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Cadogan Petroleum - Capital Network: Trading at Discount to Cash

Written by Lionel Therond

Cadogan Petroleum is an independent oil and gas exploration and production company with onshore oil, gas and condensate assets in Ukraine. The shares are listed on the main market of the London Stock Exchange and currently trade at a substantial discount to the value of net cash on the balance sheet. We believe a recent management change and refocussing of the strategy could lead to a rerating of the shares. However, the execution risk remains high and success contingent on executing the right deals in and outside Ukraine.

Cadogan Petroleum has a market capitalisation of c.$26m which compares with a net book value of $52m and a net cash position of $40m at 30 June 2016. The P/BV of 0.5x is in-line with the median valuation for similar companies. However, we believe that the disconnect between the market value of the company and the net cash position calls for a re-rating of the shares.

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