9 Jan 2020 07:00
9 January 2020
JKX Oil & Gas plc
("JKX", the "Company" or the "Group")
Quarterly Operations Update
Highlights
·; | Group annual production up 20% (2019: 10,748 boepd, 2018: 8,937 boepd). |
·; | Ukraine annual production up 52% (2019: 5,584 boepd, 2018: 3,677 boepd). |
·; | Russia annual production flat (2019: 5,158 boepd, 2018: 5,169 boepd). |
·; | More than $26m of capital expenditure invested in our operations in 2019 (Ukraine: $18m, Russia: $8m), entirely financed by operational cash flow despite lower gas prices in Ukraine in 2019. |
·; | In Ukraine new wells completed in December 2019 and January 2020 and field development continuing as planned. |
·; | Well workover programme completed in Russia with no further workovers planned in 2020. |
·; | $20.5m of cash and cash equivalents, and oil and gas inventory of approximately $4.1m in value, held at 31 December 2019. |
·; | Group on schedule to be debt free from February 2020. |
Production
| Q4 | Q3 | Q on Q % Change | 12 months | 12 months | Y on Y % Change |
2019 | 2019 | 2019 | 2018 | |||
Total production, boepd | 10,989 | 11,719 | (6)% | 10,748 | 8,937 | 20% |
Ukraine, boepd | 5,731 | 6,217 | (8)% | 5,584 | 3,677 | 52% |
- Average gas production, Mcmd | 782 | 842 | (7)% | 769 | 497 | 55% |
- Average oil and condensate production, boepd | 1,131 | 1,260 | (10)% | 1,058 | 751 | 41% |
Russia, boepd | 5,258 | 5,502 | (4)% | 5,158 | 5,169 | 0% |
- Average gas production, Mcmd | 883 | 924 | (4)% | 867 | 868 | 0% |
- Average condensate production, boepd | 59 | 62 | (5)% | 59 | 58 | 2% |
Hungary, boepd | 0 | 0 | 0% | 6 | 91 | (93)% |
Prices realised |
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Ukraine |
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- Average gas price, $/Mcm | 180 | 175 | 3% | 206 | 308 | (33)% |
- Average oil and condensate price ($/bbl) | 62 | 63 | (2)% | 61 | 74 | (18)% |
Russia |
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- Average gas price, $/Mcm | 58 | 58 | 0% | 57 | 57 | 0% |
In Ukraine:
·; | WM4, a new well in the West Mashivska field, was completed in December and is now producing gas from the deepest of three hydrocarbon bearing intervals encountered, with a current rate of around 100 boepd. Production from the other two hydrocarbon bearing intervals is scheduled for later dates. |
·; | NN82 was completed this month, January 2020, and production is expected to start shortly. |
·; | The rig is relocating to IG143, a follow-up well to the successful IG103 sidetrack and IG142 wells. |
·; | Drilling of the R101 sidetrack by a second rig continues and is scheduled to complete in Q1 2020. |
In Russia:
·; | The workover and sidetrack of Well 18 has been completed and the well is currently producing at 1,282 boepd with a wellhead pressure of 1,161 psi. |
·; | Well 5 production has been stable through Q4 at 400 boepd with no further acid jobs carried out. |
·; | The successful workovers of these two wells increased the number of producing wells to six and more than offset the production decline in Well 20. Average daily production in 2020 is expected to exceed 5,250 boepd without the need for further workovers. The rig has now been demobilised. |
Liquidity
In $m | 31 Dec 2019 | 30 Jun 2019 | 31 Dec 2018 |
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Total cash and cash equivalents | 20.5 | 10.7 | 19.2 |
Bond liability (principal and interest accrued) | (5.7) | (5.7) | (11.3) |
Net cash | 14.8 | 4.9 | 7.9 |
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Approximate sales value of gas and oil inventory | 4.1 | 8.0 | 9.9 |
Our Ukrainian subsidiary held 14 million cubic metres of gas and 27 thousand barrels of oil inventory available for immediate sale at 31 December 2019. Approximate sales value of gas and oil inventory is calculated using average sales prices for December 2019.
It is anticipated that the Group will be debt free after the final bond payment of $5.8m scheduled for February 2020. Access to undrawn credit facilities is maintained, although management is confident that execution of field development plans in Ukraine can continue to be financed from operational cash flow.
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 2018 Annual Report. Final resolution of the 2010 rental fee claim case is expected in the next few months. As previously reported, in October 2019 the second of the eight 2015 cases was closed in favour of JKX's subsidiary in Ukraine, Poltava Petroleum Company (PPC). Final resolution of the remaining six 2015 rental fee claims cases, four of which are currently suspended, is expected during 2020 and 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 2018 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.
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 |
Ben Fraser, CFO
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EM Communications | +44 (0) 20 7002 7860 |
Stuart Leasor, Jeroen van de Crommenacker
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