JKX successfully works over IG-101 well in Ukraine
16 January 2018
JKX Oil & Gas (JKX LN) reported on Jan. 15 it
completed a workover of its IG-101 well with sidetracking in December 2017 in
what was the first drilling operation of its Ukrainian subsidiary since 2015.
The well’s current production is 2.1 MMscf/d of natural gas and 55 boepd of
condensate, which meets management expectations, the company CEO said.
Alexander Paraschiy: The well’s
current output is about 400 boepd, or 13% of JKX’s monthly hydrocarbon output
in Ukraine. The workover results, therefore, are really encouraging. With a cut
in the natural gas production tax to 12% for well spudded this year (vs. a 29%
tax for older wells), JKX should intensify its drilling operations in 2018.
The key risk for the company, however, is that it
might not have enough financial resources to start a massive drilling campaign.
Also, the company has unresolved tax issues in Ukraine that pose additional
risks. Such risks could be reduced if the company secures additional external
financing. At this stage, we are not rating JKX stock.
