Cadogan Petroleum has reached an agreement with one of the Defendants in the litigation being pursued by the Company, Smith Eurasia Limited, and various related parties with respect to potentially improper payments made by Smith Eurasia Limited to former executives of the Company prior to March 2009.

Under the parties' agreement, in which Smith Eurasia does not accept fault or liability in relation to the allegedly improper payments, the Company will receive $4,500,000.

In addition the Agreement resolves all other outstanding commercial issues between Smith Eurasia and the Company as follows:

1) The Company will pay approximately $2,900,000 of outstanding invoices owing to Smith Eurasia and related parties for goods and services supplied to the Company in Ukraine. Such amounts were recognised as creditors of the Group at 30 June 2009.

2) Smith Eurasia will repurchase from the Company certain unused plant and equipment and Smith Eurasia will pay the Company approximately $1,000,000. These assets were included within the Group's inventory balance at 30 June 2009.

All amounts due under the Agreement will be paid in full within the next three months.

Tags: Cadogan Petroleum plc