JKX returns all its Ukrainian wells into production

Independent natural gas producer JKX Oil &Gas (JKX LN) received confirmation from a distribution company that it can resume delivering gas to all its industrial customers in Ukraine, the company reported on March 2. Last year, the Ukrainian government forbid private gas distribution companies to deliver gas to 168 largest industrial consumers between Dec. 1, 2014 and Feb. 28, 2015. Now that JKX received the confirmation that the government regulation has expired, it has returned all its Ukraine-based wells to full production.

Alexander Paraschiy: The current development will be beneficial primarily to JKX, which suffered from the imposed supply restrictions the most among publicly listed gas producers. Recall, JKX warned its gas production would be halvedin Dec. 2014 – Feb. 2015, as compared to November, due to the market-limiting regulation. Its actual output appeared to be slightly better, at just a 17% m/m decline in December and 43% m/m decline in January (as compared to Nov. 2014). Yet this was the biggest decline among private Ukrainain gas producers. 

The fact that the Ukrainian government has not extended its decree that grants exclusivity in large consumers’ gas supplies to the state monopoly Naftogaz is encouraging news, in and of itself. We saw a high likelihood that this regulation would be prolonged, and we still see that risk.