JKX Oil & Gas PLC Quarterly Operations Update (0549D)

TIDMJKX

RNS Number : 0549D

JKX Oil & Gas PLC

05 October 2018

5 October 2018

JKX Oil & Gas plc

("JKX", the "Company" or the "Group")

Quarterly Operations Update

 
                                       Q3       Q2        Q on       9 months   9 months      Y on 
                                                        Q % Change                          Y % Change 
                                      2018     2018                    2018       2017 
 Total production, boepd(1)          9,411    8,707       8.1%        8,958      8,645        3.6% 
 Ukraine, boepd                      4,014    3,585       12.0%       3,667      3,595        2.0% 
 - Average gas production,            19.4     16.7 
  MMcfd(2)                            (549)    (473)      16.2%        17.4       17.3        0.6% 
   (Mm(3) d)(3)                                                        (493)      (490) 
 - Average oil and condensate 
  production, boepd                   785      805       (2.5)%        776        711         9.1% 
 Russia, boepd                       5,302    5,030       5.4%        5,199      4,905        6.0% 
 - Average gas production, 
  MMcfd                               31.5     29.8       5.7%         30.8       29.1        5.8% 
  (Mm(3) d)                           (892)    (844)                   (872)      (824) 
 - Average condensate production, 
  boepd                                60       57        5.3%          58         54         7.4% 
 Hungary, boepd                        95       91        4.4%          92        145        (36.6)% 
 - Average gas production, 
  MMcfd                               0.5      0.5          -          0.5        0.8        (37.5)% 
  (Mm(3) d)                           (14)     (14)                    (14)       (23) 
 - Average condensate production, 
  boepd                                8        7         14.3%         8          10        (20.0)% 
 

Average Group production for the third quarter of 2018 was 9,411 boepd, which represents an 8.1% increase compared to the second quarter of 2018. Year-on-year Group production was up by 3.6%.

Group production on 30 September was 9,610 boepd comprising of 5,025 boepd in Russia and 4,585 boepd in Ukraine.

In Ukraine, production quarter-on-quarter increased due to continuing production from R3, completed late in Q2, and the performance of the work programme:

-- WM215, a leased well, was successfully worked over in September and came online on 26 September at an initial rate of 9.1 MMcfd (258 Mm(3) d) with a WHP of 2400 psig(4) on a 30/64(th) " choke. The well is currently producing at 4.4 MMcfd (125 Mm(3) d) with a WHP of 2300 psig on a 20/64(th) " choke and has yet to stabilise. This is the first well to be tested by PPC on the undeveloped West Mashivske field where further development is planned.

-- E308, the first new well to be drilled since 2014, was successfully completed on 4 September. Production commenced from this well on 17 September and has since stabilised at 0.9 MMcfd (25 Mm(3) d).

-- IG101 sidetrack was worked over which resulted in an increase in the gas rate from 0.3 MMcfd (8 Mm(3) d) to 4.1 MMcfd (116 Mm(3) d) at the start of September. The gas rate has since declined to 0.8 MMcfd (23 Mm(3) d).

-- Due to complications during the workover of the leased well R11, caused by poor condition of the well, it was not possible to reach the primary target, V26. Plans to evaluate the deeper reservoir in this location at a later date are being investigated.

A tender process has been initiated in order to find a suitable drilling rig to carry out the drilling planned in the near future, starting with a new well on the West Mashivske field.

In Russia, production has increased quarter-on-quarter. This is the result of successful acid jobs on Well 25 and 27 in the first week of July. The contracted rig for the well workover programme is currently en route to the Koshekhablskoye field with the start of the Well 5 workover expected towards the end of the fourth quarter.

The process of divesting the Company's Hungary assets is currently ongoing.

Liquidity

Balance sheet extracts at quarter ends were as follows:

 
 In $m                          30 Sep   30 June   31 Mar   31 Dec 
                                  2018      2018     2018     2017 
 
 Total cash                        4.9       7.6      6.5      6.9 
 Bond liability (principal 
  and interest accrued)         (10.9)    (11.3)   (10.9)   (16.8) 
 Net debt                        (6.0)     (3.7)    (4.4)    (9.9) 
 
 Trade and other receivables       3.2       3.3      2.9      3.3 
 Trade and other payables        (0.6)     (1.9)    (5.6)    (5.4) 
 Approximate sales value 
  of gas and oil inventory         9.9       3.1      3.3      3.0 
 

The Company's bond liability relates to a convertible bond with $10.7m principal outstanding. The bond pays an annual coupon of 14% semi-annually in arrears and matures in 2020. The bond terms are described in detail in the 2017 Annual Report.

Approximate sales value of gas and oil inventory are calculated using the latest price information available in Ukraine. A flexible trading approach has been adopted on the sale or holding of gas based upon price fluctuations in the market. At 30 September 2018 inventory consisted of 791 MMcf (22,403 Mm3) of gas and 24,120 bbl of oil held and available for immediate sale at our Ukrainian subsidiary. Since 30 September 353 MMcf (10,000 Mm3) of gas was sold for $3.7m.

(1) boepd - Barrels of oil equivalent per day

(2) MMcfd - Million cubic feet per day

(3) Mm(3) d - Thousand cubic metres per day (1 m3 = 35.315 cf)

(4) psig - pounds per square inch gauge

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                              [phone] 

Ben Fraser, CFO

   EM Communications                          [phone] 

Stuart Leasor, Jeroen van de Crommenacker

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October 05, 2018 02:00 ET (06:00 GMT)