Serinus, JKX gas production in Ukraine falls in January, Regal improves

Natural gas production at the Ukrainian subsidiaries of JKX Oil & Gas (JKX LN) and Serinus Energy (SEN PW) plummeted in January, as suggested by preliminary stats from the Energy Ministry. January daily output of JKX’s subsidiary amounted to 0.37 mcm of gas (or about 2,175 boe), which is a 31% decline from December and a 43% drop from November. Earlier, JKX warned that its gas production in Ukraine may halve in December and January (as compared to November levels) due to its inability to find appropriate demand owing to the government’s ban on selling its gas to large industrial consumers.

The daily output of KUB-Gaz, Serinus’s subsidiary, amounted to 0.72 mcm (about 2,966 boe, net to Serinus’s working interest), which is a 21% decline from December and 22% drop from November. At the same time, Regal Petroleum (RPT LN) managed to boost its gas production, with daily output amounting to 0.155 mcm (about 974 boe), or a 5% increase m/m and 2% growth from November.

Total natural gas production in Ukraine decreased 1% m/m to 1,670 mcm/day in January, while private producers managed to increase their daily production 1% m/m.

Alexander Paraschiy: It seems like most private producers, other than JKX Oil & Gas, were able to find their niche in the Ukrainian gas market without supplying any of the 168 large industrial consumers they’ve been restricted from. While we do not know what’s particularly wrong with JKX, it’s apparent the company hasn’t made sufficient efforts to seek new niches on the local gas market.

In the case of Serinus’s KUB-Gaz, whose assets are located in the Luhansk region of Ukraine (with some minor assets located directly on the territory occupied by the Russian-backed terrorists), the decline in output isn’t a big surprise. What’s most surprising is Regal’s slight increase in output after three consecutive years of decline.