OREANDA-NEWS. JKX Oil & Gas plc ('JKX' or the 'Company')

HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2015

Operational Highlights

·      Average production of 8,611 boepd (2014: 10,126 boepd)

·      Development drilling suspended in Ukraine due to negative investment climate

·      Award of extension to Elizavetovskoye production licence in Ukraine to include West Mashivske prospect

·     Tubing replacement programme underway in Russia

·     Russian plant capacity modifications approved by Russian authorities

·     Hernad production permit applications in Hungary on-going

Key Financials

·      Revenue: \\$44.4m (2014: \\$74.3m)

·      Operating costs down 24% at \\$12.1m (2014: \\$15.9m)

·      Production taxes up 18% at \\$20.8m (2014: \\$17.6m)

·      Loss from operations: \\$7.3m (2014: \\$2.4m profit)

·      Loss per share: 8.01cents (2014: earnings 4.95 cents)

·      Operating cash flow: \\$3.5m (2014: \\$31.1m)

·      Capital expenditure: \\$4.2m (2014: \\$21.4m)

·      Cash resources: \\$22.4m (31 December 2014: \\$25.9m)           

Outlook

·      Potential resumption of development drilling in Ukraine in second half of 2015

·      Russian plant capacity modifications to increase capacity to 60 MMcfd by year end

·      Completion of first tubing replacement programme in Russia scheduled for second half of 2015

·      Completion of Hungarian production permitting

·      Two exploration wells scheduled in Slovakia in fourth quarter of 2015

JKX Chief Executive, Dr Paul Davies, commented:

"Both our subsidiaries in Ukraine and Russia have remained under pressure during the first half of 2015. Revenues declined significantly primarily due to a sharp fall in oil and gas realisations and lower production volumes. Development drilling in Ukraine was suspended because of the government's intervention in the gas sales market including the introduction of punitive rates of production tax, foreign exchange controls and government-imposed restrictions on the sale of gas. However, the Company has maintained a positive operating cash flow.

In Russia, production remained constrained due to the previously reported tubing failures. The first replacement programme is now underway and making good progress, with the second planned to begin in the second half of the year. Expansion of the Russian production facilities will take place at the same time.

We are making vigorous efforts to restore a positive investment climate in Ukraine for independent oil and gas producers and believe these are slowly making headway. Restrictions on the sale of our gas were lifted in February, and there is an increasing indication that production tax rates might fall during the second half of the year. If the economic environment improves, we plan to resume development drilling on the Elizavetovskoye field.

Sustainability of operations, cash conservation and asset protection continue to be at the centre of our strategy. The Group has demonstrated resilience, with the fundamental strength of its business giving the Board confidence in our ability to return the Group to profitability when external conditions improve."