Max shares take a dive after drilling setbacks

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Kazakhstan oil explorer Max Petroleum's shares halved in value yesterday after the company said it may have to "significantly curtail" its drilling programme.

The warning came after the drill on one of its major prospects – NUR 1 – twice became stuck in salt deposits.

The first time, at a depth of 5,718 metres, forced the company to drill around the side of the stuck drilling tools.

The second occasion, earlier this week, saw the new drill pipe stuck at 5,722 metres when it hit unusually high pressures in the salt levels.

Max said it was trying to free the latest drill by dissolving the salt with fresh water and then using higher-density mud to counter the pressure build-up.

The cost of the well has risen by $10m (£6.4m) to $43m, which has forced Max to start talks with its major lender, Macquarie Bank, about raising extra capital.

Max said it held talks with potential providers of debt or equity but these had been hampered by financial market conditions.

The company said it had drawn down $54.2m of its existing borrowing facility of $58m which runs until the end of this month.

Its shares slumped 54 per cent.