Max Petroleum facing funding crunch as drill gets stuck

Kazakhstan focused oil company, Max Petroleum, is being squeezed both operationally and financially, an update revealed today.

The firm is struggling to complete drilling at its NUR-1 well; the problem appears to be "anomalously high pressure" which has left the drill pipe stuck at 5,772 metres, but that is far from Max Petroleum's only problem, as its exploration licence runs out in March 2013 and the technical difficulties clearly put that timeframe in danger.

One possible solution is to invest more money in the project but money is also fast running out.

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The firm's overdraft limit is $58m, of which it has a used up $54.2m. Rather ominously, today's update says: "In the absence of additional funding the Company may have to significantly curtail its intended exploration activities."

This is seriously bad news, which the market has not been slow to price in, at 9:14 Max Petroleum's shares were down 54%.

BS