JKX Profits Hit by Russian Technical Difficulties

JKX Oil & Gas has said that while it has made revenue increases on the Ukrainian side of its operations, technical difficulties, which delayed a gas plant in Russia, has hit its earnings for the first half of 2012.

In a statement released yesterday, the company said that revenue had dropped overall the first half of 2012, amounting to $103 million for that period as opposed to $107.4 million for the same period in 2011. Operating profits also dropped to $31.3 million for the first half of 2012 compared to $32.9 million for the first half of 2011.

Though the company said it had been buoyed by strong gas production and low tax rates in Ukraine but said that technical difficulties on in realising its first gas plant in Russia had affected its overall performance.

"Operating results for the first half of the year are solid with strong gas and LPG realisations in Ukraine offsetting the shortfall in Russian production and associated revenues," Chief Executive of JKX, Dr Paul Davies, said. "In Ukraine, lower levels of production based taxes and operating costs have contributed to improved cash flow and underlying operating profit."

Despite the effect of the delays on the plant, Dr. Davies said that the company expects revenue to rally for the second half of the year, bring overall revenue levels up.

"We expect our performance in the second half of the year to reflect the extended schedule for build-up to Russian plant capacity, and remain committed to delivering long term value for our shareholders," he said.