LONDON (Alliance News) - JKX Oil & Gas PLC Monday posted a drop in revenue and profit for the first half of the year, despite an increase in overall production levels, amid lower gas sales prices in Ukraine and a fall in the Ukrainian currency amid continued tensions in the country.
The Eastern Europe-focused oil and gas exploration and development company said group production increased in the first six month of the financial year, but earnings were hit by a fall in gas realisations in Ukraine and a sharp devaluation in the hryvnia during the first quarter, and by reduced Ukrainian oil and condensate production.
For the six months to June 30, JKX Oil & Gas reported a profit from operations after exceptional items of USD2.4 million, compared with a profits of USD9.4 million a year earlier.
Revenue in the first half fell to USD74.3 million, down from USD91.3 million the prior year.
"Revenues in the period have been adversely affected by lower gas realisations and lower oil production in Ukraine. However, we continue to benefit from strong oil, condensate, gas and LPG realisations which are expected to remain firm through the rest of the year," said Chief Executive Paul Davies in a statement.
The company said average production increased to 10,126 barrels of oil equivalent per day during the period from 9,040 barrels of oil equivalent per day a year before.
"The first half of the year saw a continuing improvement in the company's production levels, in line with our strategy in both Ukraine and Russia, with the contribution of the first two wells in our new Elizavetovskoye field demonstrating the potential of this asset to significantly raise the level of our Ukrainian production going forward," said Davies.
It said that work programmes in both Ukraine and Russia are fully funded, and production is anticipated to be maintained at around 10,000 barrels of oil equivalent per day through the second half of the year.
"Given the current political circumstances between Russia and the Ukraine, we do not expect to see a reduction in the contractual gas price pursuant to the supply agreement in the near future. We expect our gas realisations to remain stable or increase. We anticipate our oil realisations to remain firm. We expect our investment programme to yield production increases in the coming periods," the company said.
The company said the Elizavetovskoye plant upgrade in Ukraine is on schedule to double capacity to 30 million cubic feet per day in the third quarter, while Russian plant capacity modifications is on schedule to increase capacity to 60 million cubic feet per day by year end.
JKX Oil & Gas said it continues to seek opportunities for growth both organically and through acquisitions.
"However, the board recognises that the current political instability in eastern Ukraine is not conducive to increased investment activity," the company said.
The company's shares were down 3.2% before midday Monday at 45.00 pence.