Cardinal Resources Updates Ukrainian Activity

Cardinal Resources reports an update on operations since listing on AIM in April 2005.

Operational Highlights

- 20 wells in production and two workovers completed, with a further four workovers currently in progress
- Acquisition of Rudis Drilling Company (Rudis) announced on 27th October 2005
- Three licence areas and a Joint Activity Agreement (JAA) with Ukrgazvydobuvannya (Ukrgaz), a subsidiary of Naftogaz Ukraine
- Reserves increased by nearly 50% to 27.5 MMBOE and production levels doubled
- Construction underway on one new flowline in the Kulickykhin field (within the Ukrgaz JAA) to tie in one of the existing wells; completion expected Q1 2006
- Exploratory well currently drilling in the Dubrivska licence area (well # 2); completion expected Q1 2006
- Three further wells (Bytkiv #1007, BC #3 and NY #4) expected to commence drilling in Q1 2006.

At November 30, 2005 reserves stood at 27.5 MMBOE and average daily production was 1,172 boepd.

A summary of the work to date (April 15th - November 30, 2005) is detailed below:

RC Field Bytkiv Field  Rudis Assets 
TOTAL Workovers completed                 1         1             0             2
Workovers in progress               1         1             2             4
Workovers pending                   2        10             2            14
New wells currently drilling        0         0             1             1
New drilling to commence Q1         0         1             2             3
Flowlines in progress             N/A       N/A             1             1
Producing wells                     5        12             3            20


Following the financing by Silverpoint Finance in December 2005 of US$38 million, Cardinal is currently in the process of negotiating the reinstatement of its net profit interest in the RC Field from 14.9% to 45%.

Robert J. Bensh, Chairman and Chief Executive Officer of Cardinal said, "With the necessary funds now in place, our first priority for 2006 is to restore our position in the RC Field which will provide a considerable boost to reserves and production, and significantly increase Cardinal's footprint in Ukraine."

Commenting on the Ukraine gas price he continued, "I maintain my view, based on the trends we have experienced so far, that domestic gas prices will continue to increase, with positive implications for Cardinal. Since the IPO in April 2005 we have already experienced a 30% rise in the average sales price of our gas.

"In light of the recent disruption in gas supplies from Russia and the increase in imported gas prices, there is an even more pressing need now for Ukraine to attract Western technology and increase foreign direct investment in the energy sector to increase domestic production. Cardinal's existing presence in the country means that it is well positioned to take advantage of these opportunities and pursue further acquisitions and farm-ins with local entities."


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