(Sharecast News) - JKX Oil and Gas updated the market on its operations for the third quarter on Wednesday, reporting group average production of 11,719 barrels of oil equivalent per day for the period, which was 13% higher than the previous quarter.
The London-listed firm said average production in Ukraine was 5,535 barrels of oil equivalent per day for the first nine months of 2019, which was more than 50% higher than the equivalent period in 2018.
It added that it was its highest quarterly and year-to-date oil production in Ukraine since 2013.
The company said its capital investment in the fields was continuing as planned, and was entirely financed by operating cash flow, despite the lower gas price in Ukraine.
Cash and cash equivalents stood at $9.5m, with oil and gas inventory being around $11.5m in value, as at period end on 30 September.
In Ukraine, JKX said well IG142 was completed in the quarter, and was currently producing at 857 barrels of oil equivalent per day, with a wellhead pressure of 1,867 pounds per square inch.
It said two rigs were currently in operation in the country, with one drilling WM4 in West Mashivska, and a second, larger rig procured and drilling the R101 sidetrack.
That, the board said, was the first sidetrack drilled by PPC to target the Visean sands in the North of Rudenkivske.
IG103 sidetrack production was continuing to exceed expectations, the company added, with current production at 1,116 barrels of oil equivalent per day, with a wellhead pressure of 1,150 pounds per square inch.
To date, the IG103 well had produced 374,000 barrels of oil equivalent.
Oil production increased 26% quarter-on-quarter in Ukraine in the third quarter, which JKX said was the result of two recently-drilled new wells - NN81 and IG142.
It said a two-day planned shutdown of the Novo-Nikolaevske production facility reduced third quarter production in Ukraine to an extent.
In Russia, the company said production was up quarter-on-quarter due to a well being brought into production at the end of the second quarter.
Well 5 production had been adversely affected by solids blockages, however, which resulted in the well being acidised three times in the period.
The last acid job was conducted at the end of August, and a recent flaring and choke reduction had led to the well cleaning up.
Its current production rate was 370 barrels of oil equivalent per day.
The workover of well 18 was progressing, JKX added, with all 300 metres of a fish left in the well by a previous operator milled.
It said the production casing would be repaired before drilling the sidetrack.
JKX's Ukrainian subsidiary held 54 million cubic metres of gas and 25,000 barrels of oil inventory available for immediate sale as at 30 September.
The board also said that $0.4m of bond interest was paid in August, with the final bond payment of $5.8m due in February.
"Claims issued by the Ukrainian tax authorities for additional rental fees for 2010 and 2015 are being contested through the Ukrainian court process as explained in the 2018 annual report," the board explained in its statement.
"Final resolution of the 2010 rental fee claim case is expected in the next few months.
"The 2015 rental fee claims cases were contested in eight separate cases."
As it had previously reported, in early July one of the cases was closed in favour of JKX's subsidiary in Ukraine, Poltava Petroleum Company (PPC).
The successful closure of a second case was expected "shortly", the board claimed.
"Final resolution of the remaining six 2015 rental fee claims cases, four of which are currently suspended, is expected during 2019 and 2020."
The board also noted that in February, it filed an application for the recognition and enforcement of an international arbitration award, as it described in its 2018 annual report.
"On 5 July, the written judgment of the Kyiv Appellate Court was issued, satisfying the application and ordering the State of Ukraine to pay $11.8m plus interest and $0.3m costs.
"This judgment is currently subject to appeal in the Supreme Court of Ukraine.
"No recognition will be made in the financial statements of any possible future benefit that may result from this award until there is further clarity on the process for, and likely success of, enforcing collection."
17 Mar 2015 06:17
