Russian investment firm intends to target JKX

Proxima Capital Group, led by a former top manager of Russia’s Alfa Bank, announced in a Feb. 5 press release that it’s currently “in the very early stages of considering a potential offer for JKX Oil & Gas” (JKX LN). The deadline to announce a firm intention or denial is March 5. The potential bidder plans to approach the company’s board to discuss its proposal, the release stated. In response, JKX’s board stated in a release that it has yet to be approached.

JKX shares surged 24% on Jan. 5 on heavy trading volume after skyrocketing 30% in the previous session. In one week, its shares gained 80% to close at GBP 0.23.

Alexander Paraschiy: The natural question is who’s behind Proxima and what it the likelihood that it will make any offer for JKX shareholders. At this stage, we only can list the names of potential bidders, which could be a group led by Ukrainian tycoon Igor Kolomoisky (the holder of the biggest stake in JKX, or about 27%), a group of Russian businessmen led by Aleksandr Zhukov, company CEO Paul Davies, or some other Russian group (Proxima’s CEO served in top positions at Russian VTB and Alfa Bank, as both entities were holders of large blocks of JKX previously).

Regarding a fair price for JKX, three months ago we estimated it at USD 0.66 (GBP 0.43). Currently, it might be valued at half of that, given the sharp devaluation of the Russian currency (half of JKX’s gas is produced and sold in Russia), the suspension of its drilling programs in Ukraine after an abnormal tax rate was imposed, as well as restrictions to sell its produced gas to Ukraine’s largest industrial consumers.