LONDON (Alliance News) - JKX Oil & Gas PLC on Monday said Ukrainian authorities have awarded an extension to the company's Elizavetovskoye production licence to include the West Mashivske prospect, but said it has suspended drilling operations due to "punitive" government policies.
JKX said the West Mashivske prospect is immediately west and contiguous with its existing Elizavetovskoye licence. The additional award increases the licence area by 33.9 square kilometres, making the total licence area 104.7 square kilometres.
"This further award is a recognition of our ability to develop the potential of our Ukrainian licences," said Paul Davies, JKX's chief executive.
"However, we have been forced to suspend drilling operations in Ukraine because of the current punitive levels of production tax and restrictive currency controls," Davies added, without providing any further detail on the decision.
JKX had restarted full production in Ukraine in March following the end of a temporary gas sales restriction put in place in the country. It had been forced to shut-in a proportion of its oil and gas production after the Ukrainian government in November issued a decree which required all industrial gas customers in the country to buy the gas solely from state-owned Naftogaz for three months ending February 28.
JKX did not provide any further details on the reasons behind its decision to suspend drilling operations in the country again.
Shares in JKX were down 6% to 28.2 pence on Monday.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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