5 Oct 2018 07:00
5 October 2018
JKX Oil & Gas plc
("JKX", the "Company" or the "Group")
Quarterly Operations Update
| Q3 | Q2 | Q on Q % Change | 9 months | 9 months | Y on Y % Change |
2018 | 2018 | 2018 | 2017 | |||
Total production, boepd1 | 9,411 | 8,707 | 8.1% | 8,958 | 8,645 | 3.6% |
Ukraine, boepd | 4,014 | 3,585 | 12.0% | 3,667 | 3,595 | 2.0% |
- Average gas production, MMcfd2 (Mm3d)3 | 19.4 (549) | 16.7 (473) | 16.2% | 17.4 (493) | 17.3 (490) | 0.6% |
- Average oil and condensate production, boepd | 785 | 805 | (2.5)% | 776 | 711 | 9.1% |
Russia, boepd | 5,302 | 5,030 | 5.4% | 5,199 | 4,905 | 6.0% |
- Average gas production, MMcfd (Mm3d) | 31.5 (892) | 29.8 (844) | 5.7% | 30.8 (872) | 29.1 (824) | 5.8% |
- Average condensate production, boepd | 60 | 57 | 5.3% | 58 | 54 | 7.4% |
Hungary, boepd | 95 | 91 | 4.4% | 92 | 145 | (36.6)% |
- Average gas production, MMcfd (Mm3d) | 0.5 (14) | 0.5 (14) | - | 0.5 (14) | 0.8 (23) | (37.5)% |
- Average condensate production, boepd | 8 | 7 | 14.3% | 8 | 10 | (20.0)% |
Average Group production for the third quarter of 2018 was 9,411 boepd, which represents an 8.1% increase compared to the second quarter of 2018. Year-on-year Group production was up by 3.6%.
Group production on 30 September was 9,610 boepd comprising of 5,025 boepd in Russia and 4,585 boepd in Ukraine.
In Ukraine, production quarter-on-quarter increased due to continuing production from R3, completed late in Q2, and the performance of the work programme:
· WM215, a leased well, was successfully worked over in September and came online on 26 September at an initial rate of 9.1 MMcfd (258 Mm3d) with a WHP of 2400 psig4 on a 30/64th" choke. The well is currently producing at 4.4 MMcfd (125 Mm3d) with a WHP of 2300 psig on a 20/64th" choke and has yet to stabilise. This is the first well to be tested by PPC on the undeveloped West Mashivske field where further development is planned.
· E308, the first new well to be drilled since 2014, was successfully completed on 4 September. Production commenced from this well on 17 September and has since stabilised at 0.9 MMcfd (25 Mm3d).
· IG101 sidetrack was worked over which resulted in an increase in the gas rate from 0.3 MMcfd (8 Mm3d) to 4.1 MMcfd (116 Mm3d) at the start of September. The gas rate has since declined to 0.8 MMcfd (23 Mm3d).
· Due to complications during the workover of the leased well R11, caused by poor condition of the well, it was not possible to reach the primary target, V26. Plans to evaluate the deeper reservoir in this location at a later date are being investigated.
A tender process has been initiated in order to find a suitable drilling rig to carry out the drilling planned in the near future, starting with a new well on the West Mashivske field.
In Russia, production has increased quarter-on-quarter. This is the result of successful acid jobs on Well 25 and 27 in the first week of July. The contracted rig for the well workover programme is currently en route to the Koshekhablskoye field with the start of the Well 5 workover expected towards the end of the fourth quarter.
The process of divesting the Company's Hungary assets is currently ongoing.
Liquidity
Balance sheet extracts at quarter ends were as follows:
In $m | 30 Sep 2018 | 30 June 2018 | 31 Mar 2018 | 31 Dec 2017 |
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Total cash | 4.9 | 7.6 | 6.5 | 6.9 |
Bond liability (principal and interest accrued) | (10.9) | (11.3) | (10.9) | (16.8) |
Net debt | (6.0) | (3.7) | (4.4) | (9.9) |
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Trade and other receivables | 3.2 | 3.3 | 2.9 | 3.3 |
Trade and other payables | (0.6) | (1.9) | (5.6) | (5.4) |
Approximate sales value of gas and oil inventory | 9.9 | 3.1 | 3.3 | 3.0 |
The Company's bond liability relates to a convertible bond with $10.7m principal outstanding. The bond pays an annual coupon of 14% semi-annually in arrears and matures in 2020. The bond terms are described in detail in the 2017 Annual Report.
Approximate sales value of gas and oil inventory are calculated using the latest price information available in Ukraine. A flexible trading approach has been adopted on the sale or holding of gas based upon price fluctuations in the market. At 30 September 2018 inventory consisted of 791 MMcf (22,403 Mm3) of gas and 24,120 bbl of oil held and available for immediate sale at our Ukrainian subsidiary. Since 30 September 353 MMcf (10,000 Mm3) of gas was sold for $3.7m.
1boepd - Barrels of oil equivalent per day
2MMcfd - Million cubic feet per day
3Mm3d - Thousand cubic metres per day (1 m3 = 35.315 cf)
4psig - pounds per square inch gauge
This announcement contains inside information as defined in EU Regulation No. 596/2014 and is in accordance with the Company's obligations under Article 17 of that Regulation.
ENDS
JKX Oil & Gas plc +44 (0) 20 7323 4464
Ben Fraser, CFO
EM Communications +44 (0) 20 7002 7860
Stuart Leasor, Jeroen van de Crommenacker