British Max Petroleum oil and gas company, operating in Kazakhstan, has announced about the dire financial straits, the company’s statement published on the website of the Kazakhstan Stock Exchange (KASE) said July 7.
“The Company continues in operation under severe financial stress,” the statement said.
Max Petroleum announces that Sberbank has unconditionally granted a six month standstill on all principal and interest payments due under the Company’s $80 million loan through to 14 December 2015.
In addition, the Company has accrued $3.8 million of interest as of 30 June 2015. Interest will continue to accrue during the standstill period.
Max Petroleum has received notification from the Ministry of Finance of the Republic of Kazakhstan alleging that under tax legislation, payments of over $20 million are due for Soviet-era historical data costs incurred in the Company’s Blocks A&E licence area.
The Company disagrees with this interpretation and application of the tax legislation and considers that to date it has met its obligations to reimburse historical costs as they fall due.
The Company intends to put its case to the tax authorities. Discussions with AGR Energy continue to secure financing to ensure the ongoing viability of the business and with Sberbank for a longer term debt restructuring.
The Directors of Max Petroleum currently continue to believe that there remains a reasonable prospect that such discussions could result in a sufficient refinancing of the Company and, on that basis, have not yet put the Company into administration.
The Group holds a 100% interest in the Blocks A&E Licence area covering over 12,455 km2 in the highly prolific Pre-Caspian Basin in Western Kazakhstan. The Pre-Caspian Basin has produced some of the world’s largest oil and gas discoveries, including the super-giant Tengiz, Kashagan, Karachaganak and Astrakhan fields, which range in size from seven to 20 billion barrels of oil equivalent in recoverable reserves.