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A drill stuck between a rock and a salty hard place prompted shares in Max Petroleum, the Kazakhstan-focused oil explorer, to fall by more than half on Friday.
Further problems in completing a test well, where costs have now escalated to $43m, have pushed UK-based Max close to its $58m borrowing limit.
This has prompted talks with its senior lender, Macquarie Bank, as well as “discussions with a number of providers of debt and equity financing” to secure additional capital.
Previous drilling at salt rock fields in Kazakhstan has pointed to some commercial potential for the company.
But Max Petroleum’s tight financing position will force it to “significantly curtail its intended exploration activities” if additional funding cannot be secured.
The update prompted shares – which traded above 20p at the beginning of 2010 and beyond 200p in 2007 amid post-flotation euphoria over its prospects in the former soviet republic – to fall from 8.65p to 4.1p on the financing warning.
Good fortune in finding further finance in a tight market, as much as luck in striking oil, will be required to ease the pain of investors who bought at the wrong time.