Operations Update

CADOGAN PETROLEUM PLC Cadogan Operations Update The Company has noted that the Ukrainian Government last week passed emergencybudget legislation increasing production taxes for the oil and gas industry forthe period 1 August 2014 to 31 December 2014. Tax on gas production fromhorizons shallower than 5,000m increases to 55 per cent, for those deeper than5,000m it increases to 28 per cent (from 28 per cent and 15 per centrespectively). Tax on oil production from horizons shallower than 5,000mincreases to 45 per cent (previously 39 per cent), for those deeper than 5,000mit increases to 21 per cent (previously 18 per cent). For gas wells put onstream after 1 August 2014, a coefficient of 0.55 will be applied against therates for the first 2 years of production. The Company believes that at current production levels, given its current cashposition of $47.0 million (excluding $1.0 million of the Group's share of cashand cash equivalent in joint ventures and excluding $5.0 million ofyield-generating fixed income investments), the increase in rates until31 December 2014 will not have a material effect on the Group's financialposition, operations or work programme. The Board of Cadogan will continue to evaluate the impact of the changingfiscal environment and take such operational and financial measures as it mayconsider necessary to protect the interests of the Company and its shareholders. Further to the Company's operations update dated 15 May 2014, Cadogan nowexpects a slight delay for commencing drilling its first well in Debeslavetaskato November 2014 (previously late September), due to reverification of thedrilling coordinates. Cadogan is pleased to report a further increase in stable production inMonastyretska to 50 bopd. Performance tests continue. Enquiries: Cadogan Petroleum Plc +380 (44) 591 0390 Bertrand des Pallieres Chief Executive OfficerLaurence Sudwarts Company Secretary Cantor Fitzgerald Europe +44 (0) 20 7894 7000 David PorterRichard Redmayne