22nd Sep 2014 08:42
LONDON (Alliance News) - JKX Oil & Gas PLC Monday said it is facing a substantial rise in production taxes following the Ukrainian government's introduction of emergency legislation and said it will have to reduce capital expenditure to the tune of USD10 million to offset the additional taxation costs.
The Ukrainian government in August passed legislation which will substantially increase production taxes on the oil and gas industry for the period between August 1 and December 31, 2014. The most significant increase, according to a JKX statement at the time, was the tax increase on gas production, which will approximately double to around 55%.
JKX said it will need to cut its capital expenditure in order to mitigate the impact of the increase in taxation costs by approximately USD10 million over the period, around 25% of its total budgeted capital expenditure for Ukraine this year.
JKX said it will continue its drilling programme at Poltava, targeting the completion of the Elizavetovskoye well E-303, which will be followed by the oil-targeted IG-141 well in the Ignatovskoye field.
The company said its ongoing capital investment programme in Ukraine will be reduced in line with the shortfall in operating cash flow as a result of the tax rise.
JKX shares were trading 7.1% lower at 42.5 pence per share on Monday.
By Sam Unsted; [email protected]; @SamUAtAlliance
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