OREANDA-NEWS. April 1, 2010. According to the recent press service release, JKX Oil & Gas Plc <JKX LN BUY> plans to construct facilities for production of liquefied petroleum gas (LPG) in 2010 and commission the facilities in early 2010. According to the management of the Company, a subsequent slight drop in gas production will be offset by a significant increase in higher-value liquids. JKX also plans to drill three new wells at the Rudenkivske gas condensate deposit and perform a new evaluation of reserves in 2010. The Company plans to invest about USD 90mn in its Ukrainian operations in 2010.

This news is positive for JKX. As Millennium Capital has written before, the Company’s investment policies for mining development and for an increase of the output capacities permits the Company to strengthen its position at the Ukrainian market and increase sales. Millennium Capital expects JKX sales in 2010 to reach the level of USD 245.5mn, and in view of this, the Company’s estimated fair price according to the relative peers valuation is USD 5.72 per share. The current JKX price is USD 4.29, which in fact underlies Millennium Capital’s BUY recommendation (an upside of 33.3%).