JKX Produces More, Still Makes Loss

UK-listed Russia and Ukraine producer, JKX Group, made a net loss of $10.1mn in 1H 2016, following net losses of $67.7mn in 2H 2015 and $13.8mn in 1H 2015. Loss from operations before exceptionals was $2.8mn in 1H 2016, down from $7.3mn a year ago.

Average production increased by 21% to 10,393 boe/d, 90% gas (56mn ft³/d), but low prices impacted earnings. Russia’s Koshekhablskoe gas field accounted for 60% of production, a year-on-year increase of 40%. Ukraine contributed the balance and was static.

JKX said that two exploration wells are scheduled on its licences in northeast Slovakia in 2H 2016, and that it was seeking to develop a small Hungarian gas discovery and scouting for a farm-in partner.

JKX gas plant in Hungary (Photo credit: JKX)

JKX CEO Tom Reed said: “We have partially mitigated the legal risks that we inherited in Ukraine and we have re-established a positive working relationship with the Ukrainian government.” An interim arbitration award in 2015 against Ukraine requiring it to limit fees imposed on JKX’s Poltava subsidiary, PPC, to a rate of 28% remains in effect, until a final judgement is rendered. There was no further update on a Ukrainian police raid last month on PPC’s office and the homes of two staff; JKX said the action was unjustified but that it would cooperate with authorities.

Mark Smedley