JKX OIL & GAS plc suspends its planned 2015 capital investment programme in Ukraine
The Board of JKX (“JKX”) has decided that the combination of Ukrainian Government-imposed restrictions on selling its gas to industrial clients and the punitive rate of gas production tax requires the Company to suspend its planned 2015 capital investment programme in Ukraine until the economic parameters for investment improve.
Consequently, the Skytop drilling rig is being stacked following its recent completion of well Ig-140, and operational and ancillary costs reduced.
Further to the announcement of sales restrictions imposed on private gas producers by the Ukrainian Government Decree of 29 November 2014, JKX reports that it sold approximately 80% of its December gas production capacity to industrial customers, with only 20% of its gas production capacity shut-in during the month.
The market available to private gas producers in Ukraine, however, continues to contract with competition for the increasingly limited number of credit worthy industrial customers becoming intense. JKX anticipates that gas sales may reduce to less than 50% of its production capacity in Ukraine whilst the Decree remains in force and will necessitate shut-in of a proportionate level of gas production.
At the same time, the Ukrainian temporary level of tax on gas production of 55% has been incorporated into the Ukrainian tax code for 2015.
JKX Oil & Gas plc is an exploration and production company listed on the London Stock Exchange. The Company has licence interests in Ukraine, Russia, Hungary and Slovakia.
Source: JKX Oil & Gas plc