RNS Number : 6034U
JKX Oil & Gas PLC
16 May 2008
6 Cavendish Square, London W1G 0PD, England, UK
Tel: +44 (0)20 7323 4464 Fax: +44 (0)20 7323
5258
Web site: http://www.jkx.co.uk
FOR IMMEDIATE RELEASE
16 MAY 2008
JKX Oil & Gas plc
INTERIM MANAGEMENT STATEMENT FOR THE FIRST QUARTER ENDING 30 MARCH 2008
Q1 Q1
Change
2008 2007
Production (boepd) 11,494 13,524 [15%]
Oil Production (bopd) 4,687 6,283 [25%]
Gas Production (MMcfd) 41 43 [5%]
Realised oil price ($ per barrel) 81.03 51.60 57%
Realised gas price ($ per Mcf) 5.18 3.91 32%
JKX has made good progress across all its licence areas in the first quarter and has
continued to benefit from rising oil and gas
prices. The Company is focused on its development programmes in both Ukraine and Russia in
addition to its exploration activities across its
broadening portfolio.
Ukraine
Development activity is primarily focused on increasing gas production capacity ahead of
the Soyuz tie-in and further development and
appraisal of the Tournasian carbonate reservoir. The latter programme is proceeding, although
production figures for the period reflect the
regulatory requirement to test even modest deeper reservoirs if they appear to be hydrocarbon
bearing before testing and completion of the
overlying carbonate. Lower liquids production in the quarter reflects the concentration during
the period on the gas appraisal programme.
An acid fracture stimulation programme has been developed for lower permeability
Tournasian carbonates in parts of the Ignatovskoye and
Molchanovskoye field extensions and, as a precursor to implementation of the programme in the
field, injectivity tests on Well I131 and Well
M162 have been completed successfully.
On the Rudenkovskoye Field, the special core analysis (SCAL) programme is reaching
completion and a production logging run is imminent.Once these are complete, the fracture programmes will be finalised and equipment mobilised to
commence testing towards the end of the third
quarter.
Delivery of outstanding equipment for the connection to the Soyuz gas pipeline is expected
in June. Time has been allocated in the
schedule for State inspectors to complete all regulatory aspects and approve the final
connection. Subject to the foregoing, commissioning
is currently scheduled to commence in August.
Drilling
Poltava Petroleum Company ("PPC") has drilled two new development wells and one new
appraisal well this year.
Well M164, a horizontal development well in the northern area of the Molchanovskoye Field,
flowed gas at 7.4 MMcfd with 1,200 bpd of
condensate at a well head pressure of 1,460 psi from the Devonian sandstone.
Well I136, a development well drilled on the north flank of the Ignatovskoye Field, failed
to produce oil from the depleted lowermost
carbonate section and will be recompleted in the overlying gas reservoir. Well I134, an
appraisal well to the west of the main Ignatovskoye
Field, tested water from the lowermost Tournasian sandstone and is awaiting recompletion,
stimulation and testing of the overlying
gas-bearing Tournasian carbonate.
As reported earlier, PPC also completed appraisal Well I133 in the Tournasian sandstone at
a flow rate of 3.7 MMcfd and 560 bpd of
condensate, and development Well M159 which flowed at 1.4 MMcfd and 100 bpd of condensate from
the Tournasian carbonate; subsequent acid
treatment increased this rate to 7.0 MMcfd and 400 bpd of condensate.
The Skytop rig is now drilling development Well I163 and will continue drilling activity
in the field area through 2008 and 2009. A new
workover rig has been purchased and will commence operations in late May with a full programme
of well repairs and re-completions planned
for the remainder of 2008.
Reserves
History matching and modelling of the reservoirs in the Ignatovskoye, Molchanovskoye and
Novo-Nikolaevskoye licences are nearing
completion. Revised proved plus probable reserves for these licences will be published at the
beginning of the third quarter.
Russia
Yuzhgasenergie ("YGE"), JKX's wholly owned subsidiary, completed the full 105 sq km 3D
seismic over the Koshekhablskoye Field, and
processing has now commenced. The objective is to select a target for the deeper Callovian
reservoir exploration well by mid August, with
more detailed evaluation of the overlying Oxfordian carbonate reservoir features to follow.Early results from the processing indicate a
successful survey revealing much useful data.
The Kremco 900 rig has been contracted for the Oxfordian reservoir workover programme. The
first well pad is ready and the second is
under construction with workover operations due to commence towards the end of June.
A coiled tubing unit has also been contracted from Poland and is due on the field around
the end of July to commence stimulation and
production testing of the wells as soon as they have been rehabilitated and recompleted.
Following detailed inspection of the existing gas processing facilities, a decision has
been made to replace rather than refurbish the
facility at the field. Initial design of the replacement facilities is nearing completion and
purchase orders for the first long lead items
have been placed. Some elements of the sour gas removal plant have been found to have much
longer than anticipated delivery times which may
affect YGE's fast track target of sales gas delivery by the year-end.
Exploration
Ukraine:
Evaluation of the Zaplavskoye licence which adjoins the southern part of PPC's production
licence areas has continued with two wells
planned for the second half of the year. The 42 sq km 3D seismic programme on the
Chervonoyarske East Licence is in progress. Regrettably,
no progress has been achieved in negotiations with the state oil and gas company to date on
access to the three existing wells on our
Elizavetovskoye licence.
South East Bismil Licences, Turkey:
As reported in January, JKX acquired a 20% interest in the two Bismil South licences
covering an area of 590 sq km and lying just to
the south of the Koyunlu-1 heavy oil discovery south of Batman in southeast Turkey. The
licences are operated by the private Turkish company
Arar Petrol Ve Gaz Aup AS. The acquisition of 120 km of 2D seismic has been completed and the
Koyunlu-2 well drilled to a TD of 1,310m. The
well came in about 70m up-dip of the existing discovery well with oil shows in the Cretaceous
Garzan limestone reservoir at 1,130m. However,
no oil was recovered in the DST. The well was deepened to the secondary Mardin objective but a
second DST proved that this too was tight.The well will now be plugged and abandoned. Evaluation of the seismic in the remaining parts
of the block will now continue, encouraged by
the discovery of light oil in the adjacent block to the west in deeper Palaeozoic sediments.
Karakilise Licences, Turkey:
The Hakan Yilmaz-1 well is currently drilling in the north of the Karakilise licence area
in southeast Turkey. The operator is Aladdin
Middle East and JKX holds a 30% interest in the licences.
Hungary Licences:
The 350 sq km 3D survey acquired in late 2007 has been processed and the first drillable
targets identified. The initial well is
expected to spud in the second quarter. The Hernad licences cover an area of 5,420 sq km in
northeast Hungary and JKX holds a 50% interest.
Slovakia Licences:
As reported in April, JKX farmed into three blocks in the Slovakian Carpathian fold belt
covering a total of 2278 sq km. The operator is
Aurelian Oil & Gas plc and JKX's interest is 25%. A 238 km 2D seismic survey is planned for
later in 2008.
USA Licence:
Newfield Exploration has taken over operatorship in the West Huxley Deep Unit in east
Texas and intends to spud a new well in this
quarter. JKX holds a 34.3% interest but does not view this holding as core to its programme
and expects to seek an exit at an appropriate
time.
Disposal
As reported in February, JKX sold its wholly owned subsidiary, JKX Italia Ltd, to
Mediterranean Oil & Gas plc and no longer has any
holdings in Italy.
JKX Chief Executive, Dr Paul Davies, said:
"The Company has made good progress in the first quarter. Material production increases in
Ukraine await the tie-in to the Soyuz line in
the second half of the year. Meanwhile, our most recent development Well M164 which was
completed this month has come on stream at more than
2,200 boepd, demonstrating again the productive potential of our Ukrainian licences. The new
project in Russia is moving ahead with the aim
of re-establishing production from the field by year end."
ENDS
For further information please contact:
Sofia Rehman / Anthony Cardew Cardew Group 020 7930 0777
This information is provided by RNS
The company news service from the London Stock Exchange
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