JKX announces intention to sell Russian assets

The board of JKX Oil
& Gas (JKX LN) has decided to dispose of its 100% interest in Russian operating
subsidiary Yuzhgazenergie LLC, the company reported on Oct. 4. JKX is actively
seeking a buyer, it added in the release. Sales proceeds from the disposal will
be used to finance on-going activities and possible acquisitions in Ukraine.

Yuzhgazenergie
operates the Koshekhablskoye gas field (five wells) in Adygea, southern Russia.
While producing more than half of JKX’ hydrocarbons, its Russian subsidiary contributed
less than 25% to the company’s revenue and operating profit. In 1H21, JKX sold
natural gas in Russia at USD 52/tcm (-4% yoy), or a 78% discount to the price
at JKX’ Ukrainian assets.

Alexander Paraschiy: This is a long-awaited decision that looks strategically correct for
the company. However, the way the company reported on it (just an intention,
allegedly without concrete buyer options) suggests there may not be much
interest in Russian asset.