JKX, Regal, KUB-Gaz gas production in Ukraine falls 5-29% in 2015

Natural gas production in Ukraine decreased 1% yoy to 19.9 bcm in 2015, Energobiznes reported, based on Energy Ministry preliminary data. Gas output at state companies (excluding the Crimea-based producer) dropped 5% yoy to 16.0 bcm, while private firms boosted production 17% yoy to 3.9 bcm, mainly owing to the spectacular growth of SCM-related NGD (+73% yoy to 1.3 bcm in 2015).

Ukraine’s publicly traded gas firms produced less in 2015. Output fell at Regal Petroleum (RPT LN) by 5% yoy to 52.8 mcm; at KUB-Gaz, a subsidiary of Cub-Energy (KUB CN), by 29% yoy to 238 mcm; and at the Ukrainian subsidiary of JKX Oil & Gas (JKX LN) by 14% yoy to 213 mcm.

In December alone, Regal Petroleum produced 5.92 mcm of natural gas, which was spectacular growth of 31% yoy due to the launch of a new SV-6 well in mid-December. KUB-Gaz gas output plunged 32% yoy to 19.6 mcm, while the Ukrainian subsidiary of JKX Oil & Gas rose 9% yoy to 16.5 mcm in December.

Alexander Paraschiy: With the commissioning of a new well, Regal Petroleum has set the foundation to significantly recover its natural gas output that it lost in 2015. At the same time, production growth at the subsidiary of Cub-Energy can only happen in the second half of the year, once it restarts its active drilling program. Recall in late December, Ukraine’s parliament cut the production tax for private gas producers from 55% (and 28% for producers like Regal, which mine gas from deep wells) to 29% (14%) as of January. This has prompted private gas producers to consider restarting their frozen development projects in Ukraine.

JKX’s positive yoy performance in December can only be attributed to a low comparison base. In December 2014, its gas output plunged significantly owing to its temporary inability to sell hydrocarbons to the market. The same spectacular yoy growth is expected in January 2016 (as January 2015 was the weakest in JKX recent history). JKX can markedly boost its gas production this year, particularly if it intensifies its drilling and workover activity.

Источник: Конкорд Капитал