JKX reports decline in all P&L items in 2012

Обзоры по компаниям и отраслям 09.04.2013 JKX Oil & Gas (JKX LN) reported a USD 11.3 mln loss in 2012 vs. a USD 59.1 mln profit the prior year on fading revenue and two one-off charges, the company reported on Apr. 9 in its preliminary results. The company’s 2012 revenue fell 14% yoy to USD 202.9 mln on declines in both total hydrocarbon output and average output price. JKX reported a 25% yoy drop in natural gas production in Ukraine while its boosted Russian output reduced the total decline to 8.4% yoy (8,281 boepd). Its Ukrainian natural gas price rose 26% yoy to USD 12.1/Mcf while gas realizations in Russia stood at USD 2.6/Mcf. The company’s operating profit fell 37% yoy to USD 51.6 mln, and net cash flow from operating activities declined 20% yoy to USD 78.5 mln. JKX net profit before exceptional items fell 2x yoy to USD 24.7 mln in 2012. The company wrote down USD 30.7 mln in an accelerated depreciation charge following a reduction in oil and gas reserves at its Novo Nikolaevskoye complex, and an additional USD 15.1 mln impairment provision against its Hungarian assets. Roman Dmytrenko: Due to almost a 5x lower natural gas price, JKX sales in Russia contributed a mere USD 5.1 mln in 2012 while representing 16% of the company’s total boe volume sold. Our calculations imply the company’s current Russian gas production increased even further to 55% of total output. Combined with a lack of growth in Ukrainian output and a 50% increase in a Ukrainian gas production tax effective 2013, these figures suggest that even with USD 40 mln debt attracted this year, the company’s operating cash flow might not be enough to cover its USD 89 mln and USD 85 mln in CapEx and debt repayment in 2013 and 2014, respectively.