Max Petroleum in do-or-die refinancing talks

Max Petroleum said it is desperately trying and renegotiate its debts and conclude refinancing talks with is bank and a possible equity investor as the oil price collapse has rendered its operations "unviable".

Management said there was a "reasonable prospect" of a successful conclusion to the talks.

"The fall in the oil price since November 2014 has had a very severe adverse impact on the company's current and forecast liquidity position in 2015 and beyond," the Aim-listed outfit said.

"As a result, Max Petroleum's business has been rendered unviable unless further material investment is made into the company in addition to there being a comprehensive debt restructuring agreed with Sberbank."

Having in early December obtained shareholder approval for the £37.1m cash subscription by AGR Energy, an investment vehicle of the Assaubayev family, this deal can now "not proceed" the company admitted, but it was continuing negotiations with Sberbank to find a solution.

Oil prices are roughly 50% below their level when the AGR Energy share subscription was proposed last August and 30% lower than when shareholders approved it in December.

"The directors of Max Petroleum currently believe that there is a reasonable prospect that ongoing discussions could result in a sufficient refinancing of the company and, on that basis, have not put the company into administration," the Kazakhstan-focused company 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."