JKX boosts by 1.5x the area of its most successful Ukrainian license

Natural gas E&P JKX Oil & Gas (JKX LN) was awarded an extension of its Elizavetovskoye production license by 48% to 104.7 sq. km., the company reported on May 18. The primary target in the extended area, called West Mashivske, is the Permian A8 sandstone reservoir, which is similar to the very productive Permian A2 carbonate reservoir of the Elizavetovskoye field.

Alexander Paraschiy: The news looks encouraging for JKX, given that Elizavetovskoye field proved to be the most successful and the most prospective for the company in Ukraine. Recall, JKX completed three debut wells at the Elizavetovskoye field in 2014 and all were successful. In 2H14, the new Elizavetovskoye filed contributed 31% to total output of JKX’s Ukrainian subsidiary. However, given the current limits that JKX imposed on its CapEx in Ukraine (it has stopped any drilling operations there), the company will hardly reap any economic effect of the new acquisition in the coming years, even if West Mashivske area is as good as the Elizavetovskoye field.