JKX hydrocarbon production in Ukraine falls 17% in 2M18

Hydrocarbon production at the Ukrainian subsidiary of
JKX Oil & Gas (JKX LN) fell 17% yoy to 3,420 boepd, Concorde Capital
calculated based on sector-wide data published by Energobiznes. In particular,
its natural gas output dropped 20% yoy to 23.8 mcm and its output of oil and
gas condensate fell 2% yoy to 5.35 kt in 2M18.

Last year, hydrocarbon  production at JKX’s
Ukrainian subsidiary dropped 12% yoy to 3,500 boepd and generated USD 25.3 mln
in EBITDA, or 95% of JKX’s total.

Alexander Paraschiy: The declining output in Ukraine is of little surprise, given that last
year the company had concentrated on the unsuccessful Rudenkivske project and
under-invested in production enhancement at its other assets. At the same time,
there is still a chance that JKX will be able to boost its natural gas output
in Ukraine if it’s able to launch five state-owned wells it mentioned in its Feb. 21 release. Despite such a production-enhancement
opportunity, we continue to treat JKX as a risky stock to invest in, mostly due
to unresolved payment issues with Ukrainian tax authorities.