JKX to Develop non-Ukrainian Business
UK-listed JKX Oil and Gas is to focus more of its effort on gas prospects in Hungary and Slovakia, as both low oil prices and tax issues in Ukraine took the shine off its 2015 results.
Revenues in 2015 were 40% lower year-on-year at $88.5mn, and on March 21 the company reported an operating loss of $10.7mn, compared to a $11.6mn profit in 2014. Net of exceptional items, it lost $81.5mn (2014: $79.5m loss).
Hungary become more strategic for JKX, the firm said, after it was awarded new licences last year. Despite low oil prices, the company said its prospects in Hungary and Slovakia remain attractive and it is positively reviewing investment options for licences there in 2016.
JKX now has a 100% interest in six new production licences in Hungary covering an area of 200km2, and a 25% interest in four exploration licences in Slovakia covering 1,376km2.
It began producing gas from its small Hajdunanas field in northeast Hungary in 2009 but production there and from the Gorbehaza field was suspended in 2013 by the operator at that time. JKX has since taken 100% interest in the fields and is seeking a farm-in partner with a view to re-developing Hajdunanas.
JKX’s 2015 production was mainly in Russia and Ukraine which averaged 7,271 boe/d (down 9% on 2014) and 4,325 boe/d (down 10%) respectively – in both cases, mostly gas production. No new wells were drilled in Ukraine due to the introduction of the 55% rate of production tax and foreign exchange controls earlier in 2015. Gas production tax rates were reduced to 29% for 2016 and the gas sales restrictions were lifted, but JKX cautioned that Ukraine’s economy remains fragile.
Mark Smedley