The completion of a well testing programme on the Pokrovskoe, Pirkovskoe and Zagoryanska licenses, the Company has reduced its drilling operations from five rigs to one. Four wells on the Pokrovskoe, Pirkovskoe and Zagoryanska licenses have been suspended while management undertake analysis of the data obtained to date.

The company remains on track to complete its strategic and operational review. This review will allow Cadogan to evaluate its operations to date and strategic options available to the company going forward. The review is expected to be complete by the end of the second quarter or early in the third quarter.

During the period, oil and gas was produced from the company’s minor fields in western Ukraine. Although modest, these fields produce economic volumes and provide limited cash flows to the Company.

License Issues

As previously announced, a number of successful court hearings have supported the Company’s exclusive rights to the Pirkovskoe and Zagoryanska licenses. However in February 2009 the High Administrative Court of Ukraine ruled in favor of Poltavanaftogazgeologiya in an appeal hearing in relation to the transfer of the Pirkovskoe license to NadraUkryainy.

The company has lodged an appeal in the Supreme Court of Ukraine, the highest judicial body in the country, and has received confirmation that the appeal will be heard, with the date to befinalised.

On March 30, 2009, the general prosecutor’s office of Ukraine submitted a case to the supreme court of Ukraine in support of Cadogan, arguing that the High Administrative Court had been mistaken in reaching its decision and that the ruling should be declared invalid.

Despite the recent high administrative court decision, the company’s licenses remain valid and the directors believe that this will be finally confirmed by the Supreme Court.

On January 15, 2009, following positive discussions with the ministry for environmental protection of Ukraine, the company successfully extended its license for the Zagoryanska area by five years to April 2014.