JKX Oil & Gas
reported a 17% yoy decrease in net revenue to USD 73.85 mln in 2016, the company reported
on March 20. Its reported operating loss fell 54% yoy to USD 34.75 mln, while dropping
63% to USD 3.93 mln when adjusted for non-recurring (exceptional) items. The company’s
EBITDA (adjusted for non-recurring items) decreased 6% yoy to USD 15.83 mln. JKX reported
net losses of USD 37.12 mln, a decrease of 54% yoy.
JKX’s cash flow
from operations improved 62% yoy to USD 14.64 mln and its net CapEx increased 21% yoy to
USD 6.82 mln. The company spent USD 19.89 mln on debt repayment and a bond repurchase in
2016, which resulted in a 46% yoy decrease of its cash balance to USD 14.07 mln. Its
total debt was halved yoy to USD 16.80 mln.
Ukrainian division remained the key contributor of the company’s revenue (USD 54.84 mln,
or 74% of total in 2016) despite its small contribution to total hydrocarbons output
(4,001 boepd, or 40% of total). It also remained the key generator of JKX’s adjusted
EBITDA, bringing in USD 17.38 mln. However, the division’s EBITDA decreased 39%
Russian division showed spectacular results in 2016, generating USD 6.61 mln in EBITDA –
a record-high level (vs. operating losses of USD 3.84 mln a year
Paraschiy: The company’s
overall 2016 P&L is better than what we initially expected, mainly due to a strong
performance in Russia. What disappointed us was a USD 27% yoy increase in recurring
general and administrative expenses. And that’s against the backdrop of significant
cost-cutting efforts at its U.K. offices.
We remain worried about the company’s ability to survive, amid USD 33.9
mln in potential tax liabilities to the Ukrainian government, which may be due this year.
Such a payment doesn't look affordable for the company, even when reducing it by USD 12.1
mln that was awarded by international arbitration. Given the recent
non-encouragingresults of JKX’s Rudenkivske
field, the biggest in terms of 2P reserves in Ukraine, we see no positive
catalysts for JKX in 2017.
This portion of our website is available to Concorde Capital clients only. If you are
a client, but not yet registered for website access, please click here. Registered clients, please enter your login
and password to proceed:
If you are interested in establishing a client relationship with Concorde Capital, our
sales desk would be happy to hear from you, please contact