September 22, 2005 15:49 ET

Cardinal Resources plc: Operational Update

LONDON, UNITED KINGDOM--(CCNMatthews - Sept. 22, 2005) - Cardinal Resources plc (AIM:CDL), an independent oil and gas exploration and production company, announced on September 16, 2005 an operational update for the period 15th April 2005 to 31st August 2005 in advance of its 2005 Interim Results scheduled for release before the end of September. The information contained herein has not been audited and is subject to further review.

Operational Overview

Cardinal has working interests in two operating oil and gas fields in Ukraine - the Rudivsko-Chernovozavodske ("RC") field and the Bytkiv-Babchenske ("Bytkiv") field. Cardinal's net reserves currently stand at 18.4 MMBOE (110.6 Bscfe) and the average daily production year to date through June 30th 2005 is 631 boepd. At the time of its admission to AIM on 15th April 2005, the company set out a work programme for the years 2005 and 2006, and beyond. An update on the programme's progress is detailed below.

Commenting today, Robert J. Bensh, Chairman and CEO of Cardinal said:

"Since the listing Cardinal has initiated its work programme. Two workovers have been completed, a further two are in progress, and a number of wells have been prepared in anticipation of drilling commencing by year-end.

"The political developments in Ukraine and the favourable movement of domestic gas prices to over $2.00/Mscf, compared to $1.72/Mscf at the time of the IPO, are extremely positive for Cardinal. This week the Russian and Ukrainian energy ministers met to discuss tariffs for the transportation of gas and oil through Ukrainian territory in 2006. After the negotiations, the Ukrainian minister for the first time announced that Ukraine is ready to 'work out the formula' of switching to European prices for gas starting in the new year. The final price is still subject to further negotiations but this represents a major turning point for Cardinal.

"Operating performance is in line with our expectations and we expect to announce further encouraging developments by the end of the year."

RC Field (JAA with Ukrnafta; 14.9% Net Profit Interest)

- 6 wells producing

- 1 workover completed; 1 well being worked over; 2 wells awaiting workover

- 6 additional non-JAA wells identified for potential workover

Under its JAA with Ukrnafta Cardinal has completed one unplanned workover on well #114 which is performing in line with expectations. A second workover on well #102 is underway and is expected to be completed within 30 days. The rig will then proceed to the scheduled workovers on wells #100 and #109, as planned.

Ukrnafta is also in discussions with Cardinal to evaluate workovers on six other wells not included within the JAA.

Rigs for the drilling of new wells are being sourced and work is expected to commence before the end of the year.

Discussions regarding the buyback of Cardinal's net profit interest in the RC field up to 45% are progressing.

Bytkiv Field (JV with Ukrnafta; 45% Net Profit Interest)

- 12 wells producing

- 1 workover completed

- 1 well being worked over

- 10 wells awaiting workover

UkrCarpatOil (the JV) has completed the first of several scheduled workovers in the Bytkiv field, resulting in an increase in the oil production rate at well #1004. The rate is expected to further increase following the installation of a new Progressive Cavity (PC) pump.

UkrCarpatOil has ordered additional western-made PC pumps for its producing wells, to be delivered to the field by the end of September. The new pumps are expected to reduce downtime and, together with re-perforating and stimulations, increase production rates.

The company has commenced a re-entry of well #524, currently not producing. This is expected to be completed by the end of September, to be followed by a continuous programme in the field to exploit the remaining workover potential on ten more wells.

One drill site has been prepared and a second is being prepared in anticipation of securing an appropriate rig to commence drilling new wells in the field.


Cardinal believes it is in a unique position to participate in the consolidation of the oil and gas sector in Ukraine, as well as take advantage of increasing gas prices and the ongoing development of the domestic economy.

Cardinal Resources plc (AIM: CDL) is an independent oil and gas exploration and production company in Ukraine. As an experienced operator in the country, Ukraine presents Cardinal with a unique opportunity to acquire and farm-in to oil and gas development projects accretive to reserves and production. At December 31st 2004 Cardinal had net reserves of 18.4 MMBOE and a PV12% of $40.3 million.

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