JKX reports on January hydrocarbon output surge

JKX Oil & Gas (JKX LN) reported on Jan. 29 that
its IG103 well in Ukraine, commissioned in late December after side-tracking,
continues to demonstrate hydrocarbon yields that exceed the company’s initial
expectations. During the first month of operations, this well yielded 1,795
boepd on average, the company’s presentation said, which is the best result for
JKX since 2006. Due to this well’s operation, JKX has produced 5,129 boepd in
hydrocarbon output in Ukraine since the beginning of January. This is 38% more
compared to the company’s average 4Q18 output in Ukraine.

Alexander Paraschiy: If the IG103 well’s production stabilizes at 1,500-1,600 boepd for
some period of time, this will indeed become a driver for JKX’s improved output
in Ukraine in 1Q19, at minimum. However, the fact that this is the only well in
the last 12 years that has performed that strongly suggests that it is an
exception rather than the rule for JKX. In any case, we remain certain that the
company will improve its P&L and balance sheet this year, even though we do
not expect any breakthrough in average annual production of oil and gas.