JKX decreases EBITDA 22% yoy in 1H20

JKX Oil & Gas (JKX LN) reported on Aug. 11 that
its revenue decreased 23% yoy to USD 35.1 mln in 1H20. The revenue of its Ukrainian
assets decreased 28% yoy to USD 26.8 mln mostly on a decrease of hydrocarbon
prices, while its revenue in Russia increased 2% yoy as a result of higher
hydrocarbon output (up 7% yoy). The company’s EBITDA decreased 22% yoy, we
estimate, to USD 14.4 mln, while the EBITDA margin stood flat yoy at 41%. JKX’s
net income fell 30% yoy to USD 1.5 mln.

The company has no borrowings as of end-June, while
its cash balance stood at USD 14.4 mln (vs. net cash of USD 14.9 mln as of
end-2019). It also reported that it secured a USD 5.0 mln credit line from Alfa
bank in July to finance its possible short-term needs.

Alexander Paraschiy: As natural gas prices are likely to recover in Ukraine in 2H20, the
company’s P&L is set to slightly improve, even though the absence of active
drilling operations in 1H will lead to a gradual decline of hydrocarbon output
in Ukraine (by 6-7% on quarterly basis). The recovery of drilling and workover
operations in late 2H20, along with the expected recovery of natural gas prices,
should result in JKX’s P&L improving in 2021. We remain positive on JKX’s
mid-term value growth.