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Max Petroleum may be up for sale

26 february 2014, 13:19
British Max Petroleum Plc, a Kazakhstan-focused oil and gas exploration and development company, many be on the verge of sale, Tengrinews reports citing Kursive.kz internet portal.

The company announced a significant reduction of expenditures starting from 2014. Max Petroleum said that it would focus on maximizing its cash flows, and move on from exploration and development works to production.

Besides, Max Petroleum started shutting down its drilling operations in the West Sagiz field. The company admits that there are still some opportunities to increase the reserves, but plans no more drilling in the short run. Nevertheless it does intend to retain the capacities to continue drilling Nur-1 well.

It says it continues looking for additional funding, but is reported to have halted negotiations with its partners.

Yerkin Abdrakhmanov, Senior analytic for equity instruments at Halyk Finance, says that Nur-1 well was the main potential of the company's growth, but now the drilling prospects have become even more indistinct. According to him, Max Petroleum has been in the red for several years. "The existing output is not enough to cover the expenses. Its main potential was in drilling of Nur-1 well. But over the past two years the company has failed to attract the needed financing to drill the well. Perhaps, some strategic investors will take interest in the asset," he said.

Robert Holland and James Jeff, Executive Co-Chairmen of the Board of Directors of Max Petroleum Plc, expect a the cash flows to increase significantly as production from the evicting fields picks up and the expenses go down. "But some expenses may be required during the transferring period," they add.

Recently, Max Petroleum shares plunged 27% at the news of the creedal folding of the exploration works. According to market analysts, it was the largest drop in the company's market history. Earlier, the company said that was planning capital costs in the amount of nearly $45-50 million this fiscal year that ends on March 31, 2014. As of November 30, 2013 $39 million out of these expenditures were already made.

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