Max Petroleum Calm After Losing Astrakhan License

Max Petroleum Plc (LON:MXP) has received a letter from the Ministry of Oil and Gas of the Republic of Kazakhstan notifying the company of the termination of its subsoil use licence for the Astrakhanskiy Block in Western Kazakhstan due to a failure to comply with the work obligations stipulated under the licence, the company reported in a news release. The letter does not affect the company's principal asset, the Blocks A&E licence area.
Max Petroleum believes the ministry's position reflects a broader policy change regarding the treatment of subsoil use licences behind in their work obligations. The company 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 Limited, and the holders of greater than 85% of its convertible bond holders that a termination of the Astrakhanskiy Licence would not constitute an event of default under the company's outstanding debt agreements. Accordingly, the Max Petroleum does not believe the ministry's action will have any material adverse affect on its liquidity, financial condition or prospects. Nevertheless, Max Petroleum believes the ministry's action is premature and is consulting with counsel and arranging discussions with the ministry to consider its alternatives.
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