15 Apr 2020 07:00
15 April 2020
JKX Oil & Gas plc
("JKX", the "Company" or the "Group")
Quarterly Operations Update
Highlights
· Group production up 11% year-on-year (Q1 2020:10,996 boepd, Q1 2019: 9,907 boepd).
· Group production flat compared to previous quarter with increase in Russia offsetting decrease in Ukraine.
· In Ukraine one additional new well completed in Q1 2020, IG143 and a further two sidetracks, R101 sidetrack and IG130 sidetrack scheduled to come online in April 2020.
· In Russia, Well 20 has been successfully killed and Well 18 production increased following second acid job in January.
· $14.2m of cash and cash equivalents, and oil and gas inventory of approximately $2.4m in value, held at 31 March 2020.
· Group is debt free after the final bond payment of $5.8m in February 2020.
Production
| Q1 | Q4 | Q on Q % Change | Q1 | Q1 | Y on Y % Change |
2020 | 2019 | 2020 | 2019 | |||
Total production, boepd | 10,996 | 10,989 | 0% | 10,996 | 9,907 | 11% |
Ukraine, boepd | 5,361 | 5,731 | (7)% | 5,361 | 5,009 | 7% |
- Average gas production, Mcmd | 715 | 782 | (9)% | 715 | 709 | 1% |
- Average oil and condensate production, boepd | 1,155 | 1,131 | 2% | 1,155 | 837 | 38% |
Russia, boepd | 5,635 | 5,258 | 7% | 5,635 | 4,873 | 16% |
- Average gas production, Mcmd | 946 | 883 | 7% | 946 | 819 | 16% |
- Average condensate production, boepd | 65 | 59 | 10% | 65 | 56 | 15% |
Hungary, boepd | 0 | 0 | 0% | 0 | 25 | (100)% |
Prices realised |
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Ukraine |
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- Average gas price, $/Mcm | 150 | 180 | (17)% | 150 | 269 | (44)% |
- Average oil and condensate price ($/bbl) | 49 | 62 | (21)% | 49 | 59 | (17)% |
Russia |
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- Average gas price, $/Mcm | 56 | 58 | (3)% | 56 | 56 | 0% |
In Ukraine:
· IG143, a new well in the Ignativske field was brought online in the first half of March 2020 after testing a fault block to the west of IG103 sidetrack. To date only the deepest 5m (3.4m net) of a total of 26.2m of net hydrocarbon thickness has been perforated in this well to maximise liquid hydrocarbons. This well is currently producing 157 bopd and 65 Mcmd of gas (539 boepd) on a restricted choke with a wellhead pressure of 1,104 psi.
· The heavy drilling rig used on R101 sidetrack was released on the 23 February, after the 4 ½" liner was run to a depth of 3,954m. The well had successfully penetrated the V26, primary target, to a depth 4,408m at which point the bottom hole assembly (BHA) became stuck and could not be retrieved so the well was plugged back to 4,098m. The workover rig has completed cementing the liner and running the completion and is currently rigging down. A total of 6m of net hydrocarbon thickness has been evaluated from logs in secondary targets, V21 and V22 and will be tested in April.
· The drilling of IG130 sidetrack targeting the Visean in Ignativske has been completed with perforating and testing of a 3m oil bearing sand planned in April.
· The SMS rig which has been used for drilling sidetracks and new wells since 2018 will now be put on standby at no cost with no drilling currently planned for Q2 2020.
In Russia:
· In Q1 2020 production from Well 20 rapidly declined allowing a slick line fishing job to be conducted in February which successfully cleared the tubing from 42m down to a hold up depth of 3,901m. In March the well was successfully killed after punching a hole in the tubing at 3,900m.
· Well 18 gas production increased from 211 Mcmd to 284 Mcmd following an acid job on the 15 January 2020. Currently the well is still producing at a gas rate of 260 Mcmd which has contributed to offsetting the lost production from Well 20.
Liquidity
In $m | 31 Mar 2020 | 31 Dec 2019 | 30 Jun 2019 | 31 Dec 2018 |
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Total cash and cash equivalents | 14.2 | 20.6 | 10.7 | 19.2 |
Bond liability (principal and interest accrued) | - | (5.7) | (5.7) | (11.3) |
Net cash | 14.2 | 14.9 | 4.9 | 7.9 |
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Approximate sales value of gas and oil inventory | 2.4 | 4.1 | 8.0 | 9.9 |
Our Ukrainian subsidiary held 4.5 million cubic metres of gas and 44.3 thousand barrels of oil inventory available for immediate sale at 31 March 2020. Approximate sales value of gas and oil inventory is calculated using average sales prices for March 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
Dmitry Poddubniy, CFO
EM Communications +44 (0) 20 7002 7860
Stuart Leasor, Jeroen van de Crommenacker