Max Petroleum. Phoenix rising?

Quick update here I wrote an article on Max last week which I have reposted below. Lot of chatter beginning to filter through here. Spoke to the company this morning re their outstanding warrants. They don’t seem to bothered and expect the sp to gather apace as news on their company making drills begins to formulate. Actually they were quite helpful explaining that production is increasing and is expected to increase further this year re’ their current drills etc. Keep your eyes on them  news on their drills is expected.Out of 40 exploration and appraisal wells drilled to date, 27 were successful with five post-salt discoveries. They could explode on good news and should trend up on expectation. They do have a mezzanine credit facility but are cash generative with the 2010 annual reports giving a $43 million dolar figure which was up 11% on the preceding year. Rumour is that they will beat this figure comfortabley in 2011.

Zhana Makat has had cumulative production of 2.6 mmbbl generating US$150m revenue through December 2010

Borkyldakty discovered in March 2010 will drill minimum of one appraisal well in June 2011

Successfully tested Cretaceous and Jurassic reservoirs in the Uytas discovery – three appraisal wells to be drilled in mid 2011

Jurassic discovery in Asanketken Prospect, with further drilling to test primary Triassic objectives

Geological discovery in Narmundanak South to be tested for commercial viability

Growing inventory of high quality leads and prospects that will be substantially evaluated in the next 18 months

I featured Max Petroleum several times on the Blog. And I must say that I, like the company are amazed at how low this share-price has gone. There’s been nothing but good news coming out of the company over the last several months or so. The only fly in the ointment is the tax issue involving the Court of Cassation, a panel of the Almaty City Court in the Republic of Kazakhstan which rejected the Company’s appeal of an ongoing tax claim brought against the Company. The appeal was lost due to a procedural technicality. The Company is therefore again appealing the case to the Supreme Court for consideration.  Even if they lose the claim at the Supreme court the company are looking good to go.

Max Petroleum are targeting six post salt exploration wells with an unrisked 130 million barrel resource and a risked resource of 47 million barrels. They also have five wells currently undergoing various stages of development and appraisl, Zhana Makat (Development) Uytas (Appraisal) Borkyldakty (Development) Asanketken Jurassic (Appraisal) Narmundanak South (Appraisal). These assets are classified as Low risk cash flow.

The pre salt exploration wells are targeting a mouth-watering figure of just over 1 BILLION barrels of oil from two high impact wells.The Group’s strategy is to significantly grow its reserve base through the exploration and development of a diversified portfolio of shallow, post-salt and deeper, pre-salt prospects high graded using approximately 5,000 km2 of exploratory 3D data acquired over the Group’s extensive onshore acreage position in one of the most prolific petroleum bearing basins in the world. I’ve been researching Max for quite some time and Kazakstan is becoming increasingly attractive to the Chinese and Russians. Ties between these countries are becoming increasingly apparent. China want the Gas and Oil and it is known that various trade delegations and senior figures in the Chinese government have been crawling all over Kazakstan this year. wherever the Chinese go the money goes with them. Max petroleum have an unrisked mean resource of just under 1.2 Billion barrels of oil with a risked resource base of 355 million barrels of oil. They look significantly under true value at the moment. This company could literally be transformed OVERNIGHT via several different scenarios; High impact drilling success, Chinese involvement, Successful tax appeal,Russian involvement. The Company recently awarded a tender to Saipem, a subsidiary of Eni, for a rig to drill its deep pre-salt exploration programme and expects to execute a drilling contract shortly. Max plans to commence drilling the first pre-salt well, NUR-1, in Block E during August 2011, targeting unrisked mean resource potential of 467 million barrels of oil equivalent distributed over a probable range (P90 to P10) of 170 million to 817 million mmboe with a 29% geological chance of success”.

There’s going to be a plethora of expected good news coming through the market grapevine over the next several months. They look set to rise yet again. They should be in excess of 30p in my opinion and have already hit approx’ 35p this year. If they prove up any of the high-impact drills then this company will rocket into many multipules of where they now languish. Eyes on now as they seem to of bottomed out. They will go only one way and that is up.



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  1. Pilesh says:

    Thanks Dan another great post, any news on Xcite?

  2. James says:

    MXP are a company that has to do twice as much work as anyone else to move the sp, because of its rather dubious history.

    Still there’s little point in arguing the toss, it potentially has a great set of assets.

    On the other hand, there is absolutely no point in transferring cash to equity at the moment. The only people that are doing that are a) the stupid and b) the very clever.

    If you are not in (a) or (b) then I can’t see many good reasons to play the equity game in forthcoming weeks. But then I’m certainty not in category (b) and I sometimes like to think I’m not in (a).

    For the retail investor, I’d call a time out for the mo. However, I’d like to be proved wrong.

  3. MARK RUTLEY says:

    Having attended the Oil Barrel Conference where MXP gave their presentation I too was impressed, however, the doubt remains over the 12 year licence question. What is your take on this and how it fits into the equation?