UK-listed independent JKX Oil & Gas has vowed to become a debt free company by end of February after the planned repayment of remaining portion of its $5.8 million corporate debt.

The Ukraine and Russia-focused producer almost five years ago saw a shareholder revolt that led to the firing of long-serving chief executive Paul Davies and and overhaul of the whole management team in an attempt to improve its operating and financial performance.

JKX said this week that it held about $20.5 million in cash and equivalents at its accounts as of 31 December 2019, against $10.7 million as of the middle of the last year.

The company also said that average oil and gas production at assets in Ukraine rose by 20% to over 10,700 barrels of oil equivalent per day last year as against 2018.

JKX hopes for further upside in oil and gas production in Ukraine this year on the back of further field development, which will be financed from operational cash flow rather than debt.

JKX chief executive Victor Gladun told Upstream that the producer increased its Ukraine's investment programme in 2019 through new drilling operations.

"These plans had been stimulated after the Ukrainian government's introduction in January 2018 of the lower royalty rates for new wells. The reduction to 12% from 29% provided a major incentive and kicked off lot of good initiatives to create a level playing field in the sector", he said.

"The general liberalisation of the oil and gas sector in Ukraine has had a positive influence on its development. Now, the most important issue is for the government and parliament to show sustainability in their decisions.

"Legislative and fiscal stability is the key requirement to ensure that investors stay in the country", Gladun added.

JKX also said in its statement that gas production at its sole asset in Russia, the Koshekhablskoye field in the south of the country, remained flat at about 5200 boepd last year.

Following two workovers in Russia last year, the number of producing wells at the field rose to six, with average daily production at the deposit expected to exceed 5250 boepd this year without the need for further workovers.

JKX is also progressing with resolving in Ukraine's courts several old back tax claims against its producing subsidiary in Ukraine dating back to the period between 2010 and 2015.

The company has also filed for collection of a $11.8 million international arbitration award following its legal recognition in Ukraine, however, has no clarity on the process for, and likely success of, enforcing the collection of the funds from the country’s authorities.

Finance

JKX looks to clear debt, eyes Ukraine output drive