By Ed Ballard
LONDON--Max Petroleum PLC (MXP.LN) is facing insolvency unless
it quickly agrees a debt restructuring with its lender and raises
additional finance.
Talks with Russia's Sberbank (SBER.RU) about restructuring a
loan have been unsuccessful, Max Petroleum said Monday, adding that
a deal may yet be reached. There was $82.8 million outstanding
under the loan on Sept. 30.
A share subscription from AGR Energy Ltd., a unit of AGR Group
ASA, won't proceed as planned. The 37.1 million pound ($56.5
million) deal, which would have resulted in Kazakhstan's Assaubayev
family taking a 51% stake in Max Petroleum, was struck in August
when oil prices were 50% higher, and was conditional on a debt
restructuring.
Shares in the Kazakhstan-focused oil and gas explorer, worth
about half a penny at Friday's close, lost three-quarters of their
value Monday to give the company a market value of around GBP3
million. They have declined by 94% in the last six months.
The company said it hasn't entered administration because
there's a "reasonable prospect" of a refinancing.
"Max Petroleum continues negotiations with Sberbank regarding an
appropriate debt restructuring and with AGR Energy regarding an
equity investment that, together with the debt restructuring, would
render the company viable at current oil prices," it said.
"However, there is only a short period remaining to achieve such
a refinancing and if current efforts are unsuccessful then the
consequences will be negative for all stakeholders in the
company."
Max Petroleum produced around 3,600 barrels a day from three
fields in the six months to Sept. 30, posting cash generation of
$20.9 million. Capital expenditure came to $10.8 million as the
company commissioned a pipeline and drilled more wells. Drilling
was suspended in June to cut costs.
Write to Ed Ballard at ed.ballard@wsj.com
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