Max Petroleum (LON:MXP) says it may have to ‘significantly curtail’ its exploration activities amid rising costs following drilling problems in the NUR-1 well in Kazakhstan.
This morning it revealed that drilling has again been delayed after the drill bit became stuck for the second time. A sidetrack had already been drilled in the well to circumnavigate equipment stuck in the well back in April.
The company is now trying to free the drill-bit. And it says it doesn’t expect to reach target depth until August.
It estimates the cost of the NUR well, assuming it can free the drill bit soon, at US$43 million with an additional US$10 million in forward costs.
The company is currently supported by a US£58 million loan facility, of which US$54.2 million has now been drawn.
Max says it will seek additional capital and it has now initiated talks with a number of providers of both debt and equity financing.
But it also notes these talks are impaired by ‘market conditions’ and recent regulatory changes in Kazakhstan that prevent it from completing a conventional equity offering.
On AIM this morning Max Petroleum shares more than halved in value in early deals falling 4.6p, or 53 per cent, to trade at 4.05p.