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Cadogan Petroleum takes “another step towards overall profitability”

“The increase in production levels is due to successful work-overs and the implementation of production optimisation programs,” Cadogan said

Cadogan Petroleum PLC (LON:CAD) told investors that it has ‘delivered another step towards overall profitability’.

The Ukraine-focussed oil and gas firm, in a statement, highlighted that it is benefiting from E&P revenues, reductions in administration costs, as well as strict discipline on spending and management of receivables.

WATCH: Cadogan Petroleum more than doubles production revenue in first half

Averaging 167 barrels oil equivalent per day in 2017, gross production increased by 34% compared to the previous year - net production measured 155 boepd - and the exit rate at the end of December was 190 boepd gross and 176 boepd net.

“The increase in production levels is due to successful work-overs and the implementation of production optimisation programs,” Cadogan said in the statement.

“Combined, these operations increased oil production from the Monastyretska field by 78% and kept gas production constant, despite the high level of depletion from the two producing fields.

“The increase in oil production from the Monastyretska field was achieved by re-entering old suspended wells, rather than drilling new ones. This approach delivered the targeted increase in oil production, while minimising cash outflow and as such only marginally impacted the Company’s cash position.”

The company also noted that its gas trading business had “a good year” driven by a new team and a number of opportunistic sales.

Giving its outlook for 2018, Cadogan said it expects production to exceed 200 boepd as it continues to implement production enhancement.

Additionally, the company said that two wells are planned within the next 12 to 18 months. One will be a shallow well on the Borynya licence, to test new prospects, and the other will be an appraisal well on the Monastyretska oil field.

READ: Cadogan Petroleum chief buys shares with his bonuses

The company also noted that at the Cheremkhivsko-Strupkivska licence, which is due to expire in May, the operator has filed an application to extend for 10 more years.

It added: “As E&P activity in Ukraine picks up, Cadogan also intends to actively explore opportunities to spin-off its E&P services subsidiary.

“The management team is currently reviewing several potential opportunities for further investment outside Ukraine.

“The team intends to continue to actively pursue these and other opportunities that arise to utilize the preserved cash.”

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