The first half of 2009 saw average production for Eastern European-focused gas play JKX Oil & Gas drop 12 per cent to 10,191 barrels of oil equivalent per day (boepd). However, fresh wells coming onstream in core production country Ukraine, plus the start-up in August of new production in Hungary, has seen production recover to more than 13,000 boepd. The company expects average production in the second half to come in at over 11,500 boepd.
While Ukrainian production remains a constant work-in-progress and the nascent output in Hungary can be expected to grow further, thanks to ongoing exploration, the Yuzhgazenergie assets in southern Russia are being completely rehabilitated. These were acquired in early 2008 and are expected to enter production by the end of 2010.
However, the worrying news for investors is that management now says that the gas price convergence story - which previously saw Ukrainian gas prices guaranteed to rise year-on-year towards European levels - is practically played out and the next gas price shift in Ukraine may even be marginally down from current levels.
Evolution Securities anticipates full-year diluted EPS of 37.4¢, rising to 61.3¢ in 2010 (49.4¢ in 2008).
| JKX OIL & GAS (JKX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 235p | MARKET VALUE: | £368m | |
| TOUCH: | 234-235p | 12-MONTH HIGH: | 432p | LOW: 116p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 228¢ * | NET FUNDS: | $54.1m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 117 | 83.6 | 39.4 | 2.2 |
| 2009 | 79 | 44.7 | 20.2 | 2.3 |
| % change | -33 | -47 | -49 | - |
Ex-dividend: 9 Sep Payment: 16 Oct £1=$1.63 | ||||
