Page 10 - FSUOGM Week 02 2020

FSUOGM PERFORMANCE FSUOGM
Ukraine-focused JKX reports bumper year in 2019
UKRAINE
Higher output has helped shield JKX from bearish gas market conditions in Ukraine.
SHARES in London-listed JKX Oil & Gas climbed 9% during early trading on January 9, after the company reported a 20% growth in out- put in 2019 at its fields in Ukraine and Russia.
Production in Ukraine soared 52% to 5,584 barrels of oil equivalent per day, the company said in a stock filing, while Russian output was flat at 5,158 boepd. This brought its total for the year to 10,748 boepd.
JKX’s rising production has come on the back of an extensive workover and drilling cam- paign it is undertaking at its five concessions in Ukraine’s eastern Poltava region. The company will gain this year from the launch of a new well in December at the West Mashivska field, WM4. The well is now flowing at a rate of 100 boepd from the deepest of three hydrocarbon-bearing intervals, with production due to start at the other two at a later point.
JKX also finished another borehole this month at the Novomykolaivske field, NN82, which it said would come on stream shortly. Work on a new sidetrack well, R101, is also underway at the Rudenkivske deposit, slated for completion in the first quarter. The company is also moving a rig to the Ignativske field to sink
the IG143 well, following up on other successful wells at the site.
Like other Ukrainian producers, JKX has come under pressure this year as a result of a steep decline in domestic gas prices. It sold its gas at an average price of only $206 per 1,000 cubic metres in 2019, versus $308 in the year before.
Higher output has helped shield JKX from these bearish conditions, however, with the company managing to keep its revenues stable. It had $14.8mn in net cash at the end of Decem- ber, compared with $7.9mn a year earlier, and expects to become debt free after making a final $5.8mn bond payment in February.
“Access to undrawn credit facilities is main- tained, although management is confident that execution of field development plans in Ukraine can continue to be financed from operational cash flow,” it said.
Casting a shadow on JKX’s good fortunes, the company is still in court contending claims lodged by Ukrainian tax authorities relating to rental fees in 2010 and 2015. It expects to get a final resolution in these cases during 2020 and 2021. Court rulings so far have been in its favour.™
POLICY
Minsk slaps tax on Russian oil transit as dispute with Moscow snowballs
BELARUS
Russia and Belarus still need to agree a new oil supply deal.
BELARUSIAN President Aleksandr Lukashenko has imposed an environmental tax on oil transportation by pipeline through the nation’s territory following Moscow’s refusal to deliver crude oil to the post-Soviet nation in 2020 on Minsk’s terms.
According got the presidential media office, “in order to create a source of funds for the elim- ination of the environmental consequences of potential pipeline accidents related to transfers of oil and petroleum products in the territory of Belarus, a tax has been imposed on organisa- tions transporting oil and petroleum products at a rate of 50% of profits.” The environmental tax will also apply to the transit of oil and petroleum products across Belarus along trunk pipelines, Lukashenko’s media office added in a statement on December 10.
The new tax comes amid an energy row
between Moscow and Minsk over the price of Russian oil for Belarus, however, it was not immediately clear what impact the new tax would have on Russian oil transit to Europe via Belarus, news agency BelaPAN reported the same day.
Russia halted crude supply to Belarus on Jan- uary 1 after a contract expired, and the two coun- tries are in negotiations on a new agreement.
Minsk said later in January that it has secured a temporarily solution on shipment from a Rus- sian company, without paying a premium. Over the past years, Belarus bought oil on terms sim- ilar to that for Russia’s independent refineries, which involved a small premium, the person said, according to Bloomberg.
On January 4, deputy CEO at Belarusian state petrochemical conglomerate Belneftekhim Vladimir Sizov said that it intends to resume
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