Cadogan Updates on Pirkovskoe License Appeal

On February 25, 2009, a hearing of the Higher Administrative Court of Ukraine (the "Court") took place regarding the Company's successful appeal on September 29, 2008 related to the Pirkovskoe license challenge initiated as a result of the dispute between Nadra Ukryainy (Nadra) and Poltavnaftogazgeologiya (PNGG) in relation to the transfer of the license from PNGG to Nadra in June 2007 (see note below).

Further to the court proceedings on February 25, the Court verbally resolved (the "Resolution") to cancel the resolution of the Kharkiv Appellate Administrative Court dated September 29, 2008 and upheld the resolution of the Poltava Regional Commercial Court of June 12, 2008. The written text of the said Resolution, including further details as to the basis of the decision, will be delivered by the Court during March 2009.

The court proceedings held on February 25, 2009 were not concerned with the legitimacy of the license held by Cadogan and the company continues to carry out appraisal and development on the Pirkovskoe gas field as the legitimate owner of the license. Cadogan has been advised that new legal proceedings would need to be brought against Cadogan and would need to succeed before Cadogan's interests in its licences would be affected. The position of Cadogan in the court proceedings was fully supported by the Ministry of Environmental Protection of Ukraine and the General Prosecutor Office,

The Company is continuing to investigate the situation as a matter of utmost importance in conjunction with its legal advisers.

Note: Legal Dispute History

On June 17, 2008, the Poltava Court made a written ruling, following a hearing on June 12, 2008, in favour of PNGG, a subsidiary of the Group's joint venture partner Nadra, a state owned company, in relation to an earlier licence held by PNGG, relating to the Pirkovskoe field. The Poltava Court ruling: (a) declared as invalid the licenses re-registered to Nadra (these were subsequently re-registered to the Group); and (b) recognised as valid the earlier licenses held by PNGG.

Cadogan submitted appeals against the June 17, 2008 decision of the Poltava Court to the Kharkiv Court and the hearings took place on 13 August 2008 in respect of Pirkovskoe. The Kharkiv Court ruled in favour of Cadogan, allowing its application to appeal against the Poltava Court.

On September 29, 2008 the Kharkiv Administrative Court of Appeal ("Kharkiv Court") granted the appeal filed by Cadogan in full and cancelled the written rulings of the Poltava Regional Commercial Court ("Poltava Court") of June 17, 2008.



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