JKX In An 'Important Growth Phase'
Russia and Ukraine-focused JKX Oil & Gas used its results for 2012 to confirm that it has embarked on an "important growth phase" with a reversal of the firm's recent production decline in Ukraine and had continued to grow its new Russian production.
JKX confirmed that the repayment of a $50 million debt facility by the end of 2012, as well as a more-recent placing of $40 million of convertible bonds, has created a "solid financial footing" for the company to accelerate development programs in Russia and Ukraine over the next two years.
"2012 was a challenging year for the company as we managed both production delays in Russia and reduced liquidity resulting from retirement of short-term debt," JKX Chairman Nigel Moore commented in a statement.
"I am pleased to report that the company's position going forward in 2013 is significantly improved with rising production and fully-funded development programs in both Ukraine and Russia following the successful placing of $40 million of convertible bonds in January of this year.
The results showed that JKX had achieved an upward revision of its proved and probable reserves to 93.8 million barrels of oil equivalent – representing a reserves replacement ration of 208 percent. The firm's production during the year averaged 8,281 barrels of oil equivalent per day (2011: 9,045 boepd). JKX achieved an operating profit of $51.6 million (2011: $82 million).
In 2012, JKX achieved commercial gas sales and the ramp-up of production from its Koshekhablskoye field in Russia. JKX said that its current focus in Russia is on the expansion of plant capacity to 60 million cubic feet of gas per day at minimum capital cost. The company confirmed that commercial gas sales at its Russian plant are currently in excess of 40 MMcf/d.
Meanwhile, the firm expects strong gas realizations in Ukraine to be maintained throughout 2013. In the third quarter of 2012 it awarded Schlumberger a contract for the large multi-fracture stimulation of well R-103 in the deep tight gas field Rudenkovskoye. JKX confirmed that it is on scheduled for the commencement of operations there before mid-year.
Commenting on the results Tuesday, oil sector analysts at London-based investment bank FirstEnergy said:
"We highlight that with the commencement of production in Russia... the company has achieved a major milestone and near term focus will now shift to the results of the multi-frac program on the Rudenkovskoye field in Ukraine which is expected by July."
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