JKX are a growth oil and gas company, principally based in the Ukraine, but also present in several other countries, and have recently presented some excellent results.




JKX corporate website : http://www.jkx.co.uk/index.cfm

Poltava Petroleum : http://www.ppc.net.ua/inf_en.html

Annual report 2005 : Click HERE

Good write up in the Mail today.

Dr Square,

Thanks, I'm pleased you've made such a good profit so quickly.

Next we have the forthcoming results to look forward to, and there's always the chance of some news on the drilling front of course!

JKX now have two drill rigs, so I expect we are due some news.

Aldwickk,

Yes I agree, that was an exellent write up for JKX in The Mail today, a half page article on page 111 for anyone that wants to read it.

That will arouse some interest I'm sure, and we may well see some early buying on Monday IMO.

I also thought the broker target of 350p a bit light, certainly if anything comes in to add to current production.

I did feel he downplayed the Georgian propects though, and he totally failed to mention drilling in Turkey, Italy, or the USA licence!

Comment on JKX in this week's Investors Chronicle.



"JKX profits from Ukraine gas spat

The cold war between Russia and Ukraine could directly benefit JKX which produces gas in Ukraine. Most of the companys output is sold domestically at around $1.75 per thousand cubic feet. However the reported agreement between Ukraine and Russia calls for prices to rise from $2.65 to $6.0 over 5 years bringing them closer to European levels. Broker KBC Peel hunt reckons that this could boost the core value - not including the exploration prospects - of the shares to 340p. They currently trade at 290p.

IC view - Sometimes it is misleading to read across in this way. But JKX is a well run company with good prospects, and the shares are worth buying."

DrSquare,

This is the article from The Daily Mail last Saturday;


Source

Ukraine gas crisis boosts JKX

Brian O'Connor, Daily Mail
9 January 2006

AFTER this week's nailbiting confrontation with Russia, you need strong nerves to invest in the Ukraine. Its political masters are paying a high price for defying their powerful neighbour in 2004's 'Orange Revolution'.

Ukraine agreed, under duress, to lift the average price it pays for all gas from $60 to $95 - and to pay Russian gas giant Gazprom a hefty $230 per thousand cubic metres for its supplies.

This is sad news for poor people in Ukraine, who face harsh winters. With elections due shortly, many see it as a brutal power play by the Russians.

But for JKX Oil & Gas, the UK firm set up to invest in Ukrainian energy, it is a big improvement. JKX is already making money from its oil and gas stakes there, but has to sell its gas at prices much lower than those paid in neighbouring states such as Poland or Germany.

It has long seemed on the cards that the gap would close. Now it looks as if the adjustment could happen quickly.

JKX shares were first tipped here in 2003 at 36p, and again last June at 148p. They have bounded ahead, reaching 286p this week.

The company's broker Investec expects operating profits to double in 2005 to $50m, and almost double again in 2006 to $90m. That would lift earnings per share to 23p and put the shares at 12.5 times. But the profit estimates are moving upward, and the real upside comes from rising prices further ahead.

The company, which is named after engineer JP Kenny whose firm had contracts in the Ukraine and moved into energy more or less by accident, has a range of gas contracts with local businesses. Prices are usually fixed monthly.

These prices have been climbing steadily. In 2004, they rose 13pc to $1.57 per million cubic feet. In the first half of 2005 they were $1.75. Now they are around $2.25. The average price level of this week's agreement is $2.65. The price to Russia is $6.

These prices may be hard to bear in a poor country with aged industrial infrastructure. But they are not high in comparison with the prices British firms are paying.

The average price the Ukraine will pay is equivalent to 17p per British thermal unit - a price many UK firms would die for. The higher price the Russians will get equates to 41p - not out of line nowadays.

It seems clear that, as Europe scrambles for gas supplies, pockets of low prices will be gradually soaked up. Even this week's compromise depends on the Central Asian gas producers selling at one quarter of the Russian price. How long can this last?

Tony Alves at KBC Peel Hunt has crunched some numbers on the implications for JKX. If it gets the full $6 for its gas by 2010, he values its core assets at 340p a share.

That is higher than some other brokers' figures, but excludes any value for the exploration portfolio, which includes offshore Georgia and Bulgaria as well as further prospects in the Ukraine. On balance, Alves thinks the shares are worth between 300p and 350p. I agree.

Anyone who bought on our first tip has made eight-fold profits, and may be tempted to cash in. Given a timescale of several years, there are plenty of possible sources of natural gas for Europe. Optimists say there will be a glut.

But first pipelines and import terminals have to be built. Right now the suppliers hold all the cards. I think JKX has further to go.

Very nice

Looking forward to the rest of the year. Am I right that JKX can sell their oil outside of the Ukraine?

regards

Amities / l seem to remember an executive memo from the President and issued via the Ukranian Dept of Minerals and resources that stipulated JKX oil / gas was under temporary suspension from exportation. All production to be secured for any shortage in cheap domestic supply / demand . There was talk of repealing such such restrictive trading during the latter half of 2006. @+ J... Whatever happens JKX appear to be in an enviable position . But dont forget Peel Hunt are valuing JKX @ 240/245 if $6 per scuff . ln my opinion thats not going to happen as yet but there is no doubt unhedged JKX oil will fetch higher prices .

Thanks TFC for the information

Vote of no confidence see attached.

Interesting facts debate over the time scale of the Gas deal 6 months or 5 years?

Nice to see Standard & Poors giving Ukraine a bill of health.

I`m assuming that JKX are paid in local currency and exchange for accounting purposes?

Regards


http://investing.reuters.co.uk/news/newsArticleSearch.aspx?storyID=194163+11-Jan-2006+RTRS&srch=ukraine

Dr Square,

with regard to the export of oil from the UKraine, JKX cannot at the moment, I believe, as there was an export embargo issued by the Ukraine government.

However, they receive close to the international price, AND they save on transportation costs, so there is a minimal difference, according to the FD at the last AGM.

Dr Square,

The price is currently up 12p at 304p!

And still no interest on this bb!

hello Andy
I have been watching them rise today maybe some news coming. Topped up yesterday
Keith

Wow

Yes - nice rise.

Good man yerself keith !!

Wonder why it went ballistic today ?

Andy

looked at it first thing and it was bouncing up and down a penny. came back with a smile.

I thought 3 would be a bit of a nut to crack. We due drilling news???


regards

hello whatuwant
Its nice to see someone notice. not sure about the rise today. Its been rising well this new year. results out soon myself and others on this board think they maybe good. thanks for your post
Keith

Amities /lt was not news that drove JKX to this heady high of 316. MMs walked that all the way. Ratio of buys to sells out stripped 2~1 yet the s/p enjoyed a hike of 24p. Methinks someone is collecting. *********************************************************************************My anonomous friend who buys in tranches of 2500 and 5000 is back again i see. As always his timing is imaculate . lronic though that almost every fund manager and investment bankers to whom i speak are ALL SHORT on oil yet its energy thats driving this market; and the sector where most money is to be made ********************************************************************Appears Mr B at the FED reserve is quite happy to print the money to support a $60/70 barrel . High prices are here to stay ...ln a business environment where DNZ is capitalized at 597 m with an s/p of 941p and a p/r ratio of over 40 and equal reserves to JKX then the latter { with far superior fundies to every junior except Cairns upon which is on parity }) is worth based on my fag packet calcs 500 to 520p....With a full 6 months contribution from well NO.m151 yielding an extra 4000 bpoe worth [@ $25p/b } the sum of $18.2 mn is added to the coffers of JKX .Additional capital of almost $3.2 will come from simple things like the old Soviet well that self combusted onsite of m151 @ 500 bpoe; and being hiked up . .With the number of strategic acquisitions in a number of known producing countries ,the significance of all the farm ins and farmouts with Big oil , and with so many other irons in the fire dont be tricked, cajoled or told its potential is fully factored at current levels ,or that its oversold . lts not .. ..This is merely the end of the first chapter. .,,2005 was really a year of repair ,acquisition and consolidation . 2006/7 will prove the ones of really aggresive growth . lt hasnt really started ! a/b @+ J

You must be a very rich man by now , Jamie.

But never greedy Roly . Never . .. l bet you arnt doing so bad yourself old timer ...lol ..{ joke } ...To be quite honest i find it quite astonishing have done so well considering you only acquired a PC no more than a few years ago. congrats ! Takes some doing. @+ J

Thanks but you did give me a lot of help. I did say that AFD was a better short term bet then FDI, 63p to 74p yesterday , i was not to greedy bought @ 62, sold @ 69.5

Well at last, somebody has arrived to discuss JKX!



Dr Square,

Yes we probably are due some drilling news, and I did wonder whether this rise was caused by a rumour of something to be announced.

The only thing that causes me to doubt that is the recent director sale, but they have timed their sales badly before!

Volume was reasonable, although quite a few PI sized trades in the afternoon.

I wonder whether there will be any weekend press reports?