will commit: (i) not to exercise its pre-emptive rights on Eni’s transfer of its WGI’s shares to Nadra Ukrayny, (ii) to transfer its own shares in WGI to Nadra Ukrayny for a nominal consideration and (iii) to transfer its shares in the company operating the Debeslavetska and Cheremkhivsko-Strupkivska gas licences to WGI, also for a nominal consideration.

The value of Cadogan’s participation in WGI’s shale gas licences has previously been impaired. The value of the Debeslavetska and Cheremkhivsko-Strupkivska’s producing assets has also been almost entirely depreciated in previous years. The impact of the transfers on Cadogan’s balance sheet is as such negligible.

Current production from Debeslavetska is 58 boepd (net to Cadogan) with 2P/3P reserves at June 30, 2018 of 47/147 Kboe. Production operations at Cheremkhivsko-Strupkivska remain suspended, pending  WGI receiving the renewal of the expired production licence.  

The agreement is subject to a number of customary approvals, including approval of the Antimonopoly Committee of Ukraine. The transaction is expected to be closed in 2 months.

Commenting, Guido Michelotti, CEO of Cadogan, said:
“This is a good agreement for all parties. It enables Cadogan to withdraw from its gas operations, which are sub economic under the current 70 % royalty regime. It also secures a more certain future for our loyal employees, who have operated these wells and facilities for the last ten years. Our gratitude goes to them for the hard work they have done on behalf of Cadogan.”