31st Jan 2014 09:04
LONDON (Alliance News) - Max Petroleum PLC Friday saw its shares slide sharply after it said it has started implementing a significant cost cutting drive that will last throughout 2014 and beyond as it shifts to being a producer rather than explorer, and said it will only report a modest reserve increase at one of its key assets.
Max Petroleum, which operates in Kazakhstan, said that it expects to report a modest reserve increase at its Sagiz West field in early February, following the drilling of the most recent wells at the site. It warned that it now sees few opportunities to increase reserves at the site, and no longer intends to continue drilling there at a level its current cost structure is intended to support.
It intends to maintain the organisational capacity to resume drilling its NUR-1 deep well while it continues trying to obtain financing. However, negotiations with prospective partners have ended, it said.
The company had failed to reach the geologic objectives at NUR-1, but testing the pre-salt potential of that license remains one of its primary objectives.
In its operational update, it said the cost cutting drive is part of its shift to being primarily an oil and gas producer, rather than an exploration and development company.
"We expect significant improvement in our cash flow as expected production increases from existing discoveries and cost reductions are realised, although some material transitional implementation costs may be expected," co-Chairmen Robert Holland and James Jeffs said in a statement.
Max Petroleum shares were down 17.2% at 1.64 pence early Friday, the biggest decline on AIM.
By Steve McGrath; [email protected]; @SteveMcGrath1
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