With results from a second well test in the Koshekhablskoye Field in Russia "far" exceeding expectations, the recent uplift in JKX’s share price may seem to have an explanation. However the recent recovery can best be attributed to the deep selling witnessed in its sector because of fears that the prices for oil and gas would fall in the event of a double dip recession, the likelihood of which is receding by the day.
Jkx Oil & Gas (LON:JKX) has some of the best margins in the business with a strong management team focussed on regional exploration. The only criticism sometimes levelled at the company is that its reserve position is low. This is not uncommon for junior petroleum companies and JKX is working hard to increase production through exploration and technical success. The company’s specific focus is to develop gas fields in Ukraine and Russia.
Exploration is the lifeblood of JKX. The current exploration program includes three deep wells planned for the challenging Rudenkovskoye field, Ukraine. At the end of May the first of these wells was underway. The first 1,000 metre horizontal section of the first well was scheduled for completion and testing in July, prior to any fraccing program. The company contracted a second drill rig to maintain an active development program that investors are not being regularly updated on. We expect market speculation on the success of the horizontal development wells. The sword cuts both ways and failure will result in a retracement of the JKX’s share price.
JKX’s wholly owned subsidiary the Poltava Petroleum Company (PPC) is the largest non-state gas producer in the Ukraine. Oil and gas is produced fields located in the Poltava region. PPC commenced commercial production of oil and gas in 1995. PPC’s reserve situation in the Ukraine could do with a boost. Reserves at the start of 2009 were 9.1 million barrels of liquids and 225.8 Bcf (billion cubic feet) of gas. Production during the year was 1.5 million barrels of liquids and 16.1 Bcf of gas. There were no additions to reserves during the period. It would appear that subject to technical matters that gas reserves are sufficient for over 10 years at the 2009 level of production, whilst oil reserves will be depleted during 2015.
JKX has had better luck adding to reserves in Russia where it has reserves of 0.3…
A few observations which strongly indicate FP haven't spoken to the company.....
Exploration is the lifeblood of JKX.
That's not how the company sees itself, they're much more focused on exploitation of reserves rather than discovering them
The company contracted a second drill rig to maintain an active development program that investors are not being regularly updated on.
That's because new dev wells & workovers are simply maintaining plateau production in their core area, they update 1/4ly or on a 6 monthly basis on such activity
JKX has had better luck adding to reserves in Russia where it has reserves of 0.3 million barrels of oil and 267 Bcf of gas
Not sure what part"luck" played in Russia, they're undertaking a field redevelopment, although granted the first 2 workover wells have performed far better than expected
