JKX, Serinus boost Ukraine’s natural gas output 23% m/m in April

The Ukrainian subsidiaries of Serinus Energy (SEN PW) and JKX Oil & Gas (JKX LN) boosted daily production of natural gas 23% m/m in April, as can be derived from monthly gas balance statistics reported by Energobiznes. JKX’s Poltava Gas Company produced about 3,630 boepd in April, which is still a 14% decline on a year-over-year basis. Serinus’s KUB-Gaz also demonstrated a yoy decline (-19%) to produce about 2,840 boepd (net to Serinus working interest).

Gas production by Regal Petroleum (RPT LN) was flat m/m at an estimated 915 boepd, and down 7% yoy. NGD, a subsidiary of local energy and utility giant DTEK (DTEKUA), demonstrated spectacular growth on a m/m basis (+7%) and yoy basis (+63%) to produce about 18,600 boepd of gas in April.

Alexander Paraschiy: The month-over-month increase in gas output by the assets of Serinus and JKX looks surprisingly high, and it might be explained by their recovery after the gas trading limitations, valid in Ukraine during last winter, were removed. At this stage, it’s very unlikely that the companies will be able to restore their gas output further in the coming months, given that their investment activity in Ukraine has been decreasing since 2H14.

Meanwhile, we look forward to see what tax regime for gas producers the Ukrainian government will offer to substitute the investment-prohibitive taxation introduced last August and toughened since January. If the new tax burden will be some 30%-40% smaller than currently, we can expect JKX and Serinus will restore their investment activity in Ukraine to show an output increase in mid-2016.