JKX's results were in line with forecasts but there's been a delay installing the second development rig in its main Ukraine field. The rig is only now ready to start working so it won't help boost production in the second half. But JKX says it should still meet its target to raise production from just under 12,000 barrels a day (bpd) to 20,000 bpd in 2011. There's also been a slow start up of some other wells following maintenance shutdowns.
In the six-month period, production rose 15 per cent to 11,689 bpd, although it's expected to be lower for the full year at just over 10,500 bpd due to the delays. And although oil revenue has also been boosted by high energy prices of late, recent doubts about the strength of global recovery and high levels of US oil stocks have seen oil prices fall back and look set for a period of volatility. Profit growth was also held back by exploration write-offs.
The good news is that Ukraine increased gas prices by 10 per cent at the beginning of August. JKX is well-placed to finance its exploration and developments programmes in Ukraine, Russia and Hungary until the Koshekhablskoye development comes on stream next year, having raised nearly £38m in January.
So Oriel Securities has raised its NAV estimates from 315p to 340p.
JKX OIL & GAS (JKX) | ||||
|---|---|---|---|---|
| ORD PRICE: | 290p | MARKET VALUE: | £498m | |
| TOUCH: | 289-290p | 12-MONTH HIGH: | 313p | LOW: 221p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 8 | |
| NET ASSET VALUE: | 283¢ | NET CASH: | $107m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 78.6 | 44.7 | 20.2 | 2.3 |
| 2010 | 104 | 49.1 | 20.7 | 2.4 |
| % change | +32 | +10 | +2 | +4 |
Ex-div: 8 Sep Payment: 15 Oct £=$1.55 | ||||
