Cadogan Suspends Wells in Eastern Ukraine

Drilling of the Borynya 3 well on the Bitlayanska license area was terminated at a drilled depth of 5,325m and the well will be suspended for future evaluation. The well provided valuable data and demonstrated that an active hydrocarbon system is present over an extended interval.

Several discrete gas bearing pressure regimes were penetrated and good quality logs and LWD data were obtained. Reservoir zones exist in the 8½" hole, one of which flowed gas to surface during a short duration drill stem test carried out in June 2009. The 6" hole section also encountered a succession of thin high pressure gas sands. There will be no further significant drilling expenditure required on this well.

However, the Company is evaluating whether limited expenditure would be justified during 2010 to acquire 2D seismic over the Bitlayanska license.

The Company's wells in Eastern Ukraine are currently suspended with the exception of Pirkovska 1, which is on extended testing. This well is currently producing about 70 barrels of light oil per day from a thin Visean sand.

Licenses and litigation

The Company is awaiting the date for a hearing in the High Court on the License challenges on the Pirkovska and Zagoranska licenses.
Regarding the recent threat to annul and transfer five of the Company’s licenses to a third party on September 23, 2009, as far as Cadogan is aware the licenses were neither annulled nor transferred to any third party on that date. Advice on this matter is expected from the Ministry of Environment shortly.

In the High Court in London, the litigation is ongoing against former executives and suppliers of the Company.