JKX Outlines Ukraine Field Plan

UK-based producer JKX Oil & Gas said September 21 it has completed field development plans (FDPs) for Russia and Ukraine.

In Ukraine, it identifies a technical solution to potentially unlock approximately 600bn ft³ of recoverable gas reserves previously considered uneconomic at the Rudenkivske gas field. The field is estimated to have 2.8 trillion ft³ gas in place.

Its FDP calls for 135 wells to be drilled over ten years, resulting in plateau production of 110mn ft³/d (18,300 barrels of oil equivalent per day) but requiring $660mn of capital investment. But full field development would require the use of modern equipment and services not currently available in Ukraine. Further reform of Ukraine's upstream incentives, in particular by reducing royalty rates, would spur full field development, JKX added.

JKX adds that its Russian FDP covers the Koshekhablskoye gas field and is based on a new reservoir audit by DeGolyer & MacNaughton. This gives a total proven plus probable mid-2016 reserve figure net to JKX of 85.5mn boe, up from a previous end-2014 figure of 64mn boe. However, the proven reserve component included in those figures has declined to 46.5mn boe (from 53.4mn boe).

The company said its overall production for the year to August 31 was up 17.5% at 10,271 boe/d, including a 38% increase in Russian gas production, but overall revenue was 19.5% lower than in the first eight months of 2015.

JKX subsidiary in Ukraine, the Poltava Petroleum (Credit - Poltava Petroleum Company)

JKX expects the outcome of an international arbitration tribunal on its claim against Ukraine by the end of this year, relating to overpayment of some $180mn. Separate unrelated legal claims in Ukraine remain ongoing. Meanwhile it says it is cooperating with a police investigation there, following police raids in Poltava in June. The firm has notified both UK and US embassies in Kiev and continues to “vigorously contest” the validity of claims made.  

Mark Smedley