JKX Oil & Gas Plc, an oil and gas producer active in Ukraine and Russia, fell in London trading after the board opted not to reinstate a dividend.
JKX shares dropped as much as 8.2 percent, the biggest intraday decline since Dec. 19, and traded down 6.9 percent at 171 pence as of 10:12 a.m. local time.
After a period of “very intensive” capital spending, the board won’t recommend renewing dividend payments that were suspended last year, Chief Executive Officer Paul Davies said.
JKX was hit by higher taxes in Ukraine as well as a production decline of 12 percent last year to 9,045 barrels a day. The explorer’s Koshekhablskoye project in Russia, which will add output of about 7,000 barrels of oil equivalent a day, has completed the first phase after a delay and is scheduled to reach capacity this year.
“The board looks at paying dividends at the end of each period, and it tends to be a reflection of operations,” Davies said in telephone interview. He declined to say when he expects a dividend to be paid again. “The key thing is that a big project has completed and is coming on stream. We’ve got a relatively benign commercial environment, and that bodes well for 2012.”
JKX today reported a 14 percent decline in operating profit to $82.1 million after absorbing an increase in Ukrainian production tax of $61.7 million. Revenue rose 23 percent to a record $236.9 million, the company said in a statement.
Capital expenditures declined to $162 million last year from $178.5 million the previous year, the company said.