JKX reduces Ukraine output 12% m/m in February

JKX Oil & Gas (JKX LN) reported on March 14 it produced 9,801 boepd of hydrocarbons in February, which is a 3.3% decline m/m and about 6.7% growth yoy. Its February production decreased from January in both its key markets, Ukraine (-11.5% to 3,854 boepd) and Russia (-2.4% to 5,643 boepd). The company also reported on the start of natural gas and condensate production in Hungary (304 boepd last month).

The key reason for the JKX output decline in Ukraine was a 47% m/m plunge in output (to 489 boepd) at its new NN-47 well, launched in December. Its other Ukrainian assets decreased their output 1.8% m/m.

Alexander Paraschiy: The sharp output drop at its NN-47 well – located at the firm’s least developed but biggest by 2P reserves Rudenkivske field – does not look encouraging. It suggests that the development of Rudenkivske will be much more capital-intensive, and therefore will generate much less free cash flow than other Ukrainian fields. We retain our neutral view on JKX stock.