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Max Petroleum reports rise in annual revenue

Max Petroleum reports rise in annual revenue

Max Petroleum (LON:MXP) has reported annual revenue of US$100.4mln, up 8%, as production increased at its operations in Kazakhstan.

Daily production was up 17% in the twelve months, to March 31, averaging 3,899 barrels of oil per day.

Max drilled 35 new wells into its shallower post-salt reservoirs during the year. The company has now drilled 103 of these wells since August 2006.

Activities in the year reflect a change in strategy to focus upon production rather than exploration.

"Max Petroleum has taken important steps this year to shift its focus from exploration to production,” said chairman James Jeffs.

“The changes have followed disappointing progress in adding to reserves from the post-salt, slower than expected production growth and limited advancement towards resuming drilling of the deep, pre-salt NUR-1 well.”

Oil reserves decreased over the course of the year due to certain well results, with the figure for proved and probable (2P) reserves reducing 13% to 9.5mln barrels from 10.9mln barrels at the same point in 2013 (though the company points to the fact that in the interim, reserves had increased from 8.6mln to 10.9mln by September).

Nevertheless, the company recognises that post-salt exploration now has limited remaining potential, and as such it reports a US$64.6mln impairment in today’s results.

“The disappointing operational news in the form of slower than expected production growth has made change more urgent, but improved efficiency was also a necessary and logical step given the stage of development of the group and its assets,” Jeffs added.

“The structural changes to the management and operations of the group which were made earlier in 2014 are now complete and are the start of an ongoing drive for improved efficiency”.

Jeffs said Max now offers an excellent platform to consolidate and grow oil and gas opportunities in Kazakhstan, and this opportunity is enhanced by the recently announced agreement with the influential Assaubayev family which proposes to take a majority stake in the company.

A vehicle of the Assaubayevs, is investing £37mln of new funds via a share subscription which will give it 51% of the company.

“If this transaction is completed, the investment should enable the group to fund its planned capital programme to develop its post-salt fields and maximise reserves and production. 

“In addition, Max Petroleum would be in a strengthened position to attract financial or industry partners to help finish its pre-salt NUR-1 well and to secure an extension of the exploration period of its Blocks A&E Licence in western Kazakhstan.”

He adds that Max would also be in a position to consider investments into complementary projects in Kazakhstan and across Central Asia.

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