JKX Downgrades Reserves

East Europe-focused explorer JKX has downgraded its 2P reserves from 109.4 to 95.1mn barrels of oil equivalent (boe) or 13% year-on-year, of which 7.1mn boe was due to the 4-well fracturing programme at the Rudenkivske field in Ukraine.

A year ago, the former CEO Tom Reed told IP Week that modern hydraulic fracturing technology had the potential to greatly expand the field's production, but drilling in October disproved that.

This was slightly offset by an addition of 2.2mn boe at the Ignativske field based on past production. "Once 2017 production of 1.2m boe has been taken into account, total reduction of our reserves in Ukraine amounts to 5.8mn boe," it said February 21.

JKX also wrote down 6.8mn boe in Russia as the planned Callovian well is uneconomic under current conditions. It would cost $25-$30mn to drill a well to the target of 5,800 metres and the gas price is not high enough for that, it said.

Nevertheless JKX has a new plan for this year that includes "significant activity to boost production in our core fields and to engage in low risk appraisal," it said. The plan has a suitably reduced development strategy for Rudenkivske starting in 2019, based on proven technologies. The new development plans are partially underpinned by reduced royalty rates for new wells in Ukraine from January 2018.