Max Petroleum Offers Financial Results, Operations Report
Max Petroleum Plc announced its annual results for the year ended March 31, 2008 as well as an update of its ongoing operations and execution of its strategic plan.
The Group's financial statements for the fiscal year have been prepared in accordance with International Financial Reporting Standards as adopted in the European Union and all comparable financial statements for prior periods presented have been restated from UK GAAP to comply with IFRS.
A summary of the Group's financial and operational highlights include a Revenue of $27.5 million from the sale of approximately 460,000 barrels of crude oil, or $59.72 per bbl consisting of export sales and domestic sales. Cost of sales of $14.0 million, or $30.47 per bbl and exploration and appraisal costs of $15.9 million. Impairment of investments held for sale of $5.2 million relating to the disposal of the Group's 80% interest in the East Alibek licence in July 2008. Administrative expenses include $3.8 million in non-recurring costs relating to an internal investigation primarily focused on the undisclosed receipt of beneficial interests in options over six million shares in Max Petroleum by certain former employees and members of senior management. Capital expenditure for the year totaling $77.4 million and group loss for the period of $34.5 million or $0.107 per share.
Max Petroleum Plc drilled a total of 26 wells in Block E to date, including 20 successful wells, all of which were in the Zhana Makat field, and six dry holes, they drilled one dry hole in the East Alibek licence area, which was plugged and abandoned in October 2007. Max petroleum released the shallow drilling rig operating in the Zhana Makat field in May 2008.In August 2007 they obtained regulatory approval for a three-year trial production project, allowing commencement of commercial production from the Zhana Makat field. Max Petroleum's Competent Person, Ryder Scott Company, estimated the 2008 fiscal year-end proved and probable reserves for the Zhana Makat field to be 9.1 million bbls, with an after-tax net present value discounted at 10% of $197.2 million, based on a constant weighted average sales price of $71.93 per bbl assuming 75% of the Group's future production is sold on the export market.
The Group currently funds its business using a combination of existing working capital, proceeds from the sale of crude oil production, and borrowings from its $100 million revolving mezzanine credit facility with Macquarie Bank Limited.
In June 2008, the Group launched a formal farmout process to seek partners to share in the risk and funding of the Group's previously announced three-year exploration programme. Up to 25% of the Block A&E licence and up to 50% of the Astrakhanskiy licence are being made available for third-party participation.
The Group's ongoing 3D seismic program is progressing as scheduled. The Group has completed approximately 75% of its planned 5,490 km2 3D seismic acquisition program in its Blocks A&E and Astrakhanskiy licence areas, with the acquisition of the remaining data expected by the first quarter of 2009.
The Group is currently reviewing rig tenders for rigs capable of drilling to a depth of up to 3,000 meters to begin drilling exploration prospects in Blocks A&E in January 2009. Eight drilling rig companies have submitted proposals for 14 different drilling rigs for the Group to consider.
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