JKX to start fracture stimulation of R103 well in 3Q12

JKX Oil&Gas (JKX LN) announced it signed a contract with Schlumberger, the world’s largest oilfield services company, to perform a 9-stage fracture stimulation of its R103 well in Ukraine’s Poltava region. Prerequisite tests are to be completed in 3Q12, while the fracture stimulation itself is planned for 2Q13. The R103 well, drilled back in 2010 but currently not producing, is part of JKX’s Rudenkovskoye Field, whose gas reserves account for over 20% of JKX’s total 2P gas reserves.

Roman Dmytrenko: Although it’s difficult to predict the outcome of the fracture stimulation, the involvement of Schlumberger suggest JKX could ramp up production in 2013 once the project is completed. Cost of the project is a concern for us. Nevertheless, any success will be positive for JKX as it will increase the viability of total reported Rudenkovskoye field’s economically mineable reserves.