Member Info for Krok

Aimsurfer, it is a private asset in the south of Russia, it will tell you nothing.

It us not about having or not having an LSE ticker. Many assets of this size face very similar issues and I can tell you from inside the industry JKX is in a big trouble now

And, for the record, all this happened at record gas prices

Once the share price falls below 20p, and it inevitably will if there is another quarter like this, all happy holders will shut up as simply mentioning you have this stock in your portfolio will be too humiliating))

Just scroll down this thread - I warned of what happened today a few months ago

It actually turned to be much worse than I thought it would

Minus 15% in a single day, almost half of value lost in the last 6 months - what a great company indeed!))

Keep holding, guys, always good to be a happy holder)

The valuation of an upstream asset has nothing to do with a FCF in a single quarter (or several quarters)

Tge asset heeds to have stable or, better, growing production, ability to consistently generate positive FCF without sacrificing the production and management willingness to distribute that FCF to shareholders

JKX currently has none of the above

You dont have a clue about upstream oil and gas. They stopped all capex. They cant repeat it even with minimal drilling. And they now need to drill a lot. But they dont have good structures for that anymore

I am here because I actively trade Ukrainian oil and gas stocks and JKX is just one of them.

I am also here because I am CEO of an upstream oil asset with production of ca. 4 kbopd and therefore is genuinely interested in how peers are doing

Last but not least, I am here because I had covered JKX (and most of its ex-USSR peers) for almost a decade in my previous life of an O&G investment banker

What are you doing here except for watching your investment is evaporating?

And the decline accelerates. In 4Q20 it was 8%, in 1Q21 - 12%

You don't normally see such steep decline rates in such a short period of time. Figures speaks for themselves - the existing fields in Ukraine are dying

The share prices will sink below 20p if they do not fix their Ukrainian production trend

They have already lost over 40% since the highs of 2019. Decline of 12% in a quarter is unbelievably high

Their cash only increased because they skipped capex. Once they start drilling it will change. Another quarter like this and over half production will be lost. And more than half cashflow

All-in-all, operationally JKX is in a big trouble. Don’t be amused by this latest cash increase - it works against the company

ENW gas production:

1Q20 - 598.5 mcm/d
1Q21 - 612.5 mcm/d

A huge increase of 14 mcm/d (2.3%)!

This is after completing two wells - in May 20 and Feb 21. Having spent $30 mn on these

They either stole a significant chink of that capex or are plain idiots. Not sure which one is worse

Being a London-listed company gives some kind of protection on the turbulent Ukrainian environment. I think Novinsky therefore sees some value in retaining the listing, it costs him nothing

Other than that, minority shareholders are of no interest to him. Why should they?

Don’t see any positives in the next 9 months. This is likely to be a 20p stock for the rest of 2021

I am really ****ed off by their recent operational performance, on top of all this fuss about dividend and cash pile

Free cash flow in 2021 will likely be negative, so cash will decrease. This means no dividend, again

To complete the picture, they will beed to f@ck up on the next two wells. Like they did with two previous ones

Looking further into the report, I am shocked of how awful the results of the two latest wells have been

This is simply a disaster

Before digging into details, a quick look at what they spent. Capex was $19.0 and $12.8 mn in 2019 and 2020, respectively. Total capex was therefore almost $32 mn. Huge, given they just drilled two wells

Now about the wells

SV-54 was put in production in late May 2020, the flow rate was 565 boepd. Ten months later, in late March 2021, production fell to a mere 212 boepd. This is a 62% decline! 75% if annualized! Really?

Most recent well, SV-25, started its production in late February with 452 boepd. Just one month later it is producing at 423 boepd. This is 6.4% drop in a single month! Again, almost 75% annual decline, if annualized

How is this possible? What are they doing there?

They spent $30 mn to get 600 boepd of production, which will fall to 400 boepd by year end

Their current CEO, Sergey Glazunov, is a financier. He has no technical background. Don’t understand why Novinsky has not fired him yet to replace with a proper CEO

Disgusting

Every single trade today is shown as sell. Solid update, silly shareholders

How on earth could they lose $1.6 mn of cash in 1Q21 at $236/mcm gas price and stable production is beyond me

With the exception of 1H results which will explain why ENW made no money in 1Q21, there are no material developments till the end of 2021. At least on the positive side

Given capital commitments (2 wells + 3D), FCF in 2021 is likely to be negative

Unfortunately, ENW has failed on all expectations. Don't see what can drive this stock in 2021

The 1st one on twitter:

Solid update. $61m in cash. #naturalgas prices significantly higher this winter.

Lol, I should continue to be invested here simply to read twits like this

No increase in cash at record gas prices. No dividend, even intention

Interest income on cash balance decreased by 70% and is a lousy 2.5% per annum

Cost of previous well of $12.5 mn (net of VAT) is ridiculously high. With the flow rate they received, it is a waste of money

What a shame. Will sink below 20p shortly, I am afraid

Look forward to reading “what a great update!” type of posts on twitter

Win-win situation, RTO of Proger into CAD. Lol, what a naivety

Dont touch this sh@t, it is worth nothing

From the very beginning it was plain clear CAD and Proger has been acting in concert to get cash out of CAD

There will be no repayment

CAD assets are worthless, so it gradually spends the remaining cash on its Italian management

Yes, nice rise - 60 shares purchased at ask price. Trade value - 14 pounds))

Cash pile 1Q - 70 mn
FCF 2021 - 25-30 mn
Cash pile 4Q - 85-90 mn

At current share price, EV will be close to zero by year end

Thordon, not sure why you keep asking questions re JKX on ENW board but here are the answers that will not make you happy:

1) JKX production in Russia hardly breaks even, free cashflow is slightly above zero. For the record, they invested over $300 mn in this asset in the past. Sunk cost, I know, and most of it has been written-off in previous years but worth mentioning nonetheless

2) I would advise JKX to sell the Russia asset for $20-25 mn, the recent Volga Gas deal is a good comparison. This asset gives very little value to JKX currently

3) JKX production in Ukraine dropped by 30% in the last 1,5 years. In 1Q21 it will most likely touch 4 kboepd, in 2Q it will sink below 4 kboepd. Awful result, plain awful

4) JKX has to spend a lot more than ENW simply to maintain production, as its assets are highly depleted. When it decreases capex, production decline accelerates. This is the case in 2020 - 8% production decline in 4Q20 alone

5) Look at cashflow, not profits. Free cashflow in 2019 was a miserable $6.5 mn. Again, because they had to spend a lot on capex

6) JKX is unable to earn more than $10-12 mn of FCF per year. Whatever they earn they need to spend on capex. If they underspend on capex, their production in Ukraine will suffer even more

They did a miracle in Ukraine in mid-2019 but it turned out to be a short lived one

They will likely continue to earn $10 mn from their Ukrainian operations, maybe $15 mn this year but only due to prices. Nothing to do with company specific factors

Will sink below 20p again in summer if my production forecast is correct

Also, do not rule out potential implications of US sanctions against Kolomoiskiy - they may do quite some harm

Good luck anyway

Early April - annual report
Late May - AGM notice
Late June - AGM