JKX OIL & GAS PLC (Reuters) - JKX Oil & Gas Plc (>> JKX Oil & Gas Plc) set out potential liabilities of $41 million from Ukrainian cases as its new board tries to restore investor confidence with more disclosures.
The warning comes 30 days after a board overhaul at JKX, which has struggled due to the fall in oil prices to multi-year lows and escalating political tensions between Russia and Ukraine - its two main markets.
The liabilities relate to JKX's three cases against the government in Kiev over allegations that it was overcharged in production taxes for certain periods since 2007.
"The disclosures are going to be uncomfortably fulsome and ... that's something we want to establish as a new precedent for shareholders," JKX Chief Executive Tom Reed told Reuters.
JKX's entire board quit last month after Proxima Capital Group, its second-largest shareholder, managed to rally support for the board's removal.
Proxima said at that time the failure of JKX's erstwhile board to manage the business well had led to a "destruction of value". One of its nominees said that relations with key stakeholders had been "irreparably" damaged.
JKX shares are worth less than 5 percent of their May 2008 peak. As of Friday's close of 25 pence, the company has a market value of about 37 million pounds.
Reed, formerly finance head at Russia-focused oil and gas company Ruspetro Plc (>> Ruspetro PLC), said he would not bother with JKX's stock price for at least a year and instead focus on building up production.
And while JKX does not need to be broken up and sold for spare, the board would consider all its options, including monetising on an asset.
JKX on Monday said it had produced 10,533 barrels of oil equivalent per day in January. It cautioned that production levels would decline if it was unable to restart its development programme, which ceased last year due to cash constraints.
Reed said the board expected to have a plan by the end of summer at the latest, after accessing what reservoirs JKX's assets held, how production returns could be optimised and how adequate equipment to do so could be gotten in Ukraine.
"We're not talking about specific future goals yet as we simply haven't had the time to do a proper analysis," Reed said.
(Reporting by Esha Vaish in Bengaluru; Editing by Gopakumar Warrier)
By Esha Vaish
