Kazakh oil firm Max Petroleum (MXP:AIM) plunges 70.4% to 0.17p as it becomes the latest victim of the collapse in oil prices.
The company says without a restructuring of its debt and significant inward investment it will be rendered insolvent. It has not been put into administration yet as there is a 'reasonable prospect' of a refinancing according to today's statement but Max says: 'there is only a short period remaining to achieve such a refinancing' adding ominously that 'if current efforts are unsuccessful then the consequences will be negative for all stakeholders'.
The £3.7 million cap is still in talks with creditor Sberbank and is in fresh discussions with investment vehicle of the well-connected Assaubayev family, AGR Energy, for an injection of funds that along with restructured borrowings would 'render the company viable at current oil prices'.
The AIM-quoted play, which began a review of its operations in July, said it would no longer proceed with a £37.1 million share subscription deal with AGR Energy. This would have seen the latter control 51% of the company by acquiring 2.26 billion new shares at 1.64p each.
SP Angel warns Max's fate is likely to be repeated elsewhere in the sector: 'With the company barely making sufficient cash flow to break even anyway before the decline in the oil price, today's news was already flagged by the company's own announcements. We believe that what is happening at MXP will happen elsewhere, and we do not believe that it will be the last company to find itself in this position.'