Friday, June 22, 2012 -
Shares of Kazakhstan-focused Max Petroleum went into freefall Friday on news the oil minnow used up most of its financial resources on drilling problems and may have to “significantly curtail” operations.
Shares dropped precipitously on the news Friday, taking them to nearly 75 percent of their value over the past three months.
A second drill became stuck in the NUR-1 well, driving up the total cost of the drilling to $43 million. The company gave no date for completion of the well, which was originally estimated to be finished in April, and is now postponed to August.
"Operations are now ongoing to increase the mud density further, free the stuck pipe by dissolving the salt with fresh water, and continue drilling through the salt to the next casing point at 5,900 meters [19,360 feet]," the company said.
Worse still, the London-listed firm said it has already spent $54.2 million of $58 million it set aside and has approached potential lenders for more funding.
But Max warned that negotiations will be tough as Kazakhstan enacted new laws preventing the company from doing debt-for-equity swaps, while current market conditions do not look good.
“In the absence of additional funding, the company may have to significantly curtail its intended exploration activities,” the firm said.