JKX, Serinus increase Ukraine gas output in May, Regal decreases

Обзоры по компаниям и отраслям 20.06.2014 Ukraine’s total natural gas output (excluding the Crimean subsidiary of Naftogaz) increased 1% yoy to 1.70 bcm in May 2014, according to the preliminary data of Ukraine’s Energy Ministry. Gas production was 7% (or 0.17 bcm) below the level of internal gas consumption during the month. KUB-Gas, a subsidiary of Serinus Energy (SEN PW), boosted its gas production 15% yoy to 26.3 mcm in May. This equals average daily output of 4,990 boe for KUB-Gas, or 3,490 boe net for Serinus Energy. The subsidiary’s 5M14 gas output totaled 125.8 mcm, or 15% higher yoy. A Ukrainian subsidiary of JKX Oil & Gas (JKX LN) increased its gas production 32% yoy in May to 23.4 mcm (4,450 boepd), while its 5M14 output rose 16% yoy to 106.0 mcm. At the same time, Regal Petroleum decreased its gas output 19% yoy to 4.8 mcm (910 boepd), which resulted in a 21% yoy drop in its 5M14 gas output to 24.5 mcm. Alexander Paraschiy: It is particularly encouraging to see that KUB-Gas, an enterprise with deposits located in the war-torn Luhansk Oblast, is operating as usual. The company’s production assets are located some 100 km away from the war zone on the territory controlled by central government and, provided that the Ukrainian anti-terrorist operation continues, they have a chance of avoiding the conflict. JKX’s radical increase in Ukrainian output might be related to the commissioning of its NN-80 well, which the company successfully tested in early April. Regal’s weak result indicates the depletion of its well amidst a lack of new production assets. Ukraine’s May 2014 data shows that the economy was consuming nearly as much natural gas as it produced, and we expect it will decrease gas consumption in the subsequent months to save more gas for the gas-intensive winter period. However, that does not mean Ukraine will be able to survive without Russian gas during the peak winter period.