I have considered investing in an unknown oil minnow that is operational in the Ukraine and potentially of the same calibre as JKX Oil and Gas.

Does anyone know about this company or have any thoughts?

Gerry

Thursday 31st May 2007, 9.30am to 1.00pm followed by buffet luncheon

Venue: The Brewery, Chiswell Street, London, EC1

In association with BDO Stoy Hayward

The following companies will be making presentations:


Cardinal Resources Plc

Petroneft Resources Plc

Meridian Petroleum Plc

Monarch Energy Ltd

Volga Gas


Guest Speaker: Anthony Robinson

oilbarrel.com's Russian specialist will talk on President Putin's creeping takeover
of the oil and gas sector, and particularly what it means for BP


To attend the conference please e-mail: conference@oilbarrel.com requesting a reserved place.

I caught the tail end of a news bulletin about the political difficulties in the Ukraine having been resolved? Did anyone hear the full story and do we know what impact this will have upon CDL?

Link Here

29.05.2007

Cardinal Resources Keen To Focus On Production Increases As Construction Project Nears Completion Despite Continued Uncertainty On JAA Gas Sales and RC Reinstatement

It has been a difficult six months for Cardinal Resources, which has been under attack from disgruntled shareholders led by hedge fund QVT Financial. But having survived an EGM called by QVT in a bid to oust CEO Robert Bensh, the AIM company is determined to refocus on its development work in Ukraine where production is set to increase almost four-fold this year. Investors keen for an update on the company would do well to attend oilbarrel.coms conference on Thursday 31st May, where Bensh is due to make a presentation.

QVT owned 16.18 per cent of Cardinal when it launched its first broadside against current management in November 2006. The hedge fund alleged the share price had languished due to inappropriate financing structures and bloated central costs. Cardinal rigorously defended itself against these allegations - those who remember Benshs bullish performance at an oilbarrel.com conference in September 2005 would expect nothing less - and said it was disappointing that QVT had chosen to conduct a campaign of misinformation via the press.

Cardinal has pointed out it has taken steps to reduce G&A costs by US$1.5 million to US$2 million this year, reducing the number of full-time executives in London and Houston and outsourcing non-core activities. Costs that were incurred in 2006, such as recruiting staff in Ukraine and legal expenses associated with its RC field reinstatement (of which more later), are not expected to be repeated this year.

The company has also issued extensive statements defending its financing arrangements with Silver Point Finance. In December 2005 the company secured a US$38 million bridge financing facility from Silver Point in order to finance its re-instatement to the RC field. In December 2006 there was an additional financing, increasing the facility to US$55.5 million to progress well workovers and new drilling to boost production. The terms may not be generous but Cardinal said it entered these arrangements because it was unable to access conventional bank debt and it couldnt have raised equity at a price approaching its IPO placing price. In this, it is not alone: financing constraints have curtailed the ambitions of many an AIM E&P over the past two years.

The re-instatement of Cardinals interest in the RC field has been a thorny issue since the 2005 IPO. The RC field is a large underdeveloped gas field (1.54 tcf original gas in place) located in the Dnieper Donets basin, 200 kms east of Kiev in the Poltava Oblast. Cardinal, which evolved from cash-strapped E&P Carpatsky, is in protracted negotiations with field partner Ukrnafta to increase its interest in the RC field from 14.91 per cent to the 45 per cent it was before Carpatsky stopped paying the bills.

Ukrnafta has previously acknowledged Cardinals right to this reinstatement of interest - which would more than triple its share of the RC reserves to almost 50 million - but political upheavals in Ukraine and various shifts in position on this issue within Ukranafta have hampered progress. The delays in restoring the working interest to its former level have impacted on the work programme for the field and seen a reserves downgrade.

Cardinal continues to press for the reinstatement and, it says, is exploring all legal avenues to ensure that its contractual right is respected. Should the opportunity arise to reinstate the full 45 per cent, Cardinal has the funds to do so via its Silver Point financing arrangement.

Now the company is focusing on getting its 100 per cent owned assets in Ukraine up and running. Construction of gas gathering and separation facilities is almost complete and should be operational by mid-year. Financing remains an issue for the company, however. Its plans to grow production this year from 800 barrels of oil equivalent per day to 3,000 boepd. An increase of 1,400 boepd is pretty much guaranteed because thats the volume already awaiting hook-up to production facilities. But a further 800 boepd is subject to the company having sufficient funds to complete three well workovers in the second half of the year.

Cardinal expects this cash to come from the recommencement of its joint activity agreement gas sales, which are currently being transferred to storage pending clarification of new gas sales rules in Ukraine. The JAA issue is one of those complex legal and regulatory wrangles that can bedevil operations in Ukraine and other Former Soviet Union destinations.

At the beginning of this year the Cabinet of Ministers of Ukraine amended an existing regulation on fixed pricing of gas sales to include joint activity agreements between state firms Naftogaz, Ukrnafta and Nak Nadra and foreign companies. Cardinal was verbally informed by the Ministry of Fuel and Energy that its net portion of JAA production will not be affected but the company is still seeking clarification on the actual implementation of this resolution.

As a precaution, earlier this year it elected with its partner Ukrnafta to transfer all JAA associated gas production from the RC field to storage (about 20 per cent of the companys output) for future sale at higher prices. Now in May and still without written clarification on this point, Cardinal has elected with its other JAA partner Ukrgaz to transfer all production from the BC field into storage, meaning that about 80 per cent of the companys output is in storage. In the first quarter of this year, the company had 58,542 barrels of oil equivalent in storage.

If fixed prices were applied to the companys JAA production then this could affect the net present value of its reserves as free market prices are approximately two to three times those of controlled prices. The transfer of so much production to storage has reduced the companys monthly sales and EBITDA/cash flow by US$450,000 and $360,000 respectively. It believes this short term hit is worth it, however, because in the long run, once clarification is received, it will benefit the company to have arrangements in place to sell the gas at the higher free market price. (Importantly the companys creditor Silver Point Capital has waived covenants to reflect the present shortfall in cash flow due to the suspension of JAA gas sales).

Its also important to note that the impact on cash flows of storing the JAA gas should be offset by higher volumes from the BC licence area once the new gas gathering and separation facilities are operational by the end of the second quarter. The increased production in non JAA portions of the licence will be free from price restrictions and are expected to be sold at free market prices.

Given these travails, it is little wonder that the company is focusing its development activities on those licences it owns and operates 100 per cent. The company has three workover and nine development locations identified for drilling in the Bilousivsko-Chornukhinska (BC) and North Yablunivska (NY) licence areas. Seismic work is also underway: on the Dubrivska (DB) licence, a 25 sq km shoot has identified one sidetrack opportunity and two additional well locations while a 65 sq km survey on the BC licence will help optimize production efforts and define future development drilling locations. The NY licence area may see a 35 sq km 3D survey in the third quarter, ahead of drilling in 2008. It hopes to identity an additional 10-16 drilling locations on its acreage.

Thanks for the informative post!

Post from an Oil Barrel attendee yesterday at AFN :


"Kievtrader - 31 May'07 - 20:48 - 1642 of 1644


Oilbarrel conference today in London- Bench spoke again. Gas facility will be ready between around 1st and 15th July +/- 5 days. Production will then go from current 800boe/day to about 1800 boe/day then 3000 boe/day by end 2007. Next year 4/8 wells planned. So news flows due in July re gas facility and ramping up of production. Going higher. "

May 2007 Company Fact Sheet :

http://www.cardinal-uk.com/PDF_070508_Cardinal_Factsheet.pdf




May 2007 Company Presentation :

http://www.cardinal-uk.com/PDF_070508_Cardinal_Presentation.pdf

"bobobob5 - 1 Jun'07 - 11:07 - 1646 of 1646

Oilbarrel:

* mid-July c. 2000 bopd, target 3000 bopd end-2007

* expect to shift some 3P into 2P category by end 2007

* "Force multiplier" philosophy, bring best practice to local operations

* Will announce 2008 bopd tragets later

* In Ukraine, P1 assets can be bought at $1 to $2.50 per barrel

* Reserves could rise from 32.5MM to 60/70MM barrels with completeion of the protracted 'RC' arrangements

* generally +ve about Kazakstan

* broadly -ve about Russia

I don't hold these, but a modest investment seem to have its attractions.

but IMHO DYOR etc as always"

Feb 2007 Broker Note on CDL is in the web folder below :

http://www.esnips.com/web/PPOtherStuff


.

http://www.oilbarrel.com/feature/article.html?body=1&key=oilbarrel_features_en:1180709723&feed=oilbarrel_en

01.06.2007

Conference Report Part 2: Cardinal Seeks Control In Ukraine, Meridian Is Ready To Turn On The Gas In The US While North Sea Exploration Is The Name Of The Game For Canadas Monarch Energy


Its not Russia but to many investors Ukraine shares many of the same risks. However Robert Bensh, the quick-firing US chairman and chief executive of AIM-quoted Cardinal Resources, was keen to show delegates at oilbarrel.coms conference on May 31 that despite the often complex and uncertain operating conditions, it is possible to build a profitable E&P in Ukraine.

On paper there is certainly plenty to recommend the country. Ukraine has the resources, with around 40 tcf of gas and 390 million barrels of oil, not to mention extensive energy infrastructure and, following the 2006 stand-off with Russia, domestic gas prices have reached a level that is proving attractive to foreign energy investors. In the last two years, said Bensh, gas prices have risen from US$2 per thousand cubic feet to US$4.80.

Cardinal has learnt a lot in the two years since its April 2005 IPO. The company came to AIM with a 45 per cent interest in the Bytkiv field and a 14.9 per cent interest in the RC field (with an option to increase its equity to 45 per cent for US$14 million). Both assets were held in joint venture with state firms Ukgazvydobyvannia and Ukrnafta - and there lies the crux of the problem. These joint venture assets are now subject to a gas pricing cap and Ukrnafta is stalling on Cardinals right to exercise its valuable RC option.

This has encouraged the AIM firm to focus its energy on the development of the BC, NY and DB licences, which it owns 100 per cent following its 2006 acquisition of Rudis Drilling Co. Cardinal has prioritised the development of the Rudis field and current production of 800 barrels of oil equivalent per day should increase to 1,800 to 2,000 boepd by mid-July as new gas facilities are completed before stepping up to 3,000 boepd by year end. In the meantime the company is shooting 3D seismic over its 100 per cent controlled licences in a bid to identify new drilling targets, with up to eight wells planned for 2008. In the short term I am bearish on doing business with state entities, said Bensh. But in the longer term there are still opportunities.

It is for this reason that the company is not using strong arm tactics to force through its option on the 1.5 tcf RC field, which, once executed, would more than triple the companys share of the RC reserves to almost 50 million boe for just 50 cents per barrel of oil equivalent. It is little wonder that Ukrnafta is dragging its feet.

If they do not honour this they will find themselves in Stockholm arbitrating this and they will get their ass kicked, said Bensh. But in the long term thats not the bright thing to do. We are pursuing every angle we can to increase that interest. But you do not buy Cardinal stock for this. You buy Cardinal stock for the 3,000 boepd of production by year-end.

oilbarrel.com regulars are not a shy bunch and during the Q&A Bensh was asked about the companys recent troubles with dissident shareholder QVT Financial. At the end of last year, QVT requested an EGM and proposed the removal of Bensh as CEO. That motion was defeated at the March EGM, with 70 per cent of shareholders disagreeing with QVT, which holds around 17 per cent of the outstanding shares. Bensh was keen to down play the situation.

We have not been invited to their parties and they were not invited to our Christmas party but we have a continuing dialogue and I have nothing negative to say about them, said the CEO. Im sorry we spent time and money on the EGM but it was annoying at best.

Bensh added that the company was looking to diversify the asset base outside Ukraine but ruled out investments in Russia and the US as being too much trouble.

To view Cardinals presentation click here : http://www.esnips.com/web/PPOtherStuff

Thanks for the presentations papalpower. Good reading and an impressive growth in production forecasted.

Nice to see some positive movement today.

Yes, and long may it last!

recent media comment, here

More news, HERE

Takeover Bid Approach...................

Wonder if this news has anything to do with the news on Cardinal today (as CDL has Ukrainiane assets) :

************************************************

Shell confirms interest in Ukrainian mineral resources

KYIV. Aug 23 (Interfax) - Shell Exploration & Production B.V. (The Netherlands) has confirmed its interest in prospecting and developing oil and gas deposits in Ukraine, including in the country's portion of the Black Sea shelf.

Shell is interested in any deposits on Ukrainian territory, the company's public relations manager Antonius Papaspiropoulos told Interfax.

"Despite losing a tender for a product-sharing agreement on the Kerch stretch of the Black Sea shelf, the company hasn't given up and is ready to bid in similar tenders," he said.

Papaspiropoulos said there was dynamic progress in additional prospecting in the Shebelinskoye and Zapadno-Shebelinskoye fields in the Dnepr-Donetsk basin, in cooperation with Ukraine's Ukrgazbydobuvannya company.

Seismic exploration of the fields is due to begin in late 2007-early 2008, and drilling is scheduled for the first half of 2009. lg md

http://www.interfax.ru/e/B/finances/26.html?id_issue=11844163

Comment, HERE

what price u think CDL is worth if taken over

comment, click HERE

scotivestor,

Sadly that looks unlikely at present, and 'cash is tight'!