UK Cadogan back in black in H1
Ukraine-focused Cadogan Petroleum swung back to profit in the first half of 2019, thanks to an increase in the value of a convertible loan it issued, which more than offset lower prices and limited gas sales.
Net profit came to $2.56mn in the six months, versus a $315,000 loss a year earlier, the London-listed company said in an earnings report on August 27. Cadogan explained that a €13.385mn ($14.9mn) convertible loan it provided to Italy’s Proger Managers & Partners (PMP) had increased in value by €4.21mn. In exchange for the loan, Cadogan secured a call option to buy 22% of PMP’s oil and gas engineering business Proger Ingegneria.
The loan’s value rose “as a result of a competitive conversion price and of Proger’s growth of Ebitda over the last year,” it said.
Production averaged 297 boe/day in the six months, an increase of 27% yr/yr, Cadogan said, noting it marked the sixth half-year of growth in a row. But revenues fell 38% as a result of a 15.6% slump in oil prices and a reduction in gas trading revenues.
“Gas prices witnessed an unprecedented nosedive, with prices in January and February dipping below the level seen the previous summer,” the company said. “In this scenario, Cadogan sold in January some of its stored gas with a small loss and kept the remaining balance in storage.”
It said it booked a $0.65mn loss on these stored volumes, with the anticipation that gas prices will recover in the second half.
From a peak of $369/’000 m2 in October, Ukrainian gas prices plunged to $168/’000 m³ by the end of June, Cadogan said.