29th May 2008 11:44
29 May 2008
JKX Oil and Gas plc
AGM STATEMENT
Speaking at the Annual General Meeting today, JKX Oil & Gas plc's Chairman, the Rt. Hon. Lord Fraser of Carmyllie Q.C., said:
"I am pleased to report that your Company continued to grow both revenues and profits in 2007, with average daily production from our core Ukrainian production licences rising by 13% to 12,579 boepd. The Company acquired its first production asset in southern Russia in the period resulting in almost a doubling of its proven plus probable reserves to 76 million barrels of oil equivalent.
The Company successfully drilled and completed 13 new wells on its Poltava production licences in 2007, with six of these wells targeting new productive structures beyond the established field perimeters. Logging and production data from these wells have been included in the ongoing reserve review of the Ignatovskoye, Molchanovskoye and Novo-Nikolaevskoye production licences which is scheduled for completion early in the third quarter.
The 2008 drilling programme continues apace with 4 new wells drilled to date, of which three have been completed for production. The ongoing programme encompasses infill development wells, further appraisal of the productive extensions to the Ignatovskoye and Molchanovskoye Fields and two exploration wells on the adjacent Zaplavskoye licence. The second half of the year will also see us return to the large, but technically challenging Rudenkovskoye Field to undertake an extensive series of fracturing tests on the three producing wells on the field. I am hopeful that this programme will lead to identification of a preferred reservoir stimulation procedure to be employed for the full field development.
Notwithstanding our continuing drilling successes, we currently remain constrained to delivery of between 40 to 42 MMcfd of gas from our Poltava licences. Tie-in to the 56 inch Soyuz pipeline is now scheduled for the third quarter of the year, and I envisage that this will allow us to increase gas delivery from Poltava to approximately 50 MMcfd by year end.
The Company remains committed to broadening its portfolio of both development and exploration licences in Ukraine and is actively seeking attractive assets to acquire. We continue to enjoy a stable working environment and I am confident this will continue through the year end.
I am very pleased that with our acquisition of Yuzhgazenerie in southern Russia. This year is seeing us undertake an intensive work programme to bring the field back on-stream. A 105 sq km 3D seismic programme has already been completed; the drilling rig is currently being mobilised from our operations in Ukraine into Russia to commence well work-over operations and we are on schedule to test gas from the first work-over well at the beginning of the third quarter. After detailed inspection of the existing gas processing facilities, we have deemed it prudent on economic grounds, and advisable on HSEC grounds, to replace rather than refurbish the majority of this facility. I recognise that the resulting tight schedule for design and procurement of new facilities may push delivery of sales gas into 2009.
The Company is continuing to seek further acquisitions of gas assets in southern Russia.
The Company continues to broaden its exploration portfolio in central and eastern Europe, and Turkey. The Company announced in December that it had farmed into the two Hernad exploration licences in Hungary and, immediately following the end of the reporting period, the farm-in to the two south east Bismil licences in south east Turkey. Last month, the Company announced the farm-in to three exploration licences in Slovakia. Initial results of exploration drilling in Turkey and Hungary will be forthcoming in the second half of the year.
Since the end of the reporting period, the Company has disposed of its Italian exploration portfolio (including the Aglavizza gas discovery) to Mediterranean Oil and Gas and, following the drilling of a further appraisal well next month, is seeking an exit from its remaining North America exploration asset.
The Company announced the appointment of Nigel Moore as Non-executive Director, and Peter Dixon and Martin Miller as Executive Directors in the middle of the period. At this time of rapid growth in our business, I have deemed it appropriate to seek to further strengthen the Board and hope to announce the appointment of two additional Non-executive Directors in the near future.
Your Board is committed to delivering increasing returns to our shareholders. I am pleased to announce for the third consecutive year that we are recommending a doubling of the dividend for the period."
ENDS
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Related Shares:
JKX.L