12th Dec 2016 08:41
LONDON (Alliance News) - JKX Oil & Gas PLC on Monday said production was a fraction lower in November than in the previous month but said production has been at a higher rate over the course of the year thanks to its Russian operations.
Total production in November averaged 9,746 barrels of oil equivalent per day, 1.6% lower than the 9,900 barrels pumped out each day in October. While production in Ukraine rose 9.7% to 4,095 barrels per day from 3,734 barrels, Russian production dropped 8.4% to 5,651 barrels per day from 6,167 barrels.
Production declined from the previous month mainly due to the delay in carrying out routine acid stimulation work on Well 27 in Russia as it changed service provider. Following the stimulation, the well produced 16.0 million cubic feet per day, JKX said.
Production in the Ukraine rose following the workover of NN16, which flowed at a stabilised rate of 1.8 million standard cubic feet of gas and 13.7 stock tank barrels each day of condensate.
For the first 11 months of 2016, production has averaged 10,126 barrels of oil equivalent per day. That is 16% higher than the 8,754 barrels produced daily a year earlier. Production from the Ukraine has fallen 7.0% to 4,028 barrels per day from 4,331 barrels, offset by a 38% lift from Russia to 6,098 barrels a day from 4,415 barrels a day previously.
Operations to sidetrack the Hn-2 well in Hungary, access the remaining Pannonian reservoir gas, and test the oil potential of the underlying Miocene volcanoclastic sequence, which was previously productive in the Hn-1 well, will commence in early December, JKX said.
JKX said it appointed Viktor Gladun as the general director of its operating subsidiary in Ukraine, Poltava Petroleum Co, on Monday last week, taking advantage of his 13 years of experience within the industry in Ukraine.
On Tuesday last week, Ukraine's parliament passed the first reading of a new law which, amongst other things, reduces the gas production tax on new wells from a maximum of 29% to 12%.
"We welcome this initiative by the government of Ukraine which aims to make Ukraine's gas sector an attractive destination for investors and stimulate gas production in order to realize the strategic goal of energy independence by 2020," said Chief Executive Tom Reed.
"There are a number of stages still to go in the process, but if passed, the new law will have a material impact on the group's plans for investment in Ukraine and, specifically, on the implementation of the field development plan for the Rudenkivske gas field," he added.
The Rudenkivske gas field has the potential to recover up to 600.00 billion cubic feet of gas over the fields lifetime, with production expected to peak at about 110.0 million standard cubic feet per day, equal to about 18,300 barrels of oil - more than all of JKX's current production. A total of USD660.0 million is expected to be in vested into the field.
JKX shares were up 2.1% to 20.42 pence per share on Monday.
By Joshua Warner; [email protected]; @JoshAlliance
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