Max Petroleum (LON:MXP), the oil and gas group with assets in Kazakhstan, said this morning that it had received a letter from the country’s Ministry of Oil and Gas terminating its subsoil use licence for the Astrakhanskiy Block in Western Kazakhstan due to the company's failure to comply with the work obligations stipulated under the licence. The letter does not affect Max’s principal asset, the Blocks A&E licence area.
Max said it believed that the Ministry’s position reflected a broader policy change regarding the treatment of subsoil use licences behind in their work obligations. Max had already decided not to drill an exploration well on the block without a partner and has obtained assurances from its senior lender, Macquarie Bank, and the holders of greater than 85% of its convertible bonds that a termination of the Astrakhanskiy Licence would not constitute an event of default under the its outstanding debt agreements. As a result, Max said it was confident that the Ministry’s actions would not have any material adverse affect on its liquidity, financial condition or prospects. Nevertheless, its said the action was premature and was now consulting with counsel and arranging discussions with the Mininstry to consider its alternatives.
Robert Holland, Max’s executive co-chairman, said: “The company had already determined that its future lies with the exploration and development of its highly prospective inventory of pre and post-salt prospects on Blocks A&E.”
Last week, Max revealed the details of an independent report by Ryder Scott covering the recoverable prospective resources associated with certain leads and prospects on Blocks A&E. Overall, the firm estimated that total risked mean recoverable resources stand at 1.1bn barrels of oil equivalent with total unrisked mean recoverable resources estimated at 5.358bn barrels, distributed within a probable range (P90 to P10).
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