Ukrnafta, JKX and Regal Contributed to the Oil & Gas Production Drop in Ukraine
In April Ukrainian condensate production output decreased by 15.7% year-over-year to 2.1 MMbbl, bringing first four months of 2011 extraction volumes down 9% year-over-year to 8.2 MMbbl. Total gas production decreased by 5% in April, to 1.66 bcm, bringing the first four months of 2011 output down 2% year-over-year to 6.7 bcm as reported by Energobusiness.
Dragon Capital Commented on the news:
Poltava Petroleum Company (PPC), the local subsidiary of JKX Oil & Gas,suffered the largest production decline, slashing oil and gas condensate output by 34% year-over-year to 0.07 MMbbl in April and 37% year-over-year to 0.25 MMbbl in 4M11. Combined with the abolition of tax exemptions JKX enjoyed until this year, we consider these developments very negative for the company and plan to downgrade our valuation of the stock.
Ukrnafta registered drops of 21% year-over-year in April and 13% year-over-year in 4M11 (oil and gas condensate), continuing its lengthy production decline which is already measured in years. Gas extraction by both Ukrnafta and JKX was sharply lower likewise.
Regal Petroleum has been idle so far this year as its license dispute with the Ministry of Environmental Protection continues.