Operations Update

CADOGAN PETROLEUM PLC - Operations Update

PR Newswire

London, February 20

In the first half of 2012, the Company finalised a complete overhaul of itstechnical operations and sub-surface explorations teams, bringing in over 120years combined experience in major IOCs, and under their supervision hasundertaken a thorough re-evaluation of its assets. The bulk of this work is nowcompleted and the Company has revised its list of targets for its short tomedium-term plan of activity with the focus on reducing risk and maximising theproduction potential of its licences.

The Company has been able to identify new and economically viable explorationand production potential in most of its existing licences.

The deep and challenging exploration targets in the Eastern Lower Carboniferousplay were unsuccessful since the discovered reservoirs lacked adequatepetrophysical properties for successful production. In particular, in Zag 11,the Company completed its testing of the main producing reservoirs(V24-V19-V18-V17) and although the presence of hydrocarbons was evident,insufficient commercial quantities of gas were encountered due to theinadequate properties of the tested intervals.

In order to better understand the existing exploration opportunities and fullyevaluate the assets, Cadogan has applied state-of-the-art seismic reprocessingtechnology.

In Pokrovska, these efforts have already proven successful, helping to identifythree shallow depth prospects (1,400 m average), two mid-depth prospects (2,000m average) and 3 deep prospects (4,700 m average).

In West Ukraine, three shallow depth leads have also been identified within theDebeslavetska licence.

Analysis of the Company's assets continues and is expected to be completewithin the next three months. In the meantime the Company has undertakenmarginal, low risk and low capex activities to enhance production and supportthe incremental provision of information to the Company's asset review.

On the Monastereska licence in Western Ukraine a sucker rod pump was installedin the Blazhiv 1 well, which is showing positive results. The re-entry ofanother two existing wells is under evaluation.

An intervention in the Borynya 3 well (Bitlyanska), in order to perform a longproduction test on the shallower reservoirs (interval from 2,000 m down to3,200 m) and eventually start-up early production, is ongoing. This program isdue to commence by mid-2013.

In Zag 3 an intervention to open the V19 level to production will be concludedby the end of February. An extension of the upper V18 interval was alsoperformed.

In 2013 the Company will investigate the applicability of the InSAR technology(radar wave measurements from satellites) to monitor shallow gas fields'depletion through time. The first test will be in the Debeslavetska area; inconjunction with the revised geo-mechanical models, this is expected to reducethe drilling risk for future wells in our production licences. The Company alsoexpects to apply micro-seismic technology to the Bitlyanska area to furtherevaluate future gas production and its relative impact in the area.

In general, the identified objectives are gas and oil bearing and belong toshallow, medium and deep horizons. New, promising areas for investment arealready under scrutiny and the Company will report on these in due course.