9 Jul 2020 07:00
9 July 2020
JKX Oil & Gas plc
("JKX", the "Company" or the "Group")
Quarterly Operations Update
Highlights
· | Group production up 3% year-on-year (H1 2020: 10,445 boepd, H1 2019: 10,132 boepd). |
· | Group production down 10% quarter-on-quarter due to drilling and workover rigs on standby in Ukraine for the majority of the reporting period because of Covid-19 restrictions. In addition, two routine plant shutdowns in Russia and Ukraine contributed to the drop in average group production in Q2 2020. |
· | Group production at the time of issuing this update was up to nearly 11,000 boepd after successfully adding perforations in IG142. |
· | One new well is scheduled to be drilled in Ukraine commencing late in Q3 2020. |
· | $14.5m of cash and cash equivalents, and oil and gas inventory of approximately $1.7m in value, held at 30 June 2020. |
Production
Q2 | Q1 | Q on Q % Change | H1 | H1 | Y on Y % Change | |
2020 | 2020 | 2020 | 2019 | |||
Total production, boepd | 9,894 | 10,996 | (10)% | 10,445 | 10,132 | 3% |
Ukraine, boepd | 4,963 | 5,361 | (7)% | 5,162 | 5,188 | (1)% |
- Average gas production, Mcmd | 666 | 715 | (7)% | 690 | 725 | (5)% |
- Average oil and condensate production, boepd | 1,045 | 1,155 | (10)% | 1,100 | 919 | 20% |
Russia, boepd | 4,931 | 5,635 | (12)% | 5,283 | 4,932 | 7% |
- Average gas production, Mcmd | 829 | 946 | (12)% | 887 | 828 | 7% |
- Average condensate production, boepd | 54 | 65 | (17)% | 59 | 57 | 4% |
Hungary, boepd | 0 | 0 | 0% | 0 | 12 | (100)% |
Prices realised | ||||||
Ukraine | ||||||
- Average gas price, $/Mcm | 107 | 150 | (29)% | 131 | 247 | (47)% |
- Average oil and condensate price ($/bbl) | 31 | 49 | (37)% | 40 | 59 | (32)% |
Russia | ||||||
- Average gas price, $/Mcm | 52 | 56 | (7)% | 54 | 56 | (4)% |
In Ukraine:
· | The SMS drilling rig has been on standby at the production site since April at no cost. It is currently planned to use the SMS rig to commence drilling IG146 at the end of Q3 2020. IG146 will be targeting the Devonian in Ignativske close to successful IG101 sidetrack and IG142. |
· | The workover rig underwent essential maintenance until the middle of June and has since carried out two remedial workovers. |
· | In an effort to increase production two wireline perforation operations were carried out on IG143 and IG142, both of which involved adding perforations in the Devonian. |
· | A plant shutdown was carried out at the Novomykolaivske complex for 3 days in June in order to install a condensate stabilisation column and increase the LPG yield. |
In Russia:
· | A 7 day plant shutdown took place in June for routine maintenance. This was the first shutdown of this plant since 2016. All wells have now returned to the pre shutdown production levels. |
· | Well 27 was successfully acidized during the reporting period and it is currently planned to acidize Wells 5, 18 and 27 in September. |
Liquidity
In $m | 30 Jun 2020 | 31 Dec 2019 | 30 Jun 2019 | 31 Dec 2018 |
Total cash and cash equivalents | 14.5 | 20.6 | 10.7 | 19.2 |
Bond liability (principal and interest accrued) | - | (5.7) | (5.7) | (11.3) |
Net cash | 14.5 | 14.9 | 4.9 | 7.9 |
Approximate sales value of gas and oil inventory | 1.7 | 4.1 | 8.0 | 9.9 |
Our Ukrainian subsidiary held 5.5 million cubic metres of gas and 31.6 thousand barrels of oil inventory available for immediate sale at 30 June 2020. Approximate sales value of gas and oil inventory is calculated using average sales prices for June 2020.
Rental fee claims
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 2019 Annual Report. Final resolution of the 2010 rental fee claim case is expected in the next few months. As previously reported, four of the eight 2015 cases were closed in favour of JKX's subsidiary in Ukraine, Poltava Petroleum Company (PPC). Final resolution of the remaining 2015 rental fee claims cases is expected during 2021.
International arbitration award
The international arbitration award, directing the State of Ukraine to pay $11.8m plus interest and $0.3m costs to JKX as described in the 2019 Annual Report, has now been successfully legally recognised in Ukraine and JKX has filed for collection. No possible future benefit that may result from this award will be reflected in the accounts until there is further clarity on the process for, and likely success of, enforcing collection.
Covid-19
We continue to monitor the impact of Covid-19 developments on our industry, operations, staff and contractors and are confident about the safety measures we put in place.
boepd - Barrels of oil equivalent per day
bopd - Barrels of oil per day
Mboe - Thousand barrels of oil equivalent
Mcm - Thousand cubic metres
MMcm- Million cubic metres
Mcmd - Thousand cubic metres per day
psi - pounds per square inch
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
Dmytro Piddubnyy, CFO
EM Communications +44 (0) 20 7002 7860
Stuart Leasor, Jeroen van de Crommenacker