TIDMJKX
RNS Number : 0579I
JKX Oil & Gas PLC
09 August 2021
JKX Oil & Gas plc ('JKX' or the 'Company')
Half Year Report
For the six months ended 30 June 2021
Highlights to 30 June 2021
-- Average daily production: 9,255 boepd (H1 2020: 10,445
boepd)
-- Revenue: $39.5m (H1 2020: $35.1m)
-- Cost of sales: $7.2m (H1 2020: $9.6m)
-- Administrative expenses: $5.0m (H1 2020: $4.4m)
-- Exceptional item - net reversal of provision/(provision for
disputed production based taxes): $1.8m
credit (H1 2020: $1.1m charge)
-- Net profit for the period: $9.9m (H1 2020: $1.5m)
-- Earnings per share: 5.79 cents (H1 2020: 0.89 cents)
-- Operating cash flow before interest and tax: $16.8m (H1 2020:
$12.5m)
-- Capital expenditure: $3.7m (H1 2020: $7.5m)
-- Total cash balance at 30 June 2021: $36.2m (31 Dec 2020:
$24.3m)
For further information please contact:
JKX Oil & Gas plc +44 (0) 20 7323 4464
Dmytro Piddubnyy, CFO
EM Advisors +44 (0) 20 7002 7860
Jeroen van de Crommenacker
Chairman's statement
Dear Shareholder,
I am pleased to present the results for the six month period
ended 30 June 2021.
We are once again reporting a profit for the period (HI 2021
profit $9.9m), which compares favourably to the result for the same
period in 2020 (H1 2020 profit $1.5m) and for the last pre-pandemic
year of 2019 (H1 2019 profit $2.2m). 2021 first half revenue also
increased to $39.5m (H1 2020 $35.1m).
H1 2021 Financial and Production Performance
The Group's positive performance in H1 2021 is largely the
result of improvements in realised oil and gas prices and
investments made prior to 2020, since the ongoing pandemic has
prevented the Group from undertaking any major scheduled capex
works such as new well or side track activity. Whilst 2021 H1
production from Russia (H1 2021 5,282 boepd) remained stable when
compared to H1 2020 (H1 2020 5,283 boepd) the inability to
undertake scheduled capex works in 2020 negatively impacted
Ukrainian production in H1 2021 (H1 2021 3,973 boepd, H1 2020 5,162
boepd). As a result overall group production in H1 2021 was 9,255
boepd, a reduction of 11% from H1 2020 (H1 2020 10,445 boepd).
Whilst H1 2021 production results have been heavily impacted by
the lack of activity in 2020, drilling activity has now resumed in
Ukraine and the highly successful IG149 well is already
contributing to Group production. Further drilling activity is
expected in Ukraine in H2 and more details of our H1 2021
operational performance and anticipated H2 drilling activity are
set out in the CEO's statement.
We have already achieved recognition in Ukraine of the
international arbitration award made in the Company's favour in
2017 and we continue to press to have this paid. Details of these
issues, including the revised provisions maintained in respect of
rental fee claims, are given in the financial review.
In closing I would to thank the Group's staff for their
continued dedication and professionalism, despite the difficulties
the current Covid 19 pandemic poses.
Charles Valceschini
Chairman, Board of Directors.
9 August 2021
Chief Executive's statement
Dear Shareholder,
I am pleased to report that despite the impact of the ongoing
pandemic, and in particular its impact on the Group's ability to
undertake scheduled capex works in 2020, drilling and workover
activity is now starting to increase as a result of the practical
steps taken by management and the continuing hard work and loyalty
of our staff.
Profit for the period (H1 2021 profit $9.9m) compares favourably
to the result for the same period in 2020 (H1 2020 profit $1.5m)
and for the last pre-pandemic year of 2019 (H1 2019 profit $2.2m).
2021 first half revenue also increased to $39.5m (H1 2020
$35.1m).
Our strong financial performance in H1 2021(H1 2021 profit
$9.9m, H1 2020 profit $1.5m) has been favourably impacted by the
continuing positive impact of management action taken in H1 2020
that reduced costs across all locations and the recovery in oil and
gas prices, with average Ukrainian gas and oil sales prices
achieved during H1 2021 rising to $232/MCM (H1 2020 131/Mcm) and
$63 bbl (H1 2020 $40 bbl) respectively.
2021 H1 production from Russia (H1 2021 5,282 boepd) remained
stable when compared to H1 2020 (H1 2020 5,283 boepd) although the
ongoing pandemic and resulting absence of drilling activity in
Ukraine negatively impacted Ukrainian production in H1 (H1 2021
3,973 boepd, H1 2020 5,162 boepd). As a consequence overall Group
production in H1 2021 fell to 9,255 boepd, a reduction of 11% from
H1 2020 (H1 2020 10,445 boepd).
The operational highlight of the first half of 2021 has been the
drilling and completion of IG149, a new well in the Ignativske
license in Ukraine. This well has averaged 962 boepd since coming
online in May 2021and has significantly increased the Group's daily
oil production. The IG149 drilling rig was demobilised after
completion of IG149 but is expected to return in H2 2021to start
drilling R110 - the first new well to be drilled in the Rudenkivkse
license since 2010. Workovers also restarted in Ukraine during the
first half of 2021 with notable production additions from the
workovers of NN76 and IG21.
In Russia acid treatments were carried out in May but met with
only limited success and the coiled tubing unit used has been
demobilised with a commensurate cost saving.
On the new business front we remain focussed on the need to
identify new growth opportunities, both within our existing
portfolio and as part of a Ukrainian focused acquisition strategy.
The sale of the Group's Hungarian interests continues to remain
outstanding although negotiations with possible purchasers
continue.
In closing I would once more like to recognize the continued
loyalty and commitment demonstrated by women and men of your
Company across our different locations in the face of the
continuing pandemic.
Victor Gladun
Chief Executive Officer
9 August 2021
Operations review
Group production
In H1 2021 group average production was 9,255 boepd (H1 2020:
10,445 boepd), an overall decrease in production of 11%. The
reduction in production year-on-year was a result of continued
production decline and a reduction in drilling in 2020.
boepd Workovers(1) Sidetracks New wells
H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020
------------------------ ------- ------- ------- ------- ------- ------- ------- -------
Novomykolaivske complex 2,908 3,824 5 5 1 2 1 2
Elyzavetivske Licence 1,065 1,338 - - - - - -
------------------------ ------- ------- ------- ------- -------
Total Ukraine 3,973 5,162 5 5 1 2 1 2
------------------------ ------- ------- ------- ------- ------- ------- ------- -------
Russia 5,282 5,283 - - - - - -
Hungary - - - - - - - -
------------------------ ------- ------- ------- ------- -------
Total Group 9,255 10,445 5 5 1 2 1 2
------------------------ ------- ------- ------- ------- ------- ------- ------- -------
Ukraine
Novomykolaivske complex production and operations
boepd Workovers(1) Sidetracks New wells
Field name H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020
---------------- ------- ------- ------- ------- ------- ------- ------- -------
Ignativske 1,645 2,701 4 3 - 1 1 1
Molchanivske 426 380 - - - - - -
Novomykolaivske 645 510 1 1 1 - - 1
Rudenkivske 192 233 - 1 - 1 - -
---------------- ------- ------- ------- ------- ------- ------- ------- -------
Novomykolaivske 2,908 3,824 5 5 1 2 1 2
---------------- ------- ------- ------- ------- ------- ------- ------- -------
(1) Excludes abandonments
Production across the Novomykolaivske complex has reduced year
on year with the majority of the decline in the Ignativske license
due to IG142 ceasing production suddenly in February 2021. Ongoing
decline of IG103 sidetrack and IG143 also contributed to year on
year decline in the Ignativske license. IG149 completed late in H1
2021 has only partially offset the production decline seen in the
other wells of the Ignativske license. Production in the
Molchanivske license has increased year on year due to increased
production from M28, which has benefited from intermittent gas lift
introduced in February 2021, and M158 sidetrack after additional
perforations in December 2020. Production in the Novomykolaivske
license has increased year on year following the successful
sidetrack of NN75 completed in January 2021 and the workover of
NN76 from the V16 to the V15 completed in March 2021.
Outlook
When the drilling rig returns in September it is expected to
drill R110 which will be the first new well drilled in the
Rudenkivske field since R103 was drilled in 2010. R110 is being
drilled to the Devonian to the south of NN16, a leased well which
was successfully worked over in 2016.
Elyzavetivske License production and operations
boepd Workovers New wells
Field name H1 2021 H1 2020 H1 2021 H1 2020 H1 2021 H1 2020
---------------------- ------- ------- ------- ------- ------- -------
Elyzavetivske 601 809 - - - -
West Mashivska 464 529 - - - -
---------------------- ------- ------- ------- ------- ------- -------
Elyzavetivkse Licence 1,065 1,338 - - - -
---------------------- ------- ------- ------- ------- ------- -------
The decrease in production from the West Mashivske and
Elyzavetivkse fields compared to H1 2020 is due to ongoing
production decline in these two fields.
Outlook
There are currently no immediate plans for workovers or new
wells in the Elyzavetivske license.
Russia
Koshekhablskoye licence production and operations
boepd Workovers
Well name H1 2021 H1 2020 H1 2021 H1 2020
---------------- ------- ------- ------- -------
Well 5 320 359 - -
Well 18 1,477 1,474 - -
Well 20 - 114 - -
Well 25 1,770 1,719 - -
Well 27 1,642 1,547 - -
---------------- ------- ------- ------- -------
Koshekhablskoye
field(1) 5,282 5,283 - -
---------------- ------- ------- ------- -------
(1) Includes Well 15
Production in H1 2021 from the Koshekhablskoye field is the same
as in H1 2020. This is due to production from the wells being
stable over the period with the assistance of a few acid
treatments.
In May 2021 Well 15, 5 and 27 were treated with acid. There was
no significant improvement in the production from these wells
following the acid treatments despite using improved treatments
recommended by the service company. The coiled tubing equipment has
now been demobilised from the production site.
Outlook
There is no update on the timing of the workover on Well 20.
Financial review
Second
First half half First half
2021 2020 2020
(unaudited) (unaudited) (unaudited)
Operating results $m $m $m
Revenue
Oil 8.8 8.5 8.1
Gas 26.4 22.3 24.4
Liquefied petroleum gas 4.0 3.4 2.2
Other 0.3 0.3 0.4
39.5 34.5 35.1
-------------------------------------------------------- ------------- ------------- -------------
Cost of sales
Exceptional item - net reversal of provision/(provision
for disputed production based taxes) 1.8 14.6 (1.1)
Other production based taxes (9.9) (6.8) (7.0)
Depreciation, depletion and amortisation
- oil and gas assets (5.6) (6.1) (11.0)
Other cost of sales (7.2) (8.2) (9.6)
Total cost of sales (20.8) (6.5) (28.7)
-------------------------------------------------------- ------------- ------------- -------------
Gross profit 18.7 28.0 6.4
-------------------------------------------------------- ------------- ------------- -------------
Administrative expenses
Other administrative expenses (5.0) (5.7) (4.4)
(Loss)/gain on foreign exchange (0.9) 0.7 0.3
Other income 0.4 - -
-------------------------------------------------------- ------------- ------------- -------------
Profit from operations before exceptional
items 11.3 8.4 3.4
-------------------------------------------------------- ------------- ------------- -------------
Profit from operations after exceptional
items 13.2 23.0 2.3
-------------------------------------------------------- ------------- ------------- -------------
Note: there are minor differences in the tables above due to
rounding effects.
First Second
half half First half
2021 2020 2020
EARNINGS (unaudited) (unaudited) (unaudited)
Profit before tax ($m) 13.1 22.9 2.0
Net profit ($m) 9.9 18.4 1.5
Net profit before exceptional items ($m) 8.3 8.2 2.8
Basic weighted average number of shares in
issue (m) 171.7 171.7 171.7
Profit per share after exceptional items (basic,
cents) 5.79 10.68 0.89
Pre-exceptional earnings before interest, corporation
tax,
depreciation and amortisation(1) ($m) 17.4 15.0 14.7
------------------------------------------------------ --------------- ------------- ------------------
First half Second half First half
2021 2020 2020
COST OF PRODUCTION ($/BOE) (unaudited) (unaudited) (unaudited)
Production costs (excluding exceptional items) $4.3 $4.5 $5.1
Depreciation, depletion and amortisation $3.3 $3.3 $5.8
Production based taxes $5.9 $3.7 $3.7
----------------------------------------------- ------------- ------------- -------------
First half Second half First half
2021 2020 2020
CASH FLOW (unaudited) (unaudited) (unaudited)
Cash generated from operations ($m) 16.8 16.4 12.5
Operating cash flow per share (cents) 9.8 9.6 7.3
-------------------------------------- ------------- ------------- -------------
As at As at
As at 31
30 June 30 June December
2021 2020 2020
STATEMENT OF FINANCIAL POSITION (unaudited) (unaudited) (audited)
Total cash and cash equivalents(2) ($m) 36.2 14.4 24.3
Net cash(3) ($m) 36.2 14.4 24.3
Net cash to equity (%) 18.9 8.6 13.7
Return on average capital employed(4) (%) 10.8 1.7 10.9
------------------------------------------ ------------- ------------- -----------
First half Second First half
half
2021 2020 2020
(unaudited) (unaudited) (unaudited)
Additions to property, plant and equipment/intangible
assets ($m)
- Ukraine 3.5 2.9 6.5
- Russia 0.2 (0.5) 1.0
Total 3.7 2.4 7.5
------------------------------------------------------ ------------- ------------- -------------
(1) Pre-exceptional earnings before interest, tax, depreciation
and amortisation ('EBITDA') is a non-IFRS measure and calculated
using profit from operations after exceptional items of $13.2m (30
June 2020: $2.3m) and adding back depreciation, depletion and
amortisation and exceptional items $4.2m ($12.4m). EBITDA is an
indicator of the Group's ability to generate operating cash flow
that can fund its working capital needs, service debt obligations
and fund capital expenditures. EBITDA and liquidity measures in the
monthly internal reporting are used by the Board to monitor
subsidiaries' performance.
The Group uses alternative performance measures, which are not
defined by generally accepted accounting principles ('GAAP') such
as IFRS, as additional performance measures. These measures are
used by management, alongside the comparable GAAP measures, in
evaluating the business performance. The measures are not intended
as a substitute for GAAP measures and may not be comparable to
similarly reported measures by other companies.
(2) Total cash is cash and cash equivalents from continuing
operations.
(3) Net cash is cash and cash equivalents less Borrowings.
(4) Return on average capital employed is the annualised profit
for the period divided by average capital employed.
Results for the period
The profit for the period of $10.0m compares favourably to the
profit of $1.5m in the first half of 2020. The Company's financial
performance for the first half of 2021 has been impacted by the
significant improvement in oil and gas prices. Results for both
periods include reversals/ charges reflecting updated calculations
for the provisions for the disputed production based taxes as for
2010 and 2015 in Ukraine (credit of $1.8m in H1 2021 and charge of
$1.1m in H1 2020).
Total revenue for the first half of 2021 is $39.5m, 12.5% higher
than the $35.1m reported in 2020. The increase is primarily due to
the significantly higher commodity prices and partially offset by
reduced volumes.
Revenue
6 months 6 months
2021 2020 Change %
Group revenues $m $m $m Change
Ukraine 31.5 26.8 4.7 18
Gas 18.7 16.4 2.3 14
Oil 8.5 7.8 0.7 9
Liquefied Petroleum
Gas ('LPG') 4.0 2.2 1.8 82
Other 0.3 0.4 (0.1) (25)
-------------------- -------- -------- ------ --------
Russia 7.9 8.3 (0.4) (5)
Gas 7.7 8.0 (0.3) (4)
Condensate 0.2 0.3 (0.1) (33)
-------------------- -------- -------- ------ --------
Total 39.5 35.1 4.4 13
-------------------- -------- -------- ------ --------
Note: there are minor differences in the tables above due to
rounding effects.
Sales prices 6 months 2021 6 months 2020 Change % Change
Ukraine
Gas ($/Mcm) 232 131 101 77
Oil ($/bbl) 63 40 23 58
LPG ($/tonne) 525 328 197 60
-------------- ------------- ------------- ------ --------
Russia
Gas ($/Mcm) 52 54 (2) (4)
-------------- ------------- ------------- ------ --------
Ukraine revenues
The $4.7m increase in total revenues was due to significantly
higher sales prices partially offset by lower sales volumes.
The average gas sales price in dollar terms was 77% higher in
the first half of 2021 than in the first half of 2020. This is in
line with international market trends. Total gas sales volumes
decreased by 34% from 123,210 Mcm in the first half of 2020 to
81,137 Mcm in the first half of 2021, due to selling gas inventory
which reduced from 14,041 Mcm in the beginning of 2020 to 5,573 Mcm
at 30 June 2021 in addition to the gas production volume having
decreased by 25% from 125,613 Mcm in the first half of 2020 to
93,997 Mcm in the first half of 2021. For more detail on production
trends please refer to the Operations review.
The average oil sales price increased from $40/bbl in the first
half of 2020 to $63/bbl in the first half of 2021 and total oil
sales volumes for the period decreased by 46% from 195,036 barrels
in the first half of 2020 to 133,490 barrels in the first half of
2021. Oil production volume decreased by 16% from 196,460 barrels
in the first half of 2020 to 164,184 barrels in the first half of
2021, with the surplus being taken to inventory.
LPG sales volumes were 7,583 tonnes in the first half of 2021
compared to 6,787 tonnes in the first half of 2020, with sales
prices being 60% higher in 2021 ($525/tonne in 2021 compared to
$328/tonne in 2020).
Inventory held at 30 June 2021 (3.0 million cubic metres of gas
and 50.8 thousand barrels of oil) had an estimated sales value of
$4.4m using average sales prices for June 2021.
A portion of production comes from wells owned by third parties,
operated under service agreements with UkrGasVidobuvannya and under
rental agreements with NAK Nadra Ukrayini and Ukrnafta. This
production is subject to sale in the normal way, with payments
being made to the well owners in accordance with the service and
rental agreements.
Russia revenues
The $0.4m reduction in total revenues from $8.4m in the first
half of 2020 to $8m in the first half of 2021 is mainly due to
lower gas production volumes (H1 2020: 161,519Mcm, H1 2021:
160,646Mcm) and negative forex effect. A decrease of the average
gas sales prices in dollar terms caused by the comparatively weaker
local currency.
Cost of sales
Cost of sales before exceptional items for the first half of
2021 totalled $22.6m (H1 2020: $27.6m). This includes:
-- $9.9m of production taxes(1) , which were $2.9m higher than
in the first half of 2020. In Ukraine, production tax expense
(before exceptional charges) increased by $5.7m from $6.1m to $9.0m
mainly due to an increase in the average border gas price which is
the basis for calculating gas production taxes. Only $0.8m of the
total production taxes relate to Russia (H1 2020: $0.9m) where the
mineral extraction tax rate for wells deeper than 5,000m has
remained at 330 Roubles/Mcm.
-- $8.7m of operating costs, of which $5.7m relates to Ukraine
(H1 2020:$5.1m), $2.8m relates to Russia (H1 2020:$3.2m) and $0.2m
to London (H1 2020:$0.2m). The increase in operating costs in
Ukraine is mainly due to a $0.7m increase in well lease costs due
to market-driven lease rates (H1 2021:$1.3m, H1 2020:$0.9m) and
higher production activity. The decrease in operating costs in
Russia is mainly due optimising the coil tubing rental contract and
switching to another more cost efficient provider.
-- Movement in inventory volumes in Ukraine resulted in
recognition of a credit of $1.5m (H1 2020: charge $1.2m as a result
of selling inventory), which was netted off/ added to these
operating costs respectively, gives the $7.2m costs of sales
reported in the condensed consolidated income statement.
-- $5.6m of depreciation, depletion and amortisation charge (H1
2020: $11.0m), of which $3.6m relates to Ukraine (H1 2020: $7.5m)
and Russia $2.0m (H1 2020: $3.5m). The charge in the first half of
2021 is lower in Ukraine due to lower revised depletion rate as a
result of higher reserves at 31 December 2020. It is also impacted
by lower production levels explained in detail in the Operations
review. The reduction of the charge in Russia is mainly due to
lower production.
General and administrative expenses
Administrative expenses were $5.0m in the first half of 2021 and
remained similar to those of $4.4m in the first half of 2020. The
increase is mainly due to higher legal and professional fees as
advisory projects were postponed to 2021 in response to the
challenging environment.
Net finance charges
Finance costs decreased from $0.5m to $0.4m due to the full
repayment of principal outstanding in February 2020. Finance income
of $0.3m comprises income from bank deposits (H1 2020: $0.3m).
Taxation
The total tax charge for the half year is $3.0m (H1 2020: charge
$0.1m) comprising a current tax charge of $2.6m (H1 2020: $1.6m)
which relates to Ukraine and a deferred tax charge of $0.3m (H1
2020: credit $1.5m). The deferred tax credit relates to movements
in various deferred tax assets and liabilities in Ukraine and
Russia.
Discontinued operation
The discontinued operation is the Hungarian business. The
related charge reported reflects the running costs incurred during
2021. A Letter of Interest with a new potential buyer was signed in
July 2021. The sale of the business is expected in 2021 for
approximately $3.0m.
Cash flows
During the period, the available cash balances increased from
$24.3m to $36.2m. Cash generated from continuing operations of
$16.8m (H1 2020:$12.5m) remains strong and reflects the improved
pricing environment and efficient measures the Group implemented in
2020.
Use of cash during the period is as shown in the cash bridge
chart. To view this chart, readers show download a PDF version of
this report from www.jkx.co.uk.
[1] 'Rental fees' and 'production based taxes' terminology
interchangeably used throughout the report. Disputed production
taxes refer to the 2010 and 2015 claims.
Liquidity outlook
After a final payment of $5.8m to bond holders in February 2020
the Group is debt free. Our subsidiary in Ukraine still has a
UAH280m ($10.3m) revolving credit line and a UAH50m ($1.8m)
overdraft facility with Tascombank, neither of which are currently
being used and can be drawn down subject to credit approvals by the
bank. Both facilities have been renewed until December 2021 and can
be drawn down subject to credit approvals by the bank.
Additionally, in July 2020 the Group secured a $5.0m facility with
Alfa-Bank which is valid until July 2023, although draw downs are
conditional on credit approval by the bank and tranches are
repayable 2 months from draw down.
We continue to maintain provisions in respect of the 2010 and
one of the 2015 rental fee claims. PPC has received the final
judgement of the Supreme Court of Ukraine in respect of 2010 rental
fee claim relating to the Poltava Tax Authorities appeal against
lower court judgments in this case. A judgment has been made in
favour of the Poltava Tax Authorities. The case on a court dispute
to enable collection of the 2010 rental fees claimed was
historically initiated by the tax authorities against PPC. The
Supreme Court by its ruling in July 2021 upheld the judgment of the
first instance court and the case is closed in favour of PPC.
However, there is a probability of re-opening the case if the tax
authorities succeed in renewing the terms for reconsidering the
court judgments in this case due to newly discovered circumstances.
Whilst PPC has been successful in the court hearings, the Board
considers it appropriate to maintain a provision given the
uncertainty that remains regarding the future development of the
claim, although this required significant judgment given the recent
nature of the court rulings and assessment of the legislative
environment. Any legal proceedings seeking to re-open the case and
seek collection is anticipated to continue beyond 12 months after
the reporting date given the legislative steps that would be
required, and provisions in relation to this case has been
presented as non-current liability based on the expected timing of
any subsequent payments.
The international arbitration award, directing the State of
Ukraine to pay $11.8m plus interest and $0.3m costs to JKX as
described in the 2020 Annual Report, has now been successfully
legally recognised in Ukraine and JKX has filed for collection. No
possible future benefit that may result from this award will be
reflected in the accounts until there is further clarity on the
process for, and likely success of, enforcing collection.
Both our Ukrainian and Russian operations remain cash flow
positive. As a result of management actions to reduce costs and
work programme deferral during 2020 and 2021, the Company generated
strong cash flows. Operationally the Group's cash flows are
forecasted to be sufficient to manage potential rental fee
settlements if they become due. The Group also has access to the
conditional Tascombank and Alfa-Bank loan facilities or can pursue
other options to maintain liquidity should the need arise.
The consolidated interim financial statements have been prepared
on a going concern basis (see Note 2 to these financial
statements).
Dmytro Piddubnyy
Chief Financial Officer
9 August 2021
Risks and uncertainties
The Group continuously monitors major strategic, operational,
financial and external risks it faces and determines the
appropriate course of action to manage these risks. Key risks and
uncertainties which may impact the Group's performance have not
changed significantly from those stated on pages 30 to 38 of the
Group's 2020 Annual Report. However, the level of liquidity risk is
considered to have reduced since the announcement of the Group's
2020 results due to the additional cash generation, trading
successfully during the current challenging environment together
with the Group having secured an additional loan facility.
Financial risk management
The main financial risk faced by the Group is non-availability
of funds to meet business needs and rental fee payments (liquidity
risk). The significant factors outside of management control that
could adversely impact cash flows, profits and liquidity of the
Group remain the ongoing legal disputes concerning Rental Fees in
Ukraine, along with international oil and gas prices and risks
associated with operating in Ukraine and Russia given the
short-term economic outlook for these countries remains uncertain.
Although the Group has been debt free since February 2020 this risk
remains.
These are critical factors considered when assessing whether the
Group is a going concern (see Note 2 to the condensed consolidated
interim financial information).
Tax legislation
The taxation systems in emerging markets where Group companies
operate are relatively new and are characterised by frequently
changing legislation, which might be subject to interpretation.
Taxes are subject to review and investigation by local authorities,
who are enabled by law to impose substantial fines, penalties and
interest charges. In Ukraine and the Russian Federation a tax year
remains open for review by the tax authorities during subsequent
three calendar years.
Management believes that it has adequately met and provided for
tax liabilities based on its interpretation of existing tax
legislation. However, the relevant tax authorities may have
differing interpretations and the effects on these consolidated
financial statements, if the authorities were successful in
enforcing their interpretations, could be significant.
The Company has persistently defended its position in Ukrainian
courts regarding the Rental Fee claims for 2010 and 2015. Please
refer to Note 10 for more detail.
Reservoir and operational performance
The hydrocarbon reservoirs that we operate in Ukraine and Russia
generate the cash flow that underpins the Group's growth. These
reservoirs may not perform as expected, exposing the Group to lower
profits and less cash to fund planned development.
Existing production from our mature fields at the
Novomykolaivske Complex in Ukraine requires a high level of
maintenance and intervention to minimise natural production
decline. In Russia, acidization of producing wells and other well
maintenance procedures are required from time to time to maintain
stable production levels.
Our investment in development projects or workovers of old wells
is subject to uncertainty inherent in exploring and developing
hydrocarbon reserves and resources. Accurate reservoir performance
forecasts are critical in achieving the desired economic returns
and to determine the availability and allocation of funds. In
modelling reservoir performance, we rely on multiple sources of
data, some of which are decades old (reflecting the time when
certain wells were originally drilled) and therefore may not be
accurate.
Commodity prices - Russia and Ukraine
Company policy is not to hedge commodity price exposure on oil,
gas, LPG or condensate and therefore any change in prices would
have a direct effect on the Group's trading results. We are subject
to risk of unfavourable international oil and gas price movements
that can be affected by political developments in Russia and
Ukraine. In Russia, the government sets certain gas tariffs to
which the Company's Russian subsidiary, Yuzhgazenergie LLC ('YGE')
has pegged its gas sales price.
Ukrainian gas prices have recently been aligned with those
across Europe that exhibit significant volatility and seasonality.
Change in gas import flows had already had impact on gas prices in
Ukraine, and a prolonged period of low gas prices would impact the
Group's liquidity. Hydrocarbon prices started to recover in the
second half of 2020. The Ukrainian market generally followed the
global trends.
Environmental, asset integrity, and safety incidents
As we continue with the development of our oil and gas reserves,
we are exposed to a wide range of significant health, safety,
security and environmental risks that arise as a result of the
geographic spread, operational diversity, regulatory environment
and technical complexity of our exploration and production
activities.
Technical failure, non-compliance with existing standards and
procedures, accidents, natural disasters and other adverse
conditions in our operational locations, could lead to injury, loss
of life, damage to the environment, loss of containment of
hydrocarbons and other hazardous material, as well as the risk of
fires and explosions. Failure to manage these risks effectively
could result in loss of certain facilities, with the associated
loss of production, or costs associated with mitigation, recovery,
compensation and fines, or loss of operating licence.
Health, safety and the environment is a priority of the Board
who are involved in the planning and implementation of continuous
improvement initiatives. Operations in Ukraine, Russia and Hungary
all have dedicated HSECQ teams and HSE Management Systems modelled
on the ISO 9000 series, OHSAS 18001 and ISO 14001. Appropriate
insurances by reputable insurers are maintained to manage the
financial exposure to any unexpected adverse events that would
affect normal operations.
195 countries signed the historic Paris Agreement to tackle
climate change. Despite this, we know that some changes to the
climate are already inescapable due to past emissions of greenhouse
gases. The Paris Agreement commits the international community to
reduce greenhouse gas emissions in order to avoid some of the most
severe impacts of climate change. A programme for adaptation to
climate change to address the identified risks has been initiated
in all Group locations and is an ongoing process for 2021/2022 so
as to deliver resilience to climate change on the ground. This
programme will be then reviewed at least every three years and must
set out the Government's objectives, proposals and policies for
responding to the risks identified.
Corporate governance
The Group has major operations in Ukraine and Russia. Such a
complex structure requires rigorous governance and control
procedures to be in place to ensure an appropriate level of
financial discipline and controls, as well as delegation of
authority along the corporate and management structure.
Over the past few years, the Group has gone through several
major Board and management changes, with subsequent revisions of
strategy, changes of advisors and contractors, and a significant
reduction of staff across its operations. These changes require
additional efforts to ensure proper maintenance of governance,
controls, and financial discipline procedures.
Global Covid-19 pandemic
The Group has all necessary arrangements in place to ensure the
safe conduct of its business. We have implemented a number of
policies recommended by Governments in the countries of our assets
for the protection of our employees, as well as to help minimize
the spread of coronavirus (Covid-19). Our first priority is the
safety and wellbeing of our staff. Our next priority is supporting
the local communities, especially where there is a lack of medical
assistance, and we have directed our corporate and social
responsibility projects helping to fight further spread of
Covid-19. We continue to monitor the impact of Covid-19
developments on our industry, operations, staff and contractors and
are confident about the safety measures we put in place.
Statement of Directors' responsibilities
The Directors confirm that, to the best of their knowledge, this
condensed consolidated interim financial information has been
prepared in accordance with the UK-adopted International Accounting
Standard 34, 'Interim Financial Reporting', and that the Interim
Report includes a fair review of the information required by the
Disclosure and Transparency Rules 4.2.7R and 4.2.8R, namely:
-- an indication of important events that have occurred in the
first six months of 2021 and their impact on the condensed set of
financial information, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related party transactions in the first six months
of 2021 and any material changes in related party transactions
described in the last Annual Report.
A list of current Directors is maintained on the JKX Oil &
Gas plc website www.jkx.co.uk .
Charles Valceschini
Victor Gladun
Tony Alves
Dr. Rashid Javanshir
Michael Bakunenko
The Board of Directors
9 August 2021
Independent review report to JKX Oil & Gas plc
Report on the condensed consolidated interim financial
information
Introduction
We have been engaged by the Group to review the condensed set of
financial statements in the Half Year Report for the six months
ended 30 June 2021 which comprises the condensed consolidated
income statement and condensed consolidated statement of
comprehensive income, the condensed consolidated statement of
financial position, the condensed consolidated statement of changes
in equity, the condensed consolidated statement of cash flows and
the related explanatory notes.
We have read the other information contained in the Half Year
Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The Half Year Report is the responsibility of and has been
approved by the directors. The directors are responsible for
preparing the Half Year Report in accordance with the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Group are prepared in accordance with international accounting
standards in conformity with the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union.
The condensed set of financial statements included in this
half-yearly financial report has been prepared in accordance with
the UK-adopted International Accounting Standard 34, "Interim
Financial Reporting".
Our responsibility
Our responsibility is to express to the Group a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Financial Reporting Council for use
in the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Half Year Report for the six months ended 30 June 2021 is
not prepared, in all material respects, in accordance with the
UK-adopted International Accounting Standard 34, and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
Use of our report
Our report has been prepared in accordance with the terms of our
engagement to assist the Group in meeting its responsibilities in
respect of half-yearly financial reporting in accordance with the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority and for no other purpose. No person is
entitled to rely on this report unless such a person is a person
entitled to rely upon this report by virtue of and for the purpose
of our terms of engagement or has been expressly authorised to do
so by our prior written consent. Save as above, we do not accept
responsibility for this report to any other person or for any other
purpose and we hereby expressly disclaim any and all such
liability.
BDO LLP
Chartered Accountants
London
United Kingdom
9 August 2021
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
GROUP FINANCIAL STATEMENTS
Condensed consolidated income statement
Six months
to
30 June Year to
Six months 31 December
2021 to 30 June 2020
(unaudited) 2020 (audited)
(unaudited)
Note $000 $000 $000
Revenue 4 39,480 35,092 69,623
----------------------------------------------- ---- ------------- ------------- -------------
Cost of sales
----------------------------------------------- ---- ------------- ------------- -------------
Exceptional item - net reversal / (charge)
of provision for production based taxes 11 1,810 (1,099) 13,543
Production based taxes (9,873) (6,978) (13,783)
Depreciation, depletion and amortisation (5,569) (10,982) (17,130)
Other cost of sales (7,173) (9,632) (17,867)
----------------------------------------------- ---- ------------- ------------- -------------
Total cost of sales (20,805) (28,691) (35,237)
----------------------------------------------- ---- ------------- ------------- -------------
Gross profit 18,675 6,401 34,386
----------------------------------------------- ---- ------------- ------------- -------------
Administrative expenses (5,029) (4,364) (10,119)
(Loss)/gain on foreign exchange (903) 250 1,048
Other income 407 - -
----------------------------------------------- ---- ------------- ------------- -------------
Profit from operations before exceptional
items 11,340 3,386 11,772
----------------------------------------------- ---- ------------- ------------- -------------
Profit from operations after exceptional
items 13,150 2,287 25,315
----------------------------------------------- ---- ------------- ------------- -------------
Finance income 323 284 487
Finance cost (353) (543) (951)
Profit before tax 13,120 2,028 24,851
Taxation - current (2,637) (1,604) (3,303)
Taxation - deferred
- before the exceptional items (98) 1,714 3,692
- on the exceptional items (222) (197) (4,370)
----------------------------------------------- ---- ------------- ------------- -------------
Total taxation (2,957) (87) (3,981)
----------------------------------------------- ---- ------------- ------------- -------------
Profit from continuing operations 10,163 1,941 20,870
----------------------------------------------- ---- ------------- ------------- -------------
Loss from discontinued operation (attributable
to equity holders of the parent company) 8 (226) (420) (1,002)
----------------------------------------------- ---- ------------- ------------- -------------
Profit for the period/year attributable
to equity shareholders of the parent company 9,937 1,521 19,868
----------------------------------------------- ---- ------------- ------------- -------------
Six months
to
Six months
30 June to 30 June Year to
31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
Earnings per share for profit from continuing
operations attributable to the ordinary
equity holders of the parent company: $000 $000 $000
---------------------------------------------- ------------- ------------- -------------
Basic and diluted profit per 10p ordinary
share (in cents)
-after exceptional items 5.92 1.13 12.15
-before exceptional items 13 4.99 1.89 6.81
Loss per share for loss from discontinued
operations attributable to the ordinary
equity holders of the parent company:
---------------------------------------------- ------------- ------------- -------------
Basic and diluted loss per 10p ordinary
share (in cents)
-after exceptional items (0.13) (0.24) (0.58)
-before exceptional items 13 (0.16) (0.24) (0.40)
Earnings per share for profit attributable
to the ordinary equity holders of the
parent company:
---------------------------------------------- ------------- ------------- -------------
Basic and diluted profit per 10p ordinary
share (in cents)
-after exceptional items 13 5.79 0.89 11.57
-before exceptional items 4.83 1.64 6.41
GROUP FINANCIAL STATEMENTS
Condensed consolidated
statement of financial position
Six months
to
30 June Year to
31 December
2021 2020
Six months
(unaudited) to 30 June (audited)
2020 (unaudited)
$000 $000 $000
Profit for the period/year 9,937 1,521 19,868
Other comprehensive income to be reclassified
to loss or profit in subsequent periods
when specific conditions are met
- Currency translation differences 5,309 (21,434) (30,431)
Other comprehensive income that will not
be reclassified to profit or loss in subsequent
periods
- Remeasurements of post-employment benefit
obligations - - (115)
- Changes in the fair value of equity
investments at fair value through other
comprehensive income (317) - -
Other comprehensive income/(loss) for
the period/year, net of tax 4,992 (21,434) (30,546)
-------------------------------------------------- ---- ------------------ ------------------ ---------------
Total comprehensive income for the period/year
attributable to equity shareholders of
the parent company 14,929 (19,913) (10,678)
-------------------------------------------------- ---- ------------------ ------------------ ---------------
* Continuing operations 15,155 (19,493) (9,676)
* Discontinued operations (226) (420) (1,002)
-------------------------------------------------- ---- ------------------ ------------------ ---------------
As at As at As at
30 June 30 June 31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
Note $000 $000 $000
ASSETS
Non-current assets
Property, plant and equipment 5 176,928 187,050 173,913
Deferred tax assets 9,293 8,604 9,451
Investment 6 183 500 500
186,404 196,154 183,864
-------------------------------------------------- ---- ------------------ ------------------ ---------------
Current assets
Inventories 5,696 4,819 4,358
Trade and other receivables 3,916 3,166 3,661
Cash and cash equivalents 36,244 14,371 24,329
-------------------------------------------------- ---- ------------------ ------------------ ---------------
45,856 22,356 32,348
-------------------------------------------------- ---- ------------------ ------------------ ---------------
Assets classified as held for sale 8 3,252 3,212 3,186
-------------------------------------------------- ---- ------------------ ------------------ ---------------
Total current assets 49,108 25,568 35,534
-------------------------------------------------- ---- ------------------ ------------------ ---------------
Total assets 235,512 221,722 219,398
-------------------------------------------------- ---- ------------------ ------------------ ---------------
LIABILITIES
Current liabilities
Current tax liabilities (1,330) (362) (877)
Trade and other payables (10,575) (7,877) (9,332)
Provisions 10 (2,826) (27,207) (15,911)
Lease liabilities (329) (803) (401)
(15,060) (36,249) (26,521)
-------------------------------------------------- ---- ------------------ ------------------ ---------------
Liabilities of disposal group classified
as held for sale 8 (252) (312) (286)
-------------------------------------------------- ---- ------------------ ------------------ ---------------
Total current liabilities (15,312) (36,561) (26,807)
-------------------------------------------------- ---- ------------------ ------------------ ---------------
Non-current liabilities
Provisions 10 (23,592) (16,418) (10,931)
Defined pension benefit plan (929) (744) (922)
Lease liabilities (246) (372) (358)
Deferred tax liabilities (3,642) - (3,518)
-------------------------------------------------- ---- ------------------ ------------------ ---------------
Total liabilities (43,721) (54,095) (42,536)
-------------------------------------------------- ---- ------------------ ------------------ ---------------
Net assets 191,791 167,627 176,862
-------------------------------------------------- ---- ------------------ ------------------ ---------------
EQUITY
Share capital 9 26,666 26,666 26,666
Share premium 97,476 97,476 97,476
Other reserves 14 (176,290) (172,170) (181,282)
Retained earnings 243,939 215,655 234,002
-------------------------------------------------- ---- ------------------ ------------------ ---------------
Total equity 191,791 167,627 176,862
-------------------------------------------------- ---- ------------------ ------------------ ---------------
GROUP FINANCIAL STATEMENTS
Condensed consolidated
statement of changes in equity
Share Retained
capital Share premium earnings Other reserves Total
$000 $000 $000 $000 $000
----------------------------------- --------- -------------- ------------- -------------- --------
At 1 January 2020 26,666 97,476 212,849 (150,736) 186,255
Profit for the period - - 1,521 - 1,521
Exchange differences arising
on translation of overseas
operations - - - (21,434) (21,434)
Total comprehensive income
attributable to equity
shareholders of the parent - - 1,521 (21,434) (19,913)
----------------------------------- --------- -------------- ------------- -------------- --------
Transactions with equity
shareholders of the parent
Sale of shares held by
Employee Benefit Trust - - 1,285 - 1,285
----------------------------------- --------- -------------- ------------- -------------- --------
Total transactions with
equity shareholders of
the parent - - 1,285 - 1,285
----------------------------------- --------- -------------- ------------- -------------- --------
167,
At 30 June 2020 (unaudited) 26,666 97,476 215,655 (172,170) 627
----------------------------------- --------- -------------- ------------- -------------- --------
At 1 January 2021 26,666 97,476 234,002 (181,282) 176,862
Profit for the period - - 9,937 - 9,937
Exchange differences arising
on translation of overseas
operations - - - 5,309 5,309
Changes in the fair value
of equity investments
at fair
value through other comprehensive
income - - - (317) (317)
Total comprehensive income
attributable to equity
shareholders of the parent - - 9,937 4,992 14,929
----------------------------------- --------- -------------- ------------- -------------- --------
At 30 June 2021 (unaudited) 26,666 97,476 243,939 (176,290) 191,791
----------------------------------- --------- -------------- ------------- -------------- --------
GROUP FINANCIAL STATEMENTS
Condensed consolidated
statement of cash flows
Six months
to
30 June Year to
31 December
2021 2020
Six months
(unaudited) to 30 June (audited)
2020 (unaudited)
Note $000 $000 $000
Cash flows from operating activities
Cash generated from continuing operations 15 16,793 12,492 28,938
Cash generated from discontinued operations 8 29 19 300
Interest paid - (381) (381)
Income tax paid (2,041) (3,110) (4,250)
------------------------------------------------- ---- ------------- ------------------ ------------------
Net cash generated from operating activities 14,781 9,020 24,607
------------------------------------------------- ---- ------------- ------------------ ------------------
Cash flows from investing activities
Interest received 323 273 487
Proceeds from sale of property, plant
and equipment - 16 120
Purchase of property, plant and equipment (3,734) (9,467) (13,389)
Net cash used in investing activities (3,411) (9,178) (12,782)
------------------------------------------------- ---- ------------- ------------------ ------------------
Cash flows from financing activities
Sale of shares held by Employee Benefit
Trust - 1,285 1,285
Repayment of borrowings - (5,440) (5,440)
Lease liabilities (224) (756) (1,661)
Net cash used in financing activities (224) (4,911) (5,816)
------------------------------------------------- ---- ------------- ------------------ ------------------
Increase/(decrease) in cash and cash equivalents
in the period/year 11,146 (5,069) 6,009
Effect of exchange rates on cash and cash
equivalents 798 (1,183) (2,009)
Cash and cash equivalents at the beginning
of the period/year 24,725 20,725 24,725
------------------------------------------------- ---- ------------- ------------------ ------------------
Cash and cash equivalents from continuing
operations at the end of the period/year 36,244 14,371 24,329
------------------------------------------------- ---- ------------- ------------------ ------------------
Cash and cash equivalents from discontinued
operations at the end of the period/year 8 425 102 396
------------------------------------------------- ---- ------------- ------------------ ------------------
GROUP FINANCIAL STATEMENTS
Notes to the interim financial information
1. General information and accounting policies
JKX Oil & Gas plc (the ultimate parent of the Group
hereafter, 'the Company') is a public limited company listed on the
London Stock Exchange which is domiciled and incorporated in
England and Wales under the UK Companies Act. The registered office
is 6 Cavendish Square, London, W1G 0PD and the principal activities
of the Group are exploration, appraisal, development and production
of oil and gas reserves. The registered number of the Company is
03050645.
The condensed consolidated interim financial information
incorporates the results of JKX Oil & Gas plc and its
subsidiary undertakings as at 30 June 2021 and was approved by the
Directors for issue on 9 August 2021.
This condensed consolidated interim financial information does
not constitute accounts within the meaning of section 434 and of
the Companies Act 2006. Statutory accounts for the year ended 31
December 2020 were approved by the Board of Directors on 31 March
2021 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified. The auditors' report on
those accounts did not contain a statement under 498(2) or 498(3)
of the Companies Act 2006.
This condensed consolidated interim financial information has
not been audited, but was the subject of an independent review
carried out by the Company's auditors, BDO LLP.
2. Basis of preparation
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK-adopted
international accounting standards, with future changes being
subject to endorsement by the UK Endorsement Board. The Group
transitioned to UK-adopted international accounting standards in
its consolidated financial statements on 1 January 2021. There was
no impact or changes in accounting policies from the
transition.
This condensed consolidated interim financial information for
the six months ended 30 June 2021 has been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and with the UK-adopted International Accounting Standard
34, 'Interim financial reporting'. The condensed consolidated
interim financial information should be read in conjunction with
the annual financial statements for the year ended 31 December 2020
which were prepared in accordance with international accounting
standards in conformity with the Companies Act 2006 and
international financial reporting standards adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union. A
copy of the annual financial statements is available on the
Company's corporate website ( www.jkx.co.uk ) or from the Company's
registered office.
The Group's business activities, together with factors likely to
affect its future development, performance and position are set out
in the operational and financial review sections of this report.
The financial position of the Group, its cash flows, liquidity
position and borrowing facilities are described in the financial
review section.
Going concern
The Directors note that the Group is debt free and has generated
$14.8m of operating cash flow in the first half of 2021 with $36.2m
of cash held at 30 June 2021. In addition, the Group benefits from
an undrawn Tascombank loan facility of UAH280m ($10.3m) and
overdraft facility of UAH50m ($1.8m) that were both renewed in
December 2019, although each draw down is subject to credit
approval by the bank. The facility will be available through
December 2021 (subject to planned renewal after this date, if
required). Additionally, in July 2020 the Group secured a $5.0m
facility with Alfa-Bank, although draw downs are conditional on
credit approval by the bank and tranches are repayable 2 months
from draw down. The last date of the agreed loan facility is 21
July 2023.
The Board have reviewed the Group's forecast cash flows,
sensitivities and combined stress case scenarios for a period of at
least the next 12 months. In doing so, the Board considered risks
and uncertainties associated with COVID-19 and the probability of
those occurring noting the additional information available to
assess such risks following the development of the pandemic over
recent months. Factors considered included: a) market volatility in
respect of commodity prices; and c) the Group's ability to utilise
its credit facilities.
The forecasts have been based on the latest Board approved
operational budgets. Gas prices in the regulated Russian market
have been forecasted based on recent prices and contractual terms,
oil price assumptions in Ukraine have been forecast at a discount
to current market forward curves and Ukrainian gas prices have been
estimated considering market prices, seasonal gas price trends and
market outlooks.
The forecast cash flows reviewed include scenarios where
potential liabilities arise in relation to the rental fee claims in
Ukraine that the Group continues to contest. This included
assessments of the timing of such potential payments that may fall
due in the forecast period following detailed analysis of Ukrainian
legislation and the status of each claim with internal and external
legal and tax experts, notwithstanding the previous experience of
continued delays in the court proceedings.
The Board further considered separate scenarios including the
effect of reductions in Ukrainian oil and gas prices of 10% on the
base case, noting that the base case pricing is below market
prices, sustained across the forecast period. The rental claims
stress test scenario is based on the estimated earliest payment
dates when the payments could fall due. This case was combined with
the scenario listed above. All reasonably possible forecasts
demonstrate that significant cash balances are maintained under
such scenarios without draw down on the facilities and they would
be sufficient to meet such obligations as they fall due.
Based on the Group's cash flow forecasts, the Directors believe
that the combination of its current cash balances, net cash flows
from operations and undrawn facilities mean that the Group will be
able to meet its liabilities and commitments as they fall due
across the forecast period. Accordingly the Board considers it is
appropriate to adopt the going concern basis of accounting in
preparing these financial statements.
3. Accounting policies
The accounting policies adopted together with critical
accounting estimates, assumptions and judgements are consistent
with those used in the annual financial statements for the year
ended 31 December 2020. There were no new standards that became
applicable for the current reporting period.
Taxes on income in the interim period are accrued using the tax
rate that would be applicable on expected total annual
earnings.
4. Segmental analysis
The Group has one single class of business, being the
exploration for, evaluation, development and production of oil and
gas reserves. Accordingly the reportable operating segments are
determined by the geographical location of the assets and,
therefore all information is being presented for geographical
segments. This is consistent with the revenue information that is
disclosed for each reportable segment under IFRS 8 Operating
Segments.
There are four (2020: four) reportable operating segments which
are based on the internal reports provided to the Chief Operating
Decision Maker ('CODM'), the Group's Board of Directors. Ukraine
and Russia segments are involved with production and exploration;
the 'Rest of World' are involved in exploration, development and
production and the UK is the home of the head office and purchases
material, capital assets and services on behalf of other
segments.
The Group derives revenue from the transfer of goods at a point
in time.
Segment revenue, segment expense and segment results include
transfers between segments. Those transfers are eliminated on
consolidation.
Segment results and assets include items directly attributable
to the segment. Segment assets consist primarily of property, plant
and equipment, inventories and receivables. Capital expenditures
comprise additions to property, plant and equipment and intangible
assets.
Rest of
UK Ukraine Russia World Sub total Eliminations Total
First half 2021 $000 $000 $000 $000 $000 $000 $000
External revenue
Revenue by location
of asset
- Oil - 8,517 260 - 8,777 - 8,777
- Gas - 18,732 7,676 - 26,408 - 26,408
- LPG - 3,977 - - 3,977 - 3,977
* Other - 314 4 - 318 - 318
---------------------------- ------- -------- ------- ------- --------- ------------ --------
- 31,540 7,940 - 39,480 - 39,480
---------------------------- ------- -------- ------- ------- --------- ------------ --------
Inter segment revenue
- Management services/other 90 - - - 90 (90) -
- Equipment 30 - - - 30 (30) -
---------------------------- ------- -------- ------- ------- --------- ------------ --------
120 - - - 120 (120) -
------- -------- ------- ------- --------- ------------ --------
Total revenue 120 31,540 7,940 - 39,600 (120) 39,480
---------------------------- ------- -------- ------- ------- --------- ------------ --------
Profit before tax
(Loss)/profit from
operations (1,912) 13,132 1,491 428 13,139 11 13,150
Finance income - 277 46 - 323 - 323
Finance cost (6) (261) (86) - (353) - (353)
Profit before tax (1,918) 13,148 1,451 428 13,109 11 13,120
---------------------------- ------- -------- ------- ------- --------- ------------ --------
Total assets(1) 2,075 122,593 95,065 12,527 232,260 - 232,260
---------------------------- ------- -------- ------- ------- --------- ------------ --------
Total liabilities(1) (711) (38,174) (4,579) (5) (43,469) - (43,469)
---------------------------- ------- -------- ------- ------- --------- ------------ --------
(1) Total assets and liabilities exclude assets and liabilities
of the Hungarian disposal group classified as held for sale. Please
refer to Note 8 for details.
Rest of
UK Ukraine Russia World Sub total Eliminations Total
First half 2020 $000 $000 $000 $000 $000 $000 $000
External revenue
Revenue by location
of asset
- Oil - 7,827 287 - 8,114 - 8,114
- Gas - 16,366 8,013 - 24,379 - 24,379
- LPG - 2,224 - - 2,224 - 2,224
- Other - 370 5 - 375 - 375
---------------------------- ------- -------- ------- ------- --------- ------------ --------
- 26,787 8,305 - 35,092 - 35,092
---------------------------- ------- -------- ------- ------- --------- ------------ --------
Inter segment revenue
- Management services/other 381 - - - 381 (381) -
---------------------------- ------- -------- ------- ------- --------- ------------ --------
381 - - - 381 (381) -
------- -------- ------- ------- --------- ------------ --------
Total revenue 381 26,787 8,305 - 35,473 (381) 35,092
---------------------------- ------- -------- ------- ------- --------- ------------ --------
Profit before tax
(Loss)/profit from
operations (1,959) 3,909 215 (76) 2,089 198 2,287
Finance income 26 250 8 - 284 - 284
Finance cost (152) (265) (126) - (543) - (543)
Profit before tax 1,830 198 2,028
---------------------------- ------- -------- ------- ------- --------- ------------ --------
Total assets(1) 3,547 115,998 96,012 2,953 218,510 - 218,510
---------------------------- ------- -------- ------- ------- --------- ------------ --------
Total liabilities(1) (532) (48,175) (5,072) (4) (53,783) - (53,783)
---------------------------- ------- -------- ------- ------- --------- ------------ --------
(1) Total assets and liabilities exclude assets and liabilities
of the Hungarian disposal group classified as held for sale. Please
refer to Note 8 for details.
5. Property, plant and equipment and other intangible assets
During the period the Group acquired $3.7m additional assets in
Ukraine and Russia (2020: $7.5m in Ukraine, Russia), with 88% in
respect of Group's oil and gas producing and development assets
(2020: 86% in respect of Group's oil and gas producing and
development assets).
At the reporting date a review of the carrying amounts of
property, plant and equipment was undertaken to determine whether
there was any indication of a trigger that may have led to these
assets suffering an impairment loss. Following this review
impairment triggers were noted in relation to the Ukrainian and
Russian assets due to the carrying amount of the Group net assets
exceeding the Company's market capitalisation. An impairment test
was performed in respect of assets in Ukraine and Russia.
Key Assumptions - NNC and Elyzavetivske
The key assumptions used in the impairment testing were:
-- Production profiles: these were based on the latest available
information assessed internally.
-- Economic life of field: it was assumed that the title to the
licences is retained based on legal right and that the NNC licence
term will be successfully extended beyond its current 2024
expiration date through to the economic life of the field (expected
to be around 2037). The economic life of the Elyzavetivske field is
currently expected to be around 2034 as per management's current
expectation.
-- Gas prices: during 2015 Ukraine acquired the ability to
purchase gas from Europe rather than being completely dependent on
Russia for imports. As such, Ukrainian gas prices are expected to
be more aligned with European gas prices in future but also
influenced by international oil prices. The gas price used for 2021
is based on estimates of gas prices to be realised by our Ukrainian
subsidiary determined considering external market forecasts as at
year end with consideration given the applicability or otherwise of
relevant pricing adjustments for the local market. For the period
of the model a forward gas price curve was used.
-- Oil prices: the Company used a forward price curve till the
end of the model.
-- Production taxes: the Company has assumed production tax
rates of 29% for gas and 31% for oil and condensate. A gas tax rate
of 12% is applied to wells drilled since 1 January 2018.
-- Capital and operating costs: these were based on current
operating and capital costs in Ukraine for both projects. Estimates
were provided by third parties and supported by estimates from our
own specialists, where necessary.
-- Post tax nominal discount rate of 16.7%. This was based on a
Capital Asset Pricing Model analysis consistent with that used in
previous impairment reviews.
Based on the key assumptions set out above:
-- the recoverable amount of NNC's oil and gas assets ($93.1m)
exceeds its carrying amount ($85.7m) and therefore NNC's oil and
gas assets were not impaired.
-- Elyzavetivske's recoverable amount (including the West
Mashivska extension) ($11.3m) exceeds its carrying amount ($8.8m),
and therefore the CGU's oil and gas assets were not impaired.
Sensitivity analysis for the NNC and Elyzavetivske
Any impairment is dependent on judgement used in determining the
most appropriate basis for the assumptions and estimates made by
management, particularly in relation to the key assumptions
described above. Sensitivity analysis to potential changes in key
assumptions has therefore been provided below.
The impact on the impairment calculation of applying different
assumptions to gas prices, production volumes, future capital and
operating expenditure and post-tax discount rates, all other inputs
remaining equal, would be as follows:
NNC Elyzavetivske
Increase/(decrease) Increase/(decrease)
in headroom in headroom
of $7.4m for of $2.5m for
NNC CGU Elyzavetivske
$m CGU $m
------------------------- -------------------------- -------------------- --------------------
Impact if gas and oil
prices: increased by 20% 35.7 4.0
reduced by 20% (36.9) (3.9)
---------------------------------------------------- -------------------- --------------------
Impact if gas and oil
production volumes: increased by 10% 24.0 3.2
decreased by 10% (24.0) (1.5)
---------------------------------------------------- -------------------- --------------------
Impact if future capital
expenditure: increased by 20% (13.4) (0.4)
decreased by 20% 13.4 0.4
---------------------------------------------------- -------------------- --------------------
Impact if operating
expenditure: increased by 20% (7.2) (0.7)
decreased by 20% 7.2 0.8
---------------------------------------------------- -------------------- --------------------
Impact if post-tax increased by 2 percentage
discount rate: points to 18.7% (8.5) (0.4)
decreased by 2 percentage
points to 14.7% 9.6 0.5
Management performed sensitivity analysis on the estimates of
recoverable amounts and found that the excess of recoverable amount
over the carrying amount of both CGUs would be reduced to nil as a
result of a reasonably possible change in the key assumption of oil
and gas prices given the inherent volatility of prices. However,
the pricing assumptions applied are considered appropriate best
estimates considering market data and trends that support the base
case. The discount rates involve judgment but are considered
appropriately risk weighted. Management have considered the
sensitivity scenarios associated with production, capital
expenditure and operating costs and consider the base case
estimates to be supportable based on detailed planning with such
scenarios less than reasonably possible.
Key Assumptions - Russia
The key assumptions used in the impairment testing were:
-- Production profiles: these were based on the latest available
information assessed internally.
-- Economic life of field: it was assumed that YGE will be
successful in extending the licence term beyond its current 2026
expiration to the economic life of the field.
-- Gas prices: from 1 July 2021 and annually thereafter, the gas
prices have been increased by 3.0% through to 2026 based on
historical experience.
-- Capital and operating costs: these were based on the revised
budget for operating and capital costs in Russia, project estimates
provided by third parties and supported by estimates from our own
specialists, where necessary.
-- Post tax nominal Rouble discount rate of 12.6%. This was
based on a Capital Asset Pricing Model analysis.
Based on the key assumptions set out above YGE's recoverable
amount ($102.7m) exceeds it carrying amount of CGU's assets
including deferred tax assets ($76.6m) and therefore YGE's
Koshekhablskoye gas field was not impaired.
The impact on the impairment calculation of applying different
assumptions to gas prices, production, future capital and operating
expenditure and post-tax discount rates, all other inputs remaining
equal, would be as follows:
Increase/(decrease)
in headroom of $ 26.1
m for Yuzhgazenergie
CGU
----------------------------- ------------------------
$m
----------------------------- ------------------------ -----------------------
Impact of Adygean gas growth rates increased
price: by 10% annually 3.8
growth rates reduced
by 10% annually -3.6
------------------------------------------------------ -----------------------
Impact of production
volumes: Increased by 10% 19.4
Decreased by 10% -19.4
------------------------------------------------------ -----------------------
Impact of future capital
expenditure: Increased by 20% -5.0
Decreased by 20% 5.0
------------------------------------------------------ -----------------------
Impact of operating
expenditure Increased by 20% -11.7
Decreased by 20% 11.8
------------------------------------------------------ -----------------------
Increased by 1
Impact of post-tax discount percentage point
rate: to 13.6% -7.2
Decreased by 1
percentage point
to 11.6% 8.1
------------------------------------------------------ -----------------------
Management performed sensitivity analysis on the estimates of
recoverable amounts and found that the excess of recoverable amount
over the carrying amount of both CGUs would be reduced to nil as a
result of a reasonably possible change in the key assumptions of
gas prices given the inherent volatility of prices. However, the
pricing assumptions applied are considered appropriate best
estimates considering market data and trends that support the base
case. The discount rates involve judgment but are considered
appropriately risk weighted. Management have considered the
sensitivity scenarios associated with production, capital
expenditure and operating costs and consider the base case
estimates to be supportable based on detailed planning with such
scenarios less than reasonably possible.
6. Investments
The carrying value of unlisted investments comprises:
30 June 31 December
2021 (unaudited) 2020
$000 $000
PJSC of "Mining Company Ukrnaftoburinnya" - -
------------------------------------------ ----------------- -----------
Linx Telecommunications Holding B.V. 183 500
------------------------------------------ ----------------- -----------
183 500
------------------------------------------ ----------------- -----------
Group unquoted equity investments comprise a 10% holding of the
ordinary share capital of PJSC of "Mining Company Ukrnaftoburinnya"
("UNB"), a Ukrainian oil and gas company, and a 1.43% holding of
the ordinary share capital of Linx Telecommunications Holding B.V.
("Linx"), a Netherlands telecommunications company. These
investments were previously measured at cost as allowed by IAS 39
(paragraph 46 (c)) and were fully impaired at 31 December 2017. At
31 December 2019 and 2020 investment in Linx was valued at
$0.5m.
As of 1 January 2018 the Group's investments in equity
instruments were reclassified to financial assets at fair value
through other comprehensive income in accordance with the
provisions of IFRS 9. The Group has made an irrevocable election at
the time of initial recognition to account for the equity
investment at fair value through other comprehensive income
(FVOCI).
At 30 June 2021 the carrying value of UNB remained fully
impaired following assessment by the Board considering relevant
available information and valuation techniques, reflecting:
-- the lack of liquidity in the shares of UNB and considerations
regarding the nature of markets for such an investment;
-- the absence of any history of dividends or other returns on
the investment since acquisition in 2006 and the significant
uncertainty regarding future returns;
-- the absence of regular formal communication with UNB;
-- the level of uncertainty regarding any market valuation
method based on quoted Ukrainian oil and gas companies given key
differences in the respective businesses and corporate
structures;
-- the limited number of quoted Ukrainian oil and gas companies
that can be used for the market valuation approach, defined in IFRS
13; and
-- a paper prepared by a specialist third party advisor to the
Board of Directors noted the limited number of likely parties
potentially interested in purchasing the investment and the
difficulties in determining the consideration for which the
investment might be disposed generally.
At 30 June 2021 the carrying value of Linx was reported as $0.2m
(31 December 2020: $0.5m), with this valuation being based upon
management's expectation of future and final dividends to be
received from Linx. During half-year 2021 the management was
informed that Linx completed disposal of the significant business
unit in April 2021. Following the sale a dividend of $0.4m was
received in June 2021. It is reported under "Other income" in the
Profit and Loss account. The fair value of Linx was adjusted to
$0.2m through Other Comprehensive Income.
Management attends Linx shareholder meetings and is in regular
communication with its management. Management understands that Linx
continues to dispose of its businesses units and dividend out all
proceeds to shareholders prior to a liquidation of the company.
Previously dividends were received during 2017 and 2019 of $0.1m
and $0.03m respectively after disposals of other business units.
The carrying value of $0.2m is consistent with Linx management
expectations of consideration to be received for disposal of the
remaining business units and also with the most recent financial
statements of Linx.
7. Borrowings
30 June 30 June
31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
$000 $000 $000
Current
Convertible bonds due 2020 - - -
------------------------------------ ------------- ------------- -----------
Term-loans repayable within one year - - -
------------------------------------ ------------- ------------- -----------
Convertible bonds due 2020
On 19 February 2013 the Company successfully completed the
placing of $40m of guaranteed unsubordinated convertible bonds with
institutional investors which were due 2018 (prior to
restructuring) raising cash of $37.2m net of issue costs.
Please refer to Annual Group Consolidated financial statements
for 2020 for the full disclosure on Borrowings in Note 11.
On 19 February 2020 the Company made the final payment of the
third instalment to Bondholders of $5.4m (34% of the principal
amount of the Bonds), together with $0.4m interest payment in
accordance with the terms and conditions of the Bond.
Credit facility
On 11 December 2019, 12 month revolving credit line from
Tascombank amounting to UAH280m has been renewed for 2 years by
PPC, our subsidiary in Ukraine (originally secured 15 December 2017
for UAH150 m). At 30 June 2021 the total short-term line of credit
amounted to $10.3m at an exchange rate of $1: 27.18 (31 December
2020: $9.9m at an exchange rate of $1: 28.27 Hryvnia). The amount
outstanding at 30 June 2021 was nil (31 December 2020: nil), so the
undrawn portion totaled $10.3m (2020: $9.9m). The facility will be
available through December 2021 (subject to planned renewal after
this date, if required) and draw downs are subject to certain bank
credit approvals. In addition PPC holds a UAH50m ($1.8m) overdraft
facility which remains undrawn and was renewed until 13 December
2021.
The main terms and conditions of the revolving credit line with
Tascombank are as follows:
-- drawdowns can be made either in USD or UAH and are
individually subject to credit approval by the lender;
-- interest rate cost for USD drawn down is 9%;
-- interest rate cost for UAH drawn down: 17.0% to 30 days,
17.50% 31 to 90 days, 20.00% 91 to 180 days, 21.00% 181 to 365
days;
-- borrowing above UAH90m, equivalent to $3.3m at 30 June 2021
(2020: $3.2m) will require a corporate guarantee from JKX Oil &
Gas plc. The corporate guarantee provided by the JKX Oil & Gas
plc in respect of the credit facility with Tascombank is considered
to be an insurance contract under the provisions of IFRS 4;
-- assets with a market value of UAH460m, equivalent to $16.9m
at 30 June 2021 (2020: UAH460m, equivalent to $16.3m) have been
identified for use as a collateral, collateral is to be provided
only on a drawdown; and
-- amount borrowed will be repaid during the last 4 months, by
equal-sized monthly payments, to be effected on the last day of the
month/the last day of the credit limit period. Last date of
repayment for the last part of amount borrowed is 13 December
2021.
The credit facility of $10.3m (31 December 2020: $9.9m) includes
two financial covenants. If the covenants are not met an additional
interest of 2% applies to the facility but failure to meet
covenants does not represent an event of default:
-- to keep gross margin at no less than 50% during the period of
the credit facility agreement, based on PPC's financial reporting
results. This covenant was not met, however this did not result in
additional interest of 2% being applied as the credit facility was
not used during the period ended 30 June 2021.
-- starting from the first quarter of 2019 and during the period
of the credit facility agreement, PPC is to maintain the ratio
between financial (interest) debt and EBITDA (adjusted to the
annual value) at no more than 3.0. This covenant has been met as
PPC had no debt during the period ended 30 June 2021.
In July 2020 PPC also signed a $5.0m loan facility agreement
with Alfa-Bank valid for 3 years. The loan facility cannot exceed
$5.0m, calculated at a fixed at the date of agreement exchange rate
of $27.6647.
The main terms and conditions of the loan facility with
Alfa-Bank are as follows:
-- drawdowns can be made either in USD, EUR or UAH and are
individually subject to credit approval by the lender;
-- interest rate cost for USD drawn down is 4.9%, based on 2
months repayment;
-- interest rate cost for EUR drawn down 4.4%, based on 2 months
repayment;
-- interest rate cost for UAH drawn down 11.3%, based on 2
months repayment;
-- full loan facility will require a corporate guarantee from
JKX Oil & Gas plc. The corporate guarantee provided by the JKX
Oil & Gas plc in respect of the credit facility with Alfa-Bank
is considered to be an insurance contract under the provisions of
IFRS 4;
-- collateral shall be properly documented and provided in
advance, the tranche cannot be granted otherwise; and
each amount borrowed shall be repaid within 2 months from the
date when the tranche is agreed (agreed by signing of an additional
agreement ). The last date of the agreed loan facility is 21 July
2023.
Significant financial penalties:
-- the non-payment penalty is 0.2% per day of the overdue amount
but no more than National Bank of Ukraine (NBU) double discount
rate;
-- if the covenants are not met (for each case) an additional
interest of 0.1% applies to the facility; and
-- if the amount of the loan facility is not used for the
purpose indicated in the loan facility agreement PPC is liable to
pay 25% of the amount used not for the purpose indicated in the
loan facility agreement.
Significant financial covenants:
All covenants listed below have been met during the period ended
30 June 2021.
-- EBITDA - should not be less than Nil at the end of each
quarter during the period of the loan facility agreement;
-- Debt to EBITDA ratio - should be no more than 3.0 at the end
of each quarter during the period of the loan facility agreement;
and
EBITDA to Financial costs (Interest) ratio - should be not less
than 2.0 at the end of each quarter during the period of the loan
facility agreement.
8. Discontinued operations and assets classified as held for
sale
In early February 2018 the Group announced its intention to exit
its oil and gas operations in Hungary and initiated an active
programme to dispose of its Hungarian business.
On 9 March 2020 the company announced that it had agreed terms
for the disposal of the entire share capital of Hungarian business.
Following pandemic related delays the Group received notification
that the relevant Hungarian authorities had refused the necessary
consent to the transaction pursuant to legislation introduced as a
result of the current COVID-19 pandemic. Consequently, the
transaction did not proceed.
The Hungarian business unit has been classified as held for sale
for the period of more than 12 months.
An extension of the period required to complete the sale does
not preclude the asset from being classified as held for sale as
the delay is caused by events and circumstances beyond the Group's
control. Management reviewed the classification criteria as defined
by IFRS 5 and confirms that the sale is highly probable and the
Group remains committed to its plan to sell the Hungarian business
unit.
In February 2021 the Group signed Memorandum of Understanding
with a new potential buyer in the amount of $2.9m. The purpose of
this Memorandum is to establish the responsibilities/next steps of
the parties in order to successfully conclude the possible deal,
subject to the agreement and execution of a legally binding
acquisition agreement. The potential buyer did not proceed with the
sale.
On 14 July 2021 the Group received Letter of Interest from a new
potential buyer in the amount of $3.0m. The letter confirms their
readiness to consider purchase of the Hungarian business unit.
The associated assets and liabilities were presented as held for
sale in the financial statements at 31 December 2018 and remains as
such at 31 December 2019, 31 December 2020 and 30 June 2021. Prior
to the reclassification assets were measured at the lower of
carrying amount and fair value less costs to sell.
The financial performance and cash flow information presented
are for periods ended 30 June 2020 and 30 June 2021.
30 June 30 June
2021
$000 2020
$000
Administrative expenses (259) (490)
Exceptional item - reversal of provision for impairment
of Hungary 47 173
Loss on foreign exchange (14) (103)
-------------------------------------------------------- ------- -------
Loss from operations before and after tax (226) (420)
-------------------------------------------------------- ------- -------
Net cash inflow from operating activities 29 19
Effect of exchange rates on cash and cash equivalents - (13)
------------------------------------------------------ ----
Net increase in cash used by the subsidiary 29 6
The following assets and liabilities were reclassified as held
for sale in relation to the discontinued operation as at 31
December 2020 and 30 June 2021.
30 June 31 December
2021 2020
Assets and liabilities of disposal group classified $000 $000
as held for sale
Assets classified as held for sale
Property, plant and equipment 1,957 1,911
Trade and other receivables 870 879
Cash 425 396
Total assets of disposal group held for sale 3,252 3,186
----------------------------------------------------- ------- -----------
Liabilities of the disposal group classified as held
for sale
Trade and other payables (52) (86)
Abandonment provision (200) (200)
----------------------------------------------------- ------- -----------
Total liabilities of disposal group held for sale (252) (286)
----------------------------------------------------- ------- -----------
Net assets (3,000) 2,900
----------------------------------------------------- ------- -----------
9. Share capital
Equity share capital, denominated in Sterling, was as
follows:
30 June 30 June 30 June 31 December 31 December 31 December
2021 2021 2021 2020 2020 2020
(unaudited) (unaudited) (unaudited) (audited) (audited) (audited)
Number GBP000 $000 Number GBP000 $000
Allotted, called up
and fully paid
----------------------- ------------ ------------ ------------ ----------- ----------- -----------
Balance at 31 December
and 30 June 172,125,916 17,212 26,666 172,125,916 17,212 26,666
----------------------- ------------ ------------ ------------ ----------- ----------- -----------
Of which the following are shares held in treasury:
Treasury shares held
at
31 December and 30
June 402,771 40 77 402,771 40 77
--------------------- ------- -------
Treasury shares and Employee Benefit Trust
The Company did not purchase any treasury shares during the
period (2020: nil). There were no treasury shares used in the
period (2020: nil) to settle share options.
JKX Employee Benefit Trust was established in 2013 and acquired
5,000,000 shares in JKX Oil & Gas plc at a cost of $4.0m for
the purpose of making awards under the Group's employee share
schemes and these shares have been classified in the statement of
financial position as treasury shares within retained earnings.
During 2019 JKX Employee Benefit Trust sold 1,186,547 shares at
an average price of GBP0.30 per share. 180,525 shares were used in
2019 to settle share options, out of which 48,660 were sold in
order to cover National insurance cost, therefore at 31 December
2019 JKX Employee Benefit Trust held 3,632,928 shares in JKX Oil
& Gas plc . During January 2020 JKX Employee Benefit Trust sold
remaining 3,632,928 shares at an average price of GBP0.28 per
share.
There are no shares reserved for issue under options or
contracts.
10. Provisions
Refer to note 12 for details of the disputed production based
taxes in respect of 2010 and 2015, also referred to interchangeably
as rental fee claims through this report.
The provision for production based taxes, is in respect of
claims against PPC for additional rental fees for the periods
August to December 2010 and January to December 2015. $1.8m was
recognised as a credit in the half-year 2021 Consolidated income
statement (30 June 2020: $1.1m charge) which is the net of a $2.1m
reversal of provisions for one tax case that has been closed in
favour of PPC relating to January to December 2015 claims and of
$0.3m interest accrued for the remaining cases that have not been
closed, of which $0.2m charge relates to the August to December
2010 claim (30 June 2020:$0.3m) and $0.1m charge relate to January
to December 2015 claims (30 June 2020: $0.8m). Remaining claims are
being contested in the Ukrainian courts (see Note 12). The amount
is denominated in Ukrainian Hryvnia ('UAH') and is stated above at
its US$-equivalent amount using the half-year 2021 rate of
UAH27.18/$ (31 December 2020: UAH28.27/$).
Case 816/685/16, principal only, amounting to $2.8m and related
to January to December 2015 claims was reclassified from
non-current to current at 30 June 2021. This case is expected to be
considered on merits by the courts during the next twelve
months.
Provision related to August to December 2010 case amounting to
$14.6m was reclassified from current to non-current at 30 June
2021. Whilst PPC has been successful in the court hearings, the
Board considers it appropriate to maintain a provision given the
uncertainty that remains regarding the future development of the
claim, although this required significant judgment given the recent
nature of the court rulings and assessment of the legislative
environment. Any legal proceedings seeking to re-open the case and
seek collection is anticipated to continue beyond 12 months after
the reporting date given the legislative steps that would be
required, and provisions in relation to this case has been
presented as non-current liability based on the expected timing of
any subsequent payments. The provision against the case was
previously classified as current based on the expected timing of
the Supreme Court ruling in 2021 and potential payment.
The provision for rental fee claims at 30 June 2021 includes
estimated interest and penalties. Judgement is applied regarding
application of the relevant legislation to determine estimates of
the interest and penalties, together with aspects of the underlying
claims which are considered overstated based on the legislation on
which the claims are based, should this legislation be applied,
notwithstanding that the Group disputes the claims in their
entirety.
Changes in the judgement about the timing of the provision
releases: during 2019 provisions were maintained for open cases
unless judgments of the Supreme Court of Ukraine had been received
in favour of PPC or appeals to this court were considered remote,
based on assessment of facts and circumstances at the time. During
2020 the Group had determined that it was appropriate to release
provisions when first and appellate Court rulings have been
received in respect of the 2015 cases (on its merits) in the
Group's favour. In reaching that conclusion Management have
considered their experience of the legal process to date, the fact
that the Supreme Court checks judgments of the first and appellate
Courts and cannot review any new facts or circumstances and have
sought advice from external counsel. Accordingly the risk of the
lower court judgments on the merits of the cases being cancelled
are considered very low. Consequently the Group's Management had
released provisions after court judgments of first and appellate
instances in favour of PPC.
The Board believes that the claims are without merit under
Ukrainian law and the Company will continue to contest them
vigorously. Whilst provisions are held by the Group, additional
contingent liabilities exist in respect of the rental fee claims
given the judgments required in forming the provisions and
alternative potential outcomes.
Disputed
production
based taxes
Current provisions $000
--------------------------------------------- -------------
At 1 January 2021 15,911
Foreign currency translation 598
Released during the period (2,142)
Amount provided in the period 221
Reclassification from non-current provisions (11,762)
At 30 June 2021 2,826
--------------------------------------------- -------------
Production
based taxes
Non-current provisions $000
--------------------------------------- ------------
At 1 January 2021 5,080
Foreign currency translation 207
Amount provided in the period 111
Reclassification to current provisions 11,762
--------------------------------------- ------------
At 30 June 2021 17,160
--------------------------------------- ------------
Provision on decommissioning
30 June 30 June
2021 2020 31 December 2020
(unaudited) (unaudited) (audited)
$000 $000 $000
Provision for site restoration 6,432 5,913 5,851
------------------------------- ------------- ------------- ----------------
11. Exceptional items
During the period exceptional items as detailed below have been
included in cost of sales in the income statement:
Cost of
sales(1)
$000
--------------------------------------------------- ---------
Net movement in provision for disputed rental fees 1,810
1,810
--------------------------------------------------- ---------
(1) Please see Note 10 for details
12. Taxation
No UK tax liability has arisen during the six months ended 30
June 2021 (2020: nil) due to the availability of tax losses. The
current tax charged in the period relates to Ukrainian corporation
tax which has arisen in the Group's subsidiary, Poltava Petroleum
Company. Taxes charged on production of hydrocarbons in Ukraine,
Russia and Hungary are included in cost of sales.
Factors that may affect future tax charges
A significant proportion of the Group's income will be generated
overseas. Profits made overseas will not be able to be offset by
costs elsewhere in the Group. This could lead to a higher than
expected tax rate for the Group.
At Budget 2020, the government announced that the Corporation
Tax main rate (for all profits except ring fence profits) for the
year starting 1 April 2021 would remain at 19%.
The corporation tax rate in Ukraine for 2021 is 18% (2020:
18%).
Taxation in Ukraine - disputed production taxes
Since Poltava Petroleum Company's ('PPC's') inception in 1994
the Company has operated in a regime where conflicting laws have
existed, including in relation to effective taxes on oil and gas
production.
In order to avoid any confusion over the level of taxes due, in
1994, PPC entered into a licence agreement with the Ukrainian State
Committee on Geology and the Utilisation of Mineral Resources ('the
Licence Agreement') which set out expressly in the Licence
Agreement that PPC would pay rental fees on production at a rate of
only 5.5% of sales value for the duration of the Licence
Agreement.
Pursuant to the Licence Agreement, PPC was granted an
exploration licence and four 20-year production licences, each in
respect of a particular field. In 2004 PPC's production licences
were renewed and extended until 2024 and operations continued as
before.
In December 1994, a new fee on the production of oil and gas
(known as a 'rental fee') was introduced through Ukrainian
regulations. On 30 December 1995, JKX, together with its Ukrainian
subsidiaries (including PPC), was issued with a Joint Decision of
the Ministry of Economy, the Ministry of Finance and the State
Committee for the Oil and Gas ('the Exemption Letter'), which
established a zero rental fee rate for oil and natural gas produced
in Ukraine by PPC for the duration of the Licence Agreement for
Exploration and Exploitation of the Fields. Based on the Exemption
Letter PPC did not expect to pay any rental fees until a new law on
rental fees was enacted in 2011.
The new law enacted in 2011 established new mechanisms for the
determination of the rental fees. Notwithstanding the Exemption
Letter, in January 2011 PPC began to pay rental fees in order to
avoid further issues with the Ukrainian authorities but without
prejudice to its right to challenge the validity of rental fee
demands.
During 2015 rental fees in Ukraine were increased to 55% and
capital control restrictions were introduced.
International arbitration proceedings
In 2015, the Company and its wholly owned Ukrainian and Dutch
subsidiaries commenced arbitration proceedings against Ukraine
under the Energy Charter Treaty, the bilateral investment treaties
between Ukraine and the United Kingdom and the Netherlands,
respectively. In these proceedings, the Company sought repayment of
more than $180 m in rental fees that PPC had paid on production of
oil and gas in Ukraine since 2011, in addition to damages to the
business.
The tribunal decision, in February 2017, did not find in favour
of the Company in respect of the rental fees but awarded the
Company damages of $11.8 m plus interest, and costs of $0.3 m in
relation to subsidiary claims.
The arbitration award has now been legally recognised in Ukraine
and in December 2019 JKX filed for its collection. No recognition
will be made in the financial statements of any possible future
benefit that may result from this award until there is further
clarity on the process for, and likely success of, enforcing
collection.
Rental fee demands
The Group currently has two claims (2020: two) for additional
Rental Fees being contested through the Ukrainian court process.
These arise from disputes over the amount of Rental Fees paid by
PPC for certain periods since 2010, which in total amount to
approximately $20.0million (2020: $21.0 million) (including
interest and penalties), as detailed below. All amounts are being
claimed in Ukrainian Hryvnia ('UAH') and are stated below at their
US$-equivalent amounts using the year end rate of $1:UAH 27.18
(2020: $1: UAH 28.27).
August - December 2010: approximately $14.6 million (2020: $13.8
million) (including $10.1 million (2020: $9.5 million) of interest
and penalties). The case is a split into three cases - two cases on
merits (No. 816/539/14 and No. 816/4476/14) and one fiduciary case
related to collection of the rental fees claimed (No.
816/3731/14).
-- 816/539/14 - Case lost historically on merits. Since this
time, PPC have been incurring interest and penalty charges.
-- 816/4476/14 -PPC considered that there were in fact certain
procedures in case 816/539/14 that were not followed regarding the
tax notifications that formed the basis of the original claims
against PPC. Certain documentation was found to be missing from the
files of the tax authorities. On 05 April 2017 the Poltava Circuit
Administrative Court found in favor of PPC. The Kharkiv Appellate
Administrative Court on 01 June 2017 turned down PJTI's appellate
complaint on merits. However, on 22 April 2021 the Supreme Court
cancelled the judgments of the lower courts which had been in favor
of PPC and decided to close the proceedings leaving the court
judgments against PPC in the above case No. 816/539/14 the only
effective ones. As a result PPC has now lost the case.
-- 816/3731/14 - This case is a fiduciary court dispute on
forcible collection of the 2010 rental fees claimed and was
historically initiated by PJSTI against PPC once PPC lost tax
dispute No. 816/539/14 above. After two court judgments in favor of
PPC in case No. 816/4476/14, on 29 June 2017, the PCAC having
considered legal and tax expert evidence put forward by PPC along
with PJSTI's objections, found in favor of PPC preventing
collection of the amounts claimed. The KHAC by its ruling of 05th
February 2018 and the Supreme Court by its ruling of 21st July 2021
upheld the judgment of the first instance court - thus, the case is
closed in favor of PPC such that PJSTI is unable to enforce
collection. However, the Board consider that there is a risk that
the case may be re-opened if the PJSTI applies for reconsideration
of the court judgments in this case due to newly discovered
circumstances i.e. utilizes the judgment of the Supreme Court in
case No. 816/4476/14 in April 2021 to instigate a new collection
motion.
Whilst PPC has been successful in the court hearings, the Board
considers it appropriate to maintain a provision given the
uncertainty that remains regarding the future development of the
claim, although this required significant judgment given the recent
nature of the court rulings and assessment of the legislative
environment. Any legal proceedings seeking to re-open the case and
seek collection is anticipated to continue beyond 12 months after
the reporting date given the legislative steps that would be
required, and provisions in relation to this case has been
presented as non-current liability based on the expected timing of
any subsequent payments. The provision against the case was
previously classified as current based on the expected timing of
the Supreme Court ruling in 2021 and potential payment.
January - December 2015: approximately $5.4 million (2020: $7.2
million) (including $3.5 million (2020: $5.4 million) of interest
and
penalties). Following the commencement of international
arbitration proceedings at the beginning of 2015 (see above), from
July 2015
PPC reverted to paying a 28% Rental Fee for gas production
(instead of the revised official rate of 55%) as a result of the
awards
granted under the arbitration. PPC also declared part of its
Rental Fee payments at 55% for the first 6 months of 2015 as
overpayments and consequently stopped paying the Rental Fee for
gas in order to align the total payments made in 2015 with the
28%
rate awarded made under the arbitration proceedings. The
Ukrainian tax authorities have issued PPC with the series of claims
for the
difference between 28% and 55%, which were being contested in
eight separate cases. Six of these cases have now been resolved
in
PPC's favour and the others continue to be contested:
Open 2015 cases for which provisions held:
Management have specifically assessed whether the success on
cases during 2020 and 2021 provides a sufficient precedent to
release the remaining provisions for the 2015 claims. It was
concluded that given the inherent uncertainty associated with the
Ukrainian Court system and political environment it remains
appropriate to retain the remaining provisions.
-- Case No. 816/685/16 for $5.4m has already been suspended.
PJSTI have filed cassation complaint with the Supreme Court to
unsuspend it. A principal of $2.8m was reclassified from
non-current to current at 30 June 2021. This case is expected to be
considered on merits by the courts during the next twelve
months.
Pending 2015 cases for which provisions released:
Notwithstanding that for the three cases below there are further
cassation complaints from PJSTI, the Group's assessment is that
once there is a judgment of the first and appellate instance court
in favour of PPC, tax notification decision in respective case is
cancelled and the provision released unless there are specific
circumstances which would indicate provision should be
retained.
-- On 4 May 2020 the Poltava Circuit Administrative Court found
in favour of PPC in case No. 816/687/16 for $4.7m. The Kharkiv
Appellate Administrative Court on 15 October 2020 turned down
PJTI's appellate complaint. PJSTI filed a cassation complaint,
however on 19 November 2020 the Supreme Court returned it to the
PJTI stating that it sees no grounds on reconsideration of the
lower instance courts. PJTI, ignoring the ruling of the Supreme
Court, refiled another cassation complaint. The Supreme Court
accepted it and commenced the cassation proceedings. The
consideration is expected at the end of 2021. The provision was
released in 2020.
-- On 22 December 2020 the Poltava Circuit Administrative Court
found in favour of PPC in case No. 816/686/16 for $10.4m. PJSTI
filed an appellate complaint and the Kharkiv Appellate
Administrative Court accepted it. On 12 March 2021 Kharkiv
Appellate Administrative Court found in favour of PPC and cancelled
the tax notification decisions recognising them as illegal. We
expect that PJSTI will file the cassation complaint against the
above judgments within the following months. The provision was
released in 2020.
-- On 18th November 2020 the Poltava Circuit Administrative
Court found in favor of PPC in case No. 816/1191/16. PJSTI filed
appellate complaint and the Kharkiv Appellate Administrative Court
accepted it. The Kharkiv Appellate Administrative Court on 29 March
2021 turned down PJTI's appellate complaint on merits. PJSTI
attempted to file several times the cassation complaint - however,
twice the cassation complaints of PJSTI were turned down. Provision
amounting to $2.1m was release on 1 April 2021 when decision was
received.
It is expected that the process of hearings in respect of the
remaining outstanding 2015 rental fee claim will continue into 2022
and possibly beyond. Full provisions are made for claim 816/685/16
and the 2010 cases.
2015 cases closed in favour of the Group for which provisions
released in prior periods:
Case No. 816/846/16 for $5.3m. On 14 November 2019 the Poltava
Circuit Administrative Court found in favour of PPC as well as
ruled that Tax Notification Decisions previously issued against PPC
were illegal and were cancelled. The KHAC by its judgment of 5
October 2020 and the Supreme Court by its judgment of 17 March 2021
upheld the judgment of the first instance court - thus, the case is
fully closed in favour of PPC.
Changes in the judgement about the timing of the provision
releases: during 2019 provisions were maintained for open cases
unless judgments of the Supreme Court of Ukraine had been received
in favour of PPC or appeals to this court were considered remote,
based on assessment of facts and circumstances at the time. During
2020 the Group had determined that it was appropriate to release
provisions when first and appellate Court rulings have been
received in respect of the 2015 cases (on its merits) in the
Group's favour. In reaching that conclusion Management have
considered their experience of the legal process to date, the fact
that the Supreme Court checks judgments of the first and appellate
Courts and cannot review any new facts or circumstances and have
sought advice from external counsel. Accordingly the risk of the
lower court judgments on the merits of the cases being cancelled
are considered very low. Consequently the Group's Management had
released provisions after court judgments of first and appellate
instances in favour of PPC.
$1.8m was recognised as a credit in the half-year 2021
Consolidated income statement (30 June 2020: $1.1m charge) which is
the net of a $2.1m reversal of provisions for one tax case that has
been closed in favour of PPC relating to January to December 2015
claims and of $0.3m interest accrued for the remaining cases that
have not been closed, of which $0.2m charge relates to the August
to December 2010 claim (30 June 2020:$0.3m) and $0.1m charge relate
to January to December 2015 claims (30 June 2020: $0.8m). Remaining
claims are being contested in the Ukrainian courts (see Note 11).
The amount is denominated in Ukrainian Hryvnia ('UAH') and is
stated above at its US$-equivalent amount using the half-year 2021
rate of UAH27.18/$ (2020: UAH28.27/$).
13. Earnings per share
The calculation of earnings per ordinary share for the six
months ended 30 June 2021 is based on the weighted average number
of shares in issue during the period of 171,723,145 (30 June 2020:
171,723,145 and 31 December 2020: 171,723,145), including shares
held to satisfy the Group's employee share schemes and shares
purchased by the Company and held as treasury shares of 402,771 (30
June 2020: 402,771and 31 December 2020: 402,771), and the profit
for the relevant period.
Profit before exceptional items in 2021 of $8,302,515 (30 June
2020: $2,817,230 and 31 December 2020 profit: $11,016,481) is
calculated from the half-year 2021 profit of $ 9,936,932 (30 June
2020: $1,520,811 and 31 December 2020: $19,867,529) adjusted for
exceptional items of $1,856,596 credit (30 June 2020: $1,099,420
charge 31 December 2020: $13,221,048 credit) and the related
deferred tax on the exceptional items of $222,179 charge (30 June
2020: $197,000 charge and 31 December 2020: $4,370,000 charge).
There were no outstanding share options at 30 June 2021 (30 June
2020: nil).
There are no dilutive instruments.
30 June 30 June 31 December
2021 2020 2020
Reconciliations of earnings used in calculating $000 $000 $000
earnings per share
Profit from continuing operations for the
purpose of basic and diluted earnings per
share (profit for the year attributable to
the owners of the parent):
- After exceptional item 10,163 1,941 20,870
- Before exceptional item 8,576 3,237 11,696
---------------------------------------------------- ------- ------- -----------
(Loss)/profit from discontinued operations
for the purpose of basic and diluted earnings
per share ((loss)/profit for the year attributable
to the owners of the parent):
- After exceptional item (226) (420) (1,002)
- Before exceptional item (273) (420) (680)
---------------------------------------------------- ------- ------- -----------
Total profit for the purpose of basic and
diluted earnings per share (profit for the
year attributable to the owners of the parent):
- After exceptional item 9,937 1,521 19,868
- Before exceptional item 8,303 2,817 11,016
---------------------------------------------------- ------- ------- -----------
30 June 30 June 31 December
2021 2020 2020
Number of shares (unaudited) (unaudited) (audited)
Basic weighted average number of shares 172,125,916 172,125,916 172,125,916
Treasury shares (402,771) (402,771) (402,771)
Shares held in Employee Benefit Trust (Note
8) - (3,632,928) (3,632,928)
Sale of shares held by Employee Benefit Trust
(Note 8) - 3,632,928 3,632,928
Weighted average number of shares excluding
treasury shares 171,723,145 171,723,145 171,723,145
---------------------------------------------- ------------- ------------- -----------
14. Other reserves
Foreign Post-employment Equity
Capital currency benefit investments
Merger redemption translation obligation with FVOCI
reserve reserve reserve reserve reserve Total
$000 $000 $000 $000 $000 $000
At 1 January 2020 30,680 587 (182,054) (449) 500 (150,736)
Exchange differences arising
on translation of overseas
operations - - (21,434) - - (21,434)
At 30 June 2020 30,680 587 (203,488) (449) 500 (172,170)
----------------------------- -------- ----------- ------------ --------------- ------------- ---------
At 1 January 2021 30,680 587 (212,485) (564) 500 (181,282)
Exchange differences arising
on translation of overseas
operations - - 5,309 - - 5,309
Changes in the fair value
of equity investments
at fair value through other
comprehensive
income - - - - (317) (317)
At 30 June 2021 30,680 587 (207,176) (564) 183 (176,290)
----------------------------- ------ --- --------- ----- ----- ---------
Merger reserve was created on 30 May 1995 when JKX Oil & Gas
plc acquired the issued share capital of JP Kenny Exploration &
Production Limited for the issue of ordinary shares and represents
the difference between the fair value of consideration given for
the shares and the nominal value of those instruments.
Capital redemption reserve relates to the buyback of shares in
2002, there have been no additional share buy-backs since this
time.
Equity investments with FVOCI reserve includes movements that
relate to changes in the fair value of unlisted investments in
equity.
Foreign currency translation reserve includes movements that
relate to the retranslation of the subsidiaries whose functional
currencies are not the US Dollar.
During the first half of 2021, the Russian Rouble ('RR')
strengthened by approximately 0.02% from RR73.88/$ to RR72.37/$ (30
June 2020: weakened by approximately by 13% from RR61.91/$ to
RR69.95/$) Ukrainian Hryvnia ('UAH') strengthened by approximately
0.04% from UAH 28.27/$ to UAH 27.18/$ (30 June 2020: weakened by
approximately 14% from UAH 23.69/$ to UAH 26.69/$).Currency
translation differences of US$5.3m gain (2020: US$21.4m loss)
included in the Consolidated statement of comprehensive income
arose on the translation of property, plant and equipment
denominated in RR and UAH and amounted to $2.0m and $3.3m
respectively.
Post-employment benefit obligation reserve relates to a
remeasurement of liability for defined benefit pension plan in PPC,
our subsidiary in Ukraine.
15. Reconciliation of profit from operations to net cash
generated from operations
Six months Six months
to 30 June to 30 June Year to
31 December
2021 2020 2020
$000 $000 $000
Profit from continuing operations before tax 13,120 2,287 25,315
Loss from discontinued operations before tax (226) (420) (1,002)
Depreciation, depletion and amortisation 6,009 11,278 17,912
Exceptional item - (decrease)/increase in
provision for production based taxes, including
forex (1,810) 1,099 (13,543)
(Decrease)/increase in provision for impairment
of Hungary (47) (173) 322
Loss/(profit) on disposal of fixed assets 91 (15) (113)
Cash generated from operations before changes
in working capital 17,137 14,056 28,891
(Increase)/decrease in operating trade and
other receivables (290) 874 272
Increase/(decrease) in operating trade and
other payables 1,444 (5,202) (3,794)
(Increase)/decrease in inventories (1,498) 2,783 3,867
------------------------------------------------- ----------- ----------- -------------
Net cash generated from continuing operations 16,793 12,492 28,938
Net cash generated from discontinued operations 29 19 300
------------------------------------------------- ----------- ----------- -------------
16. Related-party transactions
Key management compensation amounted to $0.4m for the six months
ended 30 June 2021 (2020: $0.4m).
The following transactions were carried out with PJSC "Mining
Company Ukrnaftoburinnya" ("UNB") a Ukrainian oil and gas company
in which Group holds a 10% of the ordinary share capital and which
was considered a related party at 30 June 2021:
30 June 30 June
2021 2020
$000 $000
Gas sales - 1,133
---------- ------- -------
30 June 30 June
2021 2020
$000 $000
Gas condensate purchase - 30
------------------------ ------- -------
PPC received 100% prepayment from UNB for July's gas. $86,200
received is included under "Contract liabilities" in the period
ending 30 June 2021.
Gas and condensate are sold and purchased on normal commercial
terms and conditions.
17. Events after the reporting date
We are not aware of any events after the reporting date.
Glossary
2P reserves Proved plus probable
3P reserves Proved, probable and possible
P50 Reserves and/or resources estimates that have a 50 per cent
probability of being met or exceeded
Boe Barrel of oil equivalent
Boepd Barrel of oil equivalent per day
Bopd Barrel of oil per day
Bpd Barrel per day
HHN Riverside Energy Kft
Hryvnia The lawful currency of Ukraine
HSECQ Health, Safety, Environment, Community and Quality
KPI Key Performance Indicator
LIBOR London InterBank Offered Rate
LPG Liquefied Petroleum Gas
Mbbl Thousand barrels
Mboe Thousand barrels of oil equivalent
MMboe Million barrels of oil equivalent
MMcm Million cubic metres
PPC Poltava Petroleum Company
Roubles The lawful currency of Russia
Sq. km Square kilometre
TD Total depth
$ United States Dollars
UAH Ukrainian Hryvnia
US United States
VAT Value Added Tax
YGE Yuzhgazenergie LLC
Directors and advisors
Directors
Charles Valceschini
Victor Gladun
Tony Alves
Dr. Rashid Javanshir
Michael Bakunenko
Company Secretary
Julian Hicks
6 Cavendish Square
London
W1G 0PD
Registered office
6 Cavendish Square
London
W1G 0PD
Registered in England Number: 03050645
Registrars
Equiniti
Aspect House, Spencer Road
Lancing, West Sussex
BN99 6DA
Independent auditors
BDO LLP
55 Baker Street
Chartered Accountants and Statutory Auditors
London, W1U 7EU
Financial advisors
SPARK Advisory Partners Limited
5 St. John's Lane
London
EC1M 4BH
Broker
SP Angel Corporate Finance LLP
Prince Frederick House
35-39 Maddox Street
London
W1S 2PP
Public relations
EM Communications
6 Snow Hill
London, EC1A 2AY
We welcome visits to our website www.jkx.co.uk
Cautionary statement about
forward looking statements
The Half Year Report contains certain forward looking statements
with respect to the financial position, results of operations and
business of the Group. Examples of forward looking statements
include those regarding oil and gas reserves estimates, anticipated
production or construction commencement dates, costs, outputs,
demand, trends in commodity prices, growth opportunities and
productive lives of assets or similar factors. The words
"anticipate", "estimate", "plan", "believe", "expect", "may",
"should", "will", "continue", or similar expressions, commonly
identify such forward looking statements.
Forward looking statements involve known and unknown risks,
uncertainties, assumptions and other factors that are beyond the
Group's control. For example, future oil and gas reserves will be
based in part on long-term price assumptions that may vary
significantly from current levels. These may materially affect the
timing and feasibility of particular developments. Other factors
include the ability to produce and transport products profitably,
demand for products, the effect of foreign currency exchange rates
on market prices and operating costs, activities by governmental
authorities, such as changes in taxation or regulation, and
political uncertainty.
Given these risks, uncertainties and assumptions, actual results
could be materially different from any future results expressed or
implied by these forward looking statements which speak only as at
the date of this report. Except as required by applicable
regulations or by law, the Group does not undertake any obligation
to publicly update or revise any forward looking statements,
whether as a result of new information or future events. The Group
cannot guarantee that its forward looking statements will not
differ materially from actual results.
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END
IR SSAFLUEFSEDA
(END) Dow Jones Newswires
August 09, 2021 10:40 ET (14:40 GMT)
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