Kazakhstan-focused junior oil firm Max Petroleum reported Friday that it has begun the implementation of a "significant cost cutting initiative" that it expects to continue for the remainder of 2014 and beyond. The company said the initiative recognizes the company’s shift from exploration and development to primarily production, with a focus on maximizing cash flow.
Max said that it expects to announce in early February a modest Sagiz West reserve increase, resulting from wells that have been drilled since its most recent reserve report. The company believes there are a few other opportunities to increase reserves, but no longer plans an ongoing level of drilling activity that its current cost structure is intended to support.
Max intends to maintain the organizational capability it needs to resume drilling its NUR-1 deep well, while the firm's efforts to obtain financing continue. It warned, however, that negotiations with prospective partners are no longer currently in progress.
Senior board directors Robert Holland and James Jeffs issued a joint statement Friday:
"We expect significant improvement in our cash flow as expected production increases from existing discoveries and cost reductions are realised, although some material transitional implementation costs may be expected."
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