LONDON (Alliance News) - JKX Oil and Gas PLC Friday said it swung to a significant pretax loss in 2014 on the back of lower oil prices impacting revenue and causing the company to make a substantial impairment charge against its assets.
The oil and gas exploration, development and production company with assets spread over Ukraine and Russia reported a significantly wider loss of USD53.7 million in the year ended December 31, from a USD4.0 million pretax profit a year earlier after the company's revenue fell on the back of lower oil prices and a significant impairment charge.
The company recorded a USD69.1 million impairment against its oil and gas assets to reflect the impact of lower international oil prices and reduced domestic gas realisations in the near to medium term. JKX said around two-thirds of the charge is attributable to the Koshekhablskoye field in Russia as a result of reduced expectations of the level of near term increases in the regulated gas price.
Revenue for the year fell as lower oil and gas prices offset an increase in production. Revenue fell to USD146.2 million compared to USD180.7 million a year earlier.
Production rose by 2% in 2014 to 9,919 barrels of oil equivalent per day from 9,731 barrels of oil equivalent per day.
Production could have been higher during the period, but was impacted by tubing failures at two of its five production wells in Russia and by the restrictions imposed by the government that reduced the company's production capacity in Ukraine in December. The restrictions have now been lifted.
"Despite the increasingly challenging political and commercial environment over the past year, we made good operational progress which resulted in achieving our production target for 2014," said Chief Executive Paul Davies.
"We expect the performance of both our Ukrainian and Russian subsidiaries to remain under pressure for 2015. Our focus will be on cash conservation and asset protection, but with our solid production assets and reserves we have the potential to make significant increases in production once existing tensions ease," said Davies.
Unsurprisingly, the company said it does not believe it is the right time for it to consider paying a dividend.
JKX shares dropped by 7% to 33.00 pence per share on Friday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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