JKX Reduces Losses, But Still Squeezed
UK-based independent JKX narrowed its net loss to $37.1mn in 2016, from a loss of $81.5mn in 2015, it said March 20. But this was only a result of lower exceptional charges, namely $30.8mn last year (2015: $64.9mn) with its Russian revenues continuing to be squeezed.
Net production grew by 12% to 10,083 barrels of oil equivalent/day, from 8,996 boe/d in 2015. The 2016 volume included 54.7mn ft³/d gas.
Most of its output was in Russia, where production increased by 30% to 6,082 boe/d as a new well came online late 2015. However revenues there declined, because gas prices in Russia fell by 11.3% to $1.49/’000 ft³ last year overall, due to a 9.5% cut in the gas sales price from mid-2016. JKX nonetheless said that “international political conditions have improved considerably for both Russia and Russian gas.”
JKX's remaining production was in Ukraine, as it said it would develop fields in Hungary and Slovakia on an opportunistic basis depending on financing.
Regarding Ukraine, JKX referred the government to international arbitration in 2015, but on February 6 2017 the tribunal rejected JKX’s claim, which the firm said March 20 was for “over $200mn”. awarding it instead only some $12mn. Two months ago, the company accused police in Ukraine have been harassing its staff. JKX has now said that the saga is “damaging to Ukraine’s investment climate” adding: “We have engaged with both the US and UK embassies in Kiev in order to register our complaints in this matter.”
Credit: JKX
CEO Tom Reed (pictured above) said: “We are actively seeking to mitigate our litigation risks and potential liabilities with the Ukrainian government so that our development drilling in Ukraine can recommence....Investment in our Rudenkivske gas field in Ukraine is significant, and we continue to work with the Ukrainian government to improve the investment environment for such projects."
Rudenkivske has 2.8 trillion ft³ of gas resources in place; JKX has said that with investment, recovery rate could be increased from 2% now to between 25% and 50%.
Mark Smedley