Companies: JKX   

Ukraine-focused JKX Oil & Gas is poised to enter the Russian gas market after increasing annual turnover 40 per cent to $184.5 million (£92.3 million).

The fully listed company lifted production in the Ukraine 13 per cent last year to the equivalent of 12,579 barrels of oil a day and benefited from a 40 per cent increase in its realised price for gas, thanks to Ukrainian liberalisation. Pre-tax profits, however, rose a mere four per cent to $113.3 million and earnings fell nine per cent to 47.97c (24p) a share, because the 2007 figure reflects impairment and written-off exploration costs of $17.7 million while 2006’s profits reflected a net $13.5 million impairment write-back.

Ignoring those two items, JKX increased underlying pre-tax profits 37 per cent to $131 million. The company bought the Koshekhabloskoye gas field in the southern Russian republic of Adygea, with proven and probable reserves of more than 300 billion cubic feet, for $50 million and ended the year with cash down $13 million to $68.1 million.

JKX expects production from Koshekhabloskoye, which was suspended in 2006 when local gas prices were much lower, to start this year. The company is expanding its Ukrainian operations, which should benefit from being linked to the Soyuz pipeline to Russia.

Originally recommended by Growth Company Investor at well below £1 and highlighted a year ago at 295p, JKX shares peaked at 470p last month and are now 448p, down 6p this morning, valuing the company at £698 million. They should still outperform several others in the sector.

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JKX Oil & Gas	LSE	£559.11m	357.25p	19.25p
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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