Companies: JKX   

Interim pre-tax profits from JKX Oil & Gas were slightly lower at £27.8 million despite 40 per cent higher revenues at £43.3 million.

Fully listed JKX increased output 20 per cent to one million barrels of oil and 7.8 billion cubic feet of gas. The company benefited from a 40 per cent increase in gas prices in the Ukraine, where its chief operations are, and chief executive Dr Paul Davies expects a further increase to be agreed at the next annual Ukraine/Russian import price review.

However, a £2.5 million provision for the impairment of the value of oil and gas assets in the Ukraine clipped the pre-tax figure. JKX generated £35.2 million cash from its operations in the six months to June, up 56 per cent on a year earlier, and has doubled the interim dividend to 2p a share.

Early in the second half of the year, the company agreed to pay £25 million for 100 per cent of the southern Russian Koshekhablskoye gas field, with estimated proven gas reserves of 114 billion cubic feet and probable reserves of 216 billion cubic feet – a deal which increased its reserves by 85 per cent. JKX agreed to pay cash to the vendors, principal among them Mostotal, a concern owned by Alexander Zhukov's Glengary Overseas, which in turn owns 25.5 per cent of JKX.

Davies says JKX reckons Koshekhablskoye will benefit from a Russian price liberalisation similar to that which is proving so useful in the Ukraine. He adds that the company, which is exploring in Bulgaria and Turkey and selling assets in Italy and the USA, plans £75 million capital spending over three years, largely funded from cash flow.

Recommended by Growth Company Investor at 53p four years ago, JKX shares reached 440p last year, when GCI suggested partial profit taking. They are 19p down today at 373.5p and may take some time to resume their growth path.

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JKX Oil & Gas	LSE	£207.37m	132.50p	-17.00p
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Other company articles:
Interims ahead at JKX			29/08/2008
Exploration Insights			31/03/2008
Expansion continues at JKX			19/03/2008
Revenues grow at JKX			25/09/2007
Ukraine progress by JKX			21/08/2007