JKX hit by Russian gas problems

JKX Oil & Gas saw profits fell in the first half of the year after technical problems hit its Russian operations.

Revenues were down to $103m from $107.8m the year before, while operating profit dropped to $31.3m from $32.9m in the first half of 2011.

However, this profit was all but wiped out by a $30.7m non-cash depreciation charge against the firm's Ukrainian assets.

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Earnings per share dropped to 12.05c and the company said it would not pay an interim dividend.

JKX has encountered problems in bringing its first Russian gas plant on-stream.

It said that ramp-up of production in the plant's capacity was being delayed while work to complete high pressure wells was undertaken.

The firm intends to complete this work in the first half of 2013.

Chief Executive, Dr Paul Davies, called operating results for the first half of the year 'solid' with strong gas and LPG realisations in Ukraine offsetting the shortfall in Russian production and associated revenues.

"We anticipate the modest decline in production levels in Ukraine through year-end being more than offset by a rising contribution to group production from Russia," he added.

The company also announced that gas production from its well-27 had begun at its Koshekhablskoye Field in Russia.

"This is an important step towards achieving the planned capacity of the plant following the setbacks in putting our high performance wells into production in the second quarter of the year," Davies said.