JKX Oil & Gas’ production volumes continue to slip y-o-y in 1Q11

JKX Oil & Gas (LSE: JKX LN) announced its 1Q11 operational results on Friday: oil production fell 38% y-o-y to 2,246 bopd, and gas production dropped 14.2% y-o-y to MMcfd. In 1Q11, daily production in Ukraine, where the majority of JKX’s operations are located, averaged 8,252 boepd, down 22% y-o-y. Realized gas price increased 11.6% y-o-y to USD 8.25 per Mcf and oil price by 49.8% y-o-y to USD 92.29 per barrel. JKX said the installation of its LPG plant is on schedule, with first production planned for mid-year. Antonina Davydenko: The 1Q production volumes are disappointing for JKX given management’s previously stated plans to increase production volumes in 2011 after weak 2010 results (average daily production slid 11% y-o-y to 10,324 boepd). We forecast 2011 sales at USD 200 mln, providing for an estimated net income of USD 60 mln.