JKX fails to sidetrack new well in Russia

JKX Oil & Gas (JKX LN) reported on March 7 a
technical failure during a workover of well #5 at its Koshekhablskoye field in
Russia. After sidetrack drilling at a total depth of 5,204 m and satisfactory
geological results, the well suffered from drill pipe parting that left a 1,119
m fish in the well. The workover has been “suspended pending inspection of the
drill pipe,” JKX reported. 

Alexander Paraschiy: The failure is clearly negative news, but not a disaster for JKX since
well #5 was not contributing to the company’s production for at least five
years. With the failure, JKX is unlikely to see any increase in natural gas
production in Russia this year. But given that profit from its Russian gas
production is not significant for JKX (1H18 operating profit in Russia was a
fraction of its Ukraine profit, despite higher hydrocarbon output in Russia),
the accident’s consequences won’t be material on the company’s P&L.