JKX misses 4Q production plan, seeks USD 40 mln in debt
28 January 2013
JKX Oil & Gas (JKX LN) issued five-year convertible bonds for more than USD 40 mln to finance its development and exploration program, the company announced on Jan. 28. The bonds will offer an 8% coupon. In a Jan. 25 statement, the company reported its average hydrocarbon production reached 8,000 boepd in 4Q12 (up 3.4% qoq), with the production from its Russian assets accounting for 1/3 of the company’s total output. Without specifying a figure, the company also said its cash balances have declined from USD 10.5 mln as of end-1H12 as a result of asset development in Russia.
Roman Dmytrenko: The company’s total hydrocarbon output for the last quarter turned out to be 20% below management’s October guidance – most likely due to an unexpected output drop in Ukraine. Our calculation suggests the production of the company’s Ukrainian assets fell 22% qoq to 5,330 boepd in 4Q12. At the same time, the average output from the Russian Koshekhablskoye field has more than tripled qoq to 2,660 boepd.
The drop in its highly profitable Ukrainian production and its substitution with 4x cheaper gas produced on Russian territory is already having a visibly negative effect on the company’s cash flow and ability to further implement its development program without external financing.
