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Ukraine gas firm Cadogan falls on London debut

Cadogan Petroleum fell on its London market debut on Wednesday, after the Ukraine-focused oil and gas firm raised £139 million to fund exploration and production.

The independent exploration, development and production company with onshore gas and condensate assets in Ukraine, had begun trading from its offer price of 230 pence, giving it a market value of about £531.5 million ($1.04 billion). However, shares of Cadogan, which was advised by UBS and Fox-Davies Capital, fell 8% to 211-3/4 pence by 1003 GMT. “We’re promoting a Ukraine growth story,” CEO Mark Tolley said in a telephone interview. “This money will fund us for the next three years and we expect to be cashflow positive by mid-2010; there are outstanding metrics in Ukraine.”

Tolley said the first-day share move was just “market dynamics” and the company was focused on long-term growth. He said he expects gas prices in the region to double by early next year. Net cash from operations should rise to £18.8 million by end-2010 from an outflow of £12.7 million this year, Cadogan said in a statement. At end-January, Cadogan had proven and probable net reserves of about 80.4 million barrels of oil equivalent in Ukraine’s Dnieper-Donets and Carpathian basins.

Investment funds belonging to Deutsche Bank and JPMorgan are significant shareholders, owning 4.6% and 3.9% respectively, the statement showed. Altima Partners, a $3.6 billion alternative investment fund, is the biggest shareholder, with 8.5%. (Reuters)