Whilst UK car drivers lament the fact the price of petrol has recently surged beyond £1 per litre, there is little respite in the offing. Despite estimates of a considerable drop in oil consumption this year, signs of an economic recovery are growing in number and a return to increasing levels of oil demand is not far away.
Shareholders in JKX have exposure to bull markets in both commodities. And with the price of oil having dropped significantly from its highs of last summer, JKX’s exposure to the increasing price of gas has helped offset the resultant drop in earnings.
This year’s inaugural quarter has been far from plain sailing. Delays in completion and testing of new development wells at Poltava, Ukraine which hindered output in the final quarter of last year, again proved a significant headwind for production. Indeed the company’s 9,876 barrels of oil per day equivalent (boepd) represented a 14 percent drop on last year’s corresponding period.
Whilst gas production held firm at 41 million cubic feet per day (MMcfd), which equates to approx 6,850 boepd, oil production dropped by 34 percent to 4,687 barrels of oil per day (bopd). Indeed oil revenues took a hit as the average price realised dropped by 56 percent to US$35 per barrel. However at US$7 per thousand cubic feet (Mcf) JKX realised a 36 percent higher gas price.
As we have become accustomed to the bulk of the action at JKX occurs in Ukraine. Average production through the first quarter was 9,876 boe, comprising 41 MMcfd of gas and 3,083 barrels of oil and condensate.
Meanwhile in Russia, the group has started the initial 3 well workover operation in the Koshekhablskoye field, two of which are due for testing this month. And what’s more in Hungary, the Hajdúnánás Field development is underway and first gas is expected in July 2009.
On the exploration front, JKX remains fully committed to its pursuit of the production of tomorrow. In the Ukraine, PPC has applied for both easterly and westerly extensions to the Zaplavskoye exploration licence. In addition, the Hernad licenses in Hungary have provided further room for optimism.
Further a field in Bulgaria, having recently concluded of a 3D seismic survey across the Golitza licenses JKX hopes to identify a drilling prospect later this year. And in Slovakia recently completed seismic surveys have laid the…
