JKX revenue, EBITDA decreased by third in 2020

JKX Oil & Gas (JKX LN) generated USD 69.6 mln
revenue in 2020, which is a 32% decline yoy, according to the company’s annual
accounts reported on March 31. The decline was mostly a result of lower
hydrocarbon prices in Ukraine (natural gas prices fell 36% yoy) which resulted
in Ukrainian revenue falling by 37% to USD 52.8 mln. Meanwhile, revenue in
Russia decreased by just 4% yoy as natural gas prices were more stable there.

The company’s EBITDA (net of exceptional items)
decreased 31% yoy to USD 28.9 mln and EBITDA margin slightly improved to 41.5%
in 2020. Its Ukrainian EBITDA decreased 38% yoy to USD 26.0 mln, still
remaining a key contributor to the company’s financial result. Its EBITDA in
Russia improved 10% yoy to USD 7.7 mln, and its cost saving measures allowed it
to decrease operating losses in other locations (primarily in the UK) by 41%
yoy to USD 4.0 mln.

Meanwhile, the company’s bottom line fell just 11% yoy
to USD 19.9 mln, which was a result of the positive effect of exceptional
items. The company decided to pay no dividends from its profit.

JKX improved its cash position to USD 24.3 mln as of
end-2020 (from USD 20.6 mln a year before) and finished the year with zero debt
(vs. USD 5.7 mln borrowings a year ago).

In the year 2021, the company is planning to expand
its Ukrainian operations by developing its own fields and seeking for
opportunities to acquire new licenses, while keeping in mind cost control
measures.

Alexander Paraschiy: A strong balance sheet, the visible effect of cost-cutting measures,
as well as the improvement of natural gas prices in Ukraine allow us to expect
that the company will improve its P&L in 2021, even though we do not expect
it to be able to raise hydrocarbon production. We remain optimistic about the
company’s ability to increase its value in the mid-term.