September 22, 2014 / 7:51 AM / 6 years ago

UPDATE 1-JKX plans capex cut to offset tax hike in Ukraine

* Says additional production tax costs of $10 mln

* Extra costs amount to 25 pct of budgeted 2014 Ukraine capex

* Shares fall as much as 12.5 pct (Adds details, share movement)

Sept 22 (Reuters) - JKX Oil & Gas Plc said it would substantially reduce its capital expenditure to offset the impact of higher production taxes introduced by the Ukrainian government last month.

Shares in company fell more than 12.5 percent in early trading, making the stock one of the top percentage losers on the London Stock Exchange.

JKX, which has most of its production assets in Ukraine and Russia, said last month that it would take “operational and financial measures” after Ukraine almost doubled its gas production tax rate to 55 percent between Aug. 1 and the end of the year.

The additional production tax costs due to the legislation was $10 million for the five-month period from August to December 2014, the company said on Monday.

The additional costs amount to about 25 percent of JKX’s budgeted 2014 capital expenditure programme in Ukraine.

Ukraine accounted for 84 pct of JKX’s revenue in 2013.

The company said it would continue drilling for gas at its third well at the Elizavetovskoye field near Poltava in central Ukraine, but would simultaneously reduce its capital spending in the country.

JKX shares were down 4.9 percent at 43.50 pence at 0748 GMT. (Reporting by Roshni Menon in Bangalore; Editing by Gopakumar Warrier)

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