JKX Oil & Gas makes good progress in second quarter

JKX Oil & Gas updated the market on its second quarter operations on Friday, reporting that two new wells were completed in Ukraine in the period, as well as the workover of Well 5 in Russia.

The London-listed firm said daily production was up to 11,872 barrels of oil equivalent per day on 30 June, making for average daily production of 10,132 boepd for the first half - up 16% year on year.

It said the Ukraine gas sales price was significantly lower during the period, while the Russia regulated gas sales price remained unchanged.

Both Ukraine and Russia produced “sufficient” operational cash flow to finance its continued investment in the fields as planned.

Cash held at period end totalled $10.7m, and in addition to cash, the company said it was holding oil and gas inventory of approximately $8.0m in value.

Looking at its Ukraine operations, JKX said IG103 sidetrack production continued to exceed expectations, with current production at 1,366 boepd and a wellhead pressure of 1,320 psi.

To date, the well had produced 278 million barrels of oil equivalent.

It said WM3 had not shown any significant decline, and was currently producing at 559 boepd with a wellhead pressure of 1,326 psi.

The oil production increase was partly due to NN81, that was currently producing 153 bopd.

IG142 had been drilled to a depth of 2,515 metres, with the company saying logging results indicated a net hydrocarbon column thickness of 31 metres.

Once the well was completed, the rig would relocate to the West Mashivska field to drill WM4 - a follow-up well to WM3.

In Russia, the firm said the operational problems encountered during Well 5 operations were successfully overcome, with the well completed and, following initial acid jobs, put into production on 28 June.

The current gas rate was 144 million cubic metres per day, or 851 boepd.

Further acid jobs were planned, with JKX saying that as in other wells in the field, several acid jobs were required for wells to achieve their full potential.

The workover of Well 18 had started, and was expected to take four months.

That workover would include a repair of the production casing, removal of a parted tubing string, and the drilling of a sidetrack.

“Despite the significantly lower Ukrainian gas sales price, we remain in a net cash position and continue to finance all investment in the fields out of operational cash flow,” the company said in its statement.

First half cash outflow on capital expenditure exceeded $10m.

“In addition to cash we are holding 24,838 Mcm of gas and 45,939 barrels of oil inventory available for sale at our Ukrainian subsidiary.

“Approximate sales value of gas and oil inventory is calculated using average sales prices for June 2019.”

The remaining bond payments were $0.4m in August 2019, and $5.8m in February 2020, the board said.