JKX hydrocarbon output in Ukraine jumps 47% yoy in 1Q19

JKX Oil & Gas (JKX LN) produced 9,907 boped of
hydrocarbons in 1Q19, according to the company’s Apr. 17 trading update. This
is 13% more yoy and 12% more qoq. In Ukraine, the company produced 5,009 boepd
in 1Q19, which is 47% more yoy and 35% more qoq. The key contributor to the
boosted output in the quarter was the new IG-103 well, which was commissioned
in late December and is currently producing 1,449 boepd.

In Russia, JKX produced 4,873 boepd in 1Q19, which is
7% less yoy and 4% less qoq.

Alexander Paraschiy: JKX’s
boosted production in Ukraine, which is a much more profitable market than
Russia, is a positive development that is in line with our expectations.
Some degree of luck was involved as it’s a result of the better-than-expected
performance of a single well. The exceptional performance of this well is not
guaranteed for the future, but the achieved so far result will at least allow
JKX to significantly boost its cash generation and accumulate enough liquidity
to secure smooth repayment of any tax claims in Ukraine (if it loses litigation
against tax authorities) and for investment in further production growth. All
in all, we expect a positive reaction from the market to the company’s update.