LONDON (Alliance News) - Jupiter Energy Ltd on Tuesday said it may cut its oil production in 2015 owing to the falling world oil price, which it said has hit the Kazakhstan domestic oil market, as it reported a fall in production in its second quarter.
Jupiter said it expects the steep decline in crude oil prices to impact Kazakhstan domestic oil revenue in 2015, with sales expected to take place at significantly lower prices. Jupiter said sales negotiations are ongoing and its current expectation is that domestic oil prices could fall to under USD15 per barrel.
The group said future sales contracts will include pricing flexibility in order to ensure any rise in the price of oil is reflected in better prices being received by the company.
Jupiter said it is considering its production volumes for the year and could decide to cut daily production until an improvement in oil prices emerges. The combination of lower production and a fall in domestic prices in Kazakhstan will clearly impact revenue for the company, it said, adding that though lowering production would bring down some operating costs, the domestic oil price fall will hit profitability.
The company said its production in the second quarter of its financial year, to the end of December, fell due to a lower production rate from the J-51 well and downtime experienced during routine testing at the J-52 well. The group said its total production for the quarter was down to 45,866 barrels in the quarter from 51,303 in 2013.
Jupiter shares were untraded on Tuesday, having last traded at 20.90 pence.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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