Cadogan’s strategy is to leverage the strength of its existing balance sheet to make selective asset acquisitions that will support its long term financial position and create upside opportunity to drive shareholder value, while diversifying the portfolio and overall risk profile.
The Group holds working interests in four conventional gas, condensate and oil exploration and production licenses located in Western Ukraine and a 90% interest in Exploenergy, an Italian company, which has filed applications for two exploration licences in the Po Valley, in Northern Italy.
In Ukraine, the Group’s assets are located in the prolific Carpathian basin in close proximity to gas distribution infrastructure. The four licences (Monastryetska, Bytlyanska, Debeslavetska and Cheremkivsko-Strupkivska) are all operated by the Group. The licences produce oil and gas and hold upside potential.
The Po Valley is a proven oil & gas basin in Northern Italy. The exploration licences are in close proximity to existing field discoveries, with two leads having been identified with combined, un-risked prospective resources estimated to be in excess of 60 BCF.
Reserves and resources associated with the Group’s licenses were evaluated and delivered in a final report dated March 2016. The evaluation was conducted in accordance with SPE Petroleum Resources Management System (‘PRMS’). A summary of the report is presented below in a final report dated March 2016.
Monastyretska License area
The core Monastyretska License combines existing oil production with significant upside potential. It is located in the Lviv region in West Ukraine.
The 25.9Km2 exploration license is part of the Carpathian fold belt (Skuba unit). It is surrounded by long standing oil producing fields, including Starosambirske, one of the largest oil fields in the region with cumulative production exceeding 22 million barrels.
The Monastyreskaya license has tested and produced oil from several wells in the Paleocene Jamna Formation. One of these wells, Blazhiv 1, was re-entered and is constantly producing 47 bopd. Two further wells have been successfully re-entered, adding a combined 30 bopd under natural flow. Workover plans are in place to further enhance production by installing sucker rod pumps.
The produced oil has a negligible gas and water content and so is treated locally and trucked by the buyer to the final destination.
The Group holds a 100 per cent working interest in the license, with the State company NAK Nadra holding a 0.17% beneficial interest and the right to receive dividends. The license validity was recently extended to November 2019, after which an application for a 20 years’ production licence will be filed.
The licence has been attributed 2P reserves of 1.4 Million bbl, 3P reserves are 4.5Million bbl and contingent resources 2C 0.6 Million bbl.
Bitlyanska Licence area
Located in West Ukraine, Bitlyanska is an exploration licence in a proven and mature hydrocarbon system (outcrop and wells) within the Carpathian Krosno tectonic fold. It is surrounded by oil and gas producing fields (see figure). and close to existing infrastructure.
The license, which covers an area of 390Km2, contains the Bitlya, Borynya and Vovchenska hydrocarbon discoveries. During testing, hydrocarbons were found in low permeability / high pressure formations. The Borenya 3 well, which was re-entered in 2013, tested a significant influx of gas, oil and condensate but was not stable enough for production. The well is suspended pending fracturing and possible re-entry to the deeper layers.
The licence has been attributed 2P and 3 P reserves of 0.8 Mboe and 3.2 Mboe respectively, with significant upside 2C potential of 14.8 Mboe. The Borynya licence is estimated to hold 4.5 Mboe P50 prospective resources. The licence is valid till December 2019.
Cadogan utilises its balance sheet position to support revenue and cash generation by trading gas. The Group imports gas from Poland and Slovakia, acquires it from local producers and sells it to Ukrainian clients.
The Group entered gas trading in 2014, pioneering the reverse flow, (the import of gas via Europe using pipelines designed to deliver Russian gas to Europe) and captured the benefits of being an early entrant in a developing market.
The market has subsequently matured, with an increasing number of entrants. Nonetheless, there remains an opportunity for the Group to continue to benefit from trading operations, with revenues contributing to achieving cash neutrality and the commercial competences acquired helping maximise the value of its own production.
The cash used to back-up credit lines in Ukraine remains in UK banks and can be released at very short notice if required to support the Company’s core strategy of acquiring select E&P assets.
Utilising existing equipment, skills and established partnerships with internationally recognized service providers, Cadogan provides services to oil and gas producers in Ukraine. The provision of these services supplements the Group’s other revenue streams and supports additional cash generation.
The services are offered via the Group’s wholly owned subsidiary, Astro-Service LLC, a fully licensed entity, which is networked with local engineering-design bureaus, state hygienic/ecological institutes and materials suppliers. A distinctive feature of this Company is its ability to conjugate western standard and processes, including HSE, with a deep knowledge of the local context.
Services provided involve innovative technological solutions, international experience and highly-skilled in-house personnel and include:
Michel Meeus, Non-Independent non-executive Chairman
Mr Meeùs was appointed as a Non-executive Director on 23 June 2014. Mr. Meeùs was former Chairman of the Board of Directors of Theolia, an independent international developer and operator of wind energy projects, of which he is a major shareholder. Since 2007, he has been a director within the Alcogroup SA Company (which gathers the ethanol production units of the Group), as well as within some of its subsidiaries. Before joining Alcogroup, Mr Meeùs carved out a career in the financial sector, at Chase Manhattan Bank in Brussels and London, then at Security Pacific Bank in London, then finally at Electra Kingsway Private Equity in London.
Mr Meeus is currently chairman of the Remuneration and Nomination Committees.
Fady Khallouf, Chief Executive Officer
Fady Khallouf, has 35 years’ experience in the energy, the environment, the engineering and the infrastructure sectors.
He has previously held the position of CEO and CFO of FUTUREN (Renewable Energy, listed on Euronext Paris) where he achieved the restructuring and the turnaround of the group.
Prior to that, he was the CEO of Tecnimont group (Petrochemicals and Oil & Gas), the Vice-President Strategy and Development of EDISON group (Electricity and Gas, E&P), the Head of M&A of EDF group (Energy). Fady Khallouf had beforehand held various management positions at ENGIE (Energy), Suez (Environmental Services), and DUMEZ (Construction and Infrastructures).
Lilia Jolibois, Independent non-executive Director
Lilia Jolibois is currently a member of four Boards: Futuren S.A., INSEAD, CARA (UK and Wales), and Aster Fab. Her career spans Merrill Lynch Investment Banking, Sara Lee, and Lafarge in the USA and Europe. At Lafarge Group, Ms. Jolibois served in numerous positions in finance, strategy, business development, and CEO and Chair of the Board for Lafarge Cement and Gypsum in Ukraine, and SVP and Chief Marketing-Sales-Supply Chain Officer for Lafarge Aggregates, Asphalt & Paving.
Lilia is currently Chairman of the Company’s Audit Committee and a member of the Remuneration and Nomination Committees.
Jacques Mahaux, Non-executive Director
Jacques Mahaux has held various executive and directorship positions in Group Crédit Agricole in Luxembourg, CA Indosuez, Indosuez Bank and various Luxembourg and Swiss Holding companies active in industrial sectors. Previously he acted as an Attorney at Law at the Brussels Bar. He is currently a Supervisory Board member of ETAM SCA.
Mr Mahaux is currently a member of the Audit, Remuneration and Nomination Committees.
Gilbert Lehmann, Senior Independent non-executive Director
Mr Lehmann was appointed to the Board on 18 November 2011. He is currently acting as an adviser to the Executive Board of Areva, the French nuclear energy business, having previously been its Deputy Chief Executive Officer responsible for finance. He is also a former Chief Financial Officer and deputy CEO of Framatone, the predecessor to Areva, and was CFO of Sogee, part of the Rothschild Group.
Mr Lehmann is also Deputy Chairman and Chairman of the Audit Committee of Eramet, the French minerals and alloy business. He is Deputy Chairman and Audit Committee Chairman of Assystem SA, the French engineering and innovation consultancy. From 2007 to 2009, Mr Lehmann was Chairman of ST Microelectronics NV, one of the world’s largest semiconductor companies, and stepped down as Vice Chairman in 2011.
Mr Lehmann is currently a member of the Remuneration and Nomination Committees
Refer to the list of major shareholders for details:
|Major Shareholder||Number of shares held||% of total voting rights|
|SPQR Capital Holdings SA||67 298 498||28,55|
|Mr Michel Mees||26 000 000||11,03|
|CA Indosuez (Switzerland) SA||18 683 000||7,93|
|Veronique Salik||17 959 000||7,62|
|Brigitte Salik||17 409 000||7,39|
|Kellet Overseas Inc.||14 002 696||5,94|
|Mr Pierre Salik||7 950 000||3,37|
|7 657 886||3,25|
Cantor Fitzgerald Europe
One Churchill Place
London E14 5RB
Lawyers to the Company
Baker & McKenzie LLP
100 New Bridge Street
London EC4V 6JA
Antika Law Firm
12, Khreschatyk Str., 2nd floor
Kyiv 01001, Ukraine
Auditors and Reporting Accountants
55 Baker Street
London, W1U 7EU
Office phone number 020 7486 5888
Fax 020 7487 3686
GM & P Gas Mediterraneo & Petrolio S.r.l.
Via Triulziana 10,
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LLC "BREND-VIK LTD"
Postal Address: 4/8 Kurenivskiy lane,
Kyiv, 04073, Ukraine
Shakespeare & Martineau
+44 0207 264 4366