The Ukraine development plans of London-listed player JKX Oil & Gas are facing "financing challenges" despite the group significantly reducing its workforce in the past year.

The company, which has not yet settled the arbitration case with the government of Ukraine over royalty tax rates, warned that the recently unveiled field development plan to unlock resources at the Rudenkivske gas field in Ukraine, faces money problems.

"Financing will continue to be a challenge for our company. Put simply, our development project in Ukraine is much bigger than our current market capitalisation. We will have to be creative and aggressive in financing that development," JKX said on Wednesday.

The company, which is actively seeking resolution with the Ukrainian government, said that while its production outlook is "quite ambitious", this is "impossible to specifically target in the absence of funding".

"As we obtain sources of financing for the Rudenkivske development, we will tighten our production targets and timing and keep you informed," it said. "Monetisation of Russia, and perhaps Hungary, remain potential sources of funding for the core Ukrainian development plan."

The field development plan for Rudenkivske would see the company drill 135 wells over ten years. According to the company, total capital investment over the same 10-year period is estimated at about $660 million.

Working to cut costs over the past 12 months period, JKX also axed by 45% of the workforce from its headquarter office in London.

"We now occupy one floor of the building where we previously occupied four floors. We have been able to extract ourselves from the long-term lease on one of the unoccupied floors and negotiations continue with the landlord to extract ourselves from the liability of the remaining unoccupied floors," JKX said.

"During 2016, headcount reductions of 29% and 20% have been made in Ukraine and Russia, respectively," the company added.

"Most of this action taken on costs during 2016 will not fully benefit our financials until 2017 and we are continuing to identify further cost-saving opportunities."

JKX shares were down 3.3% on Wednesday morning in London.

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Financing poses ‘challenge’ for JKX’s Ukraine plans