JKX Oil&Gas with key assets in Ukraine decides against selling business in Hungary

MOSCOW. April 12 (Interfax) - JKX Oil&Gas with key assets in Ukraine has following a change of management dropped plans announced in the summer of 2021 to sell its business in Hungary for $3 million and has decided to develop them, Ukrainian media quoted the chairman of the company's board of directors, Mikhail Bakunenko, as saying.

"The goal of JKX Oil&Gas going forward is to create a medium sized energy company in Central and Eastern Europe," he said.

Bakunenko said the previous chairman presented the Hungarian assets as having no potential and offered to sell them. The company received several offers, but each time the deals fell through at different stages.

"With the beginning of the crisis we decided to take a risk and take a closer look at the possibilities of Hungary," the new chairman said.

Bakunenko said that a year later, specialists carried out a new 3D seismic survey using highly qualified experts and the most modern design processes, and after processing and interpreting the data, geological modeling was carried out and drilling targets were determined.

He said preparations were already underway to drill two gas wells: the drilling of the first is scheduled for April of this year, and the second in another field for June 2024, and by the beginning of 2025, it is planned to drill a well at an oil asset.

"If the well's exploration data is productive, the company will continue to implement investment projects, which may have more than ten wells in total. Then Hungary will become a priority market," he said.

He said the company also had an operating gas processing plant capable of processing 500,000 cubic meters of gas per day, as well as its own connecting pipeline to the regional gas network and a very highly qualified technical team.

Bakunenko said that after analyzing the data, is also emerged that the assets in Hungary contain the main prerequisites for the development of geothermal energy: temperatures above 170° C and a favorable geological structure. "We are already negotiating with potential partners to develop this area," he said.

JKX Oil&Gas is engaged in exploration and production of hydrocarbons in Ukraine. JKX-owned Poltava Petroleum Company is one of the largest non-state oil and gas companies in Ukraine. It holds five mining licenses and one for geological exploration, including pilot production

The company's shares had been traded on the London Stock Exchange since March 20, 2006.In November 2021, shareholders approved a delisting from the LSE and the buyback of 23.3% of the shares. JKX Oil&Gas was re-registered as a private company at the beginning of February 2022 and has not disclosed its beneficiaries since then.

The largest shareholders of JKX as of December 2021 were Eclairs Group (EGL) of Igor Kolomoisky and Gennady Bogolyubov with 27.54% and Bridgewater Holdings Corp. with 19.97%. Other major shareholders were Neptune Invest & Finance Corp. with 12.98%, Keyhall Holding Ltd with 11.45% and Interneft Ltd with 6.17%. In total, the company has said it had more than 800 shareholders. At the end of November 2023, JKX said Kolomoisky had lost control of the company.

"Since November 1, 2022, EGL has been excluded from the British Virgin Islands (BVI) Company Registry and was liquidated on July 4, 2023. According to the provisions of the BVI Companies Act, the property of a company removed from the Registry becomes the property of the British Crown, which has now happened," Bakunenko said.

According to the latest report for 2022, JKX's average production was 2,569 barrels of oil equivalent per day, which is 37% less than in 2021.

The company's revenue in 2022 increased by 2.4% to $114.87 million, operating profit decreased by 27.6% to $33.54 million, and net loss was $37.23 million compared with $40.25 million a year earlier.