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• Licences held by JV partner challenged in Ukranian court
• Cadogan stresses that its licences remain in force
• Shares halve as trading recommences
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You'll need to read the dense legalese of Cadogan's statement about three times in order to figure out what's caused its share price to fall 51 per cent this morning, when trading resumed after a brief suspension.
The problems surround the Pirkovskoe and Zagoryanska fields, which Cadogan operates under a joint venture. A previous operator of the fields is claiming that its rights were unlawfully stripped away from it, and a court of first instance has ruled in that operator's favour. All of this happened without anyone seeing fit to inform Cadogan, although Ukranian media has been full of it.
What now? If the licence is to be annulled, the Ministry of Environmental Protection must approve that annulment. But Cadogan intends to challenge the ruling first, and is making the usual confident noises, like: "Cadogan does not believe there are reasonable grounds upon which claims seeking to contest its title to its licences can successfully be made."
This sort of thing is happening frequently in the former Soviet Union - just ask JKX Oil & Gas, Sibir Energy, Victoria Oil & Gas, Imperial Energy or even the mighty BP, all of whom have had problems with local vested interests using either politics or the legal system to make life difficult. It might seem an over-reaction for the shares to halve, but the reality is that Cadogan could face a long and energy-sapping legal fight. Fairly priced at 76p.
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-IC-2.1.3g-prod - 17/03/2010 18:13:09 - ben.wheeler
