27th Mar 2014 14:29
LONDON (Alliance News) - JKX Oil & Gas PLC Thursday said its pretax profit doubled in its full-year 2013 as lower costs offset a fall in gas revenues from Ukraine.
The oil and gas exploration and development company, which operates in Ukraine, said its pretax profit increased to USD4.0 million from USD1.6 million the previous year despite an 11% fall in revenues to USD180.7 million from USD202.9 million in 2012.
The company said its revenues fell as Ukraine sales fell 21% to USD151.0 million from USD191.1 million the previous year as production volumes fell 27.8% in the country and the average realised gas sales price in the country fell 1.3% to USD11.96 per million cubic feet from USD12.12 per million cubic feet in 2012.
However the company said these figures were partially offset by a five-fold increase in revenues from Russia to USD28.9 million from USD5.1 million the previous year as gas sales prices in Russia increased 6.5% to USD2.77 per million cubic feet rather than USD2.60 per million cubic feet in 2012.
JKX said that the geopolitical risk of its future gas prices in Ukraine has increased and the price at which it can sell its gas in Ukraine was set according to a Russia-Ukraine gas border price due to a long term agreement between the two governments.
Importantly, as part of an International Monetary Fund agreement with Ukraine announced on Thursday, in order for Ukraine to achieve financial assistance worth between USD14 billion and USD18 billion, it must complete certain conditions including raising domestic gas prices by 50%.
However, JKX said its cost of sales fell significantly, by 16% to USD147.3 million rather than USD174.9 million the previous year as production based taxes, impairments and write off costs all fell at the company, leading to a gross profit of USD33.4 million compared from USD28.0 million in 2012.
The company did not declare a dividend for the period but said that it plans to review its dividend policy going forward.
JKX shares were down 1.2% to 60.00 pence Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
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