JKX hydrocarbon output falls 13% in 3Q20

JKX Oil & Gas (JKX LN) produced 10,245 boepd of
oil hydrocarbons in 3Q20, the company reported in its Oct. 8 trading update. This
is 3.5% more compared to 2Q20 and 12.6% less yoy. The primary reason for the
yoy decline is a 24.0% plunge in output in Ukraine (to 4,727 boepd, or 4.8%
less qoq). At the same time, in Russia the company improved its output 0.3% yoy
and 11.9% qoq to 5,519 boepd.

In 9M20, the company’s output was 10,378 boepd, which
is 2.7% less yoy, as an increase in Russia by 4.6% yoy was offset by a decrease
in Ukraine by 9.4% yoy.

The company also reported that it has accumulated
large liquidity as its cash balance reached USD 18.8 mln as of end-September,
with no debt (vs. USD 14.5 mln in cash a quarter ago and USD 14.9 mln net cash
as of the year’s start). The company announced its intention to spud its first
well in Ukraine in 2020, which will be its IG-146 well.

Alexander Paraschiy: The company’s quarterly output exceeded our expectations of about a 7%
qoq decline in Ukraine (JKX intensified production at one of its new wells to
improve the result) and only a slight increase of output in Russia. In 4Q20, we
expect a moderate output decline in Ukraine and Russia, and we estimate JKX’s
full-year 2020 output will be 4.5%-5.0% less yoy.