Two oil executives in shares investigation

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The Independent Online

Shares in the oil and gas exploration company Max Petroleum were suspended yesterday after the company announced that two key executives were under investigation in relation to their share option dealings.

Chief executive Steve Kappelle and chief operating officer Ole Udsen have both been suspended "pending an investigation onto potential breaches of their employment contracts involving the undisclosed receipt of share options".

"The scope of the investigation, however, will not be limited to these matters," the company said. Executive chairman Jim Jeffs and other board members have taken on extra duties for the duration of the inquiry.

The AIM-listed company's share price has been volatile in recent weeks and has fallen from 190p to around 100p in August. It is thought a number of hedge fund investors pulled out in the midst of the credit crisis. Yesterday, its shares closed at 110p, giving Max Petroleum a market capitalisation of £357m.

Although the company could not give further detail on the investigation, the market speculated that the options related to Roxi Petroleum, a group backed by many of the same investors as Max Petroleum, and is Kazakh-focused. The executives were promoted to their current positions in March last year. Mr Kappelle is London-based, while Mr Udsen works at the company's Kazakhstan offices in Almaty.

A spokesman said the inquiry should not impact exploration licences or usual activities.

Max Petroleum was founded in April 2005 with the target of growing into an independent oil and gas exploration and production company, initially focused on Kazakhstan. As of last month, the company was producing 1,800 barrels of oil a day.

Its Almaty office employs 170 staff. The company has been the subject of several bid rumours, and earlier this year it was thought the Russian gas giant Gazprom was running the slide rule over the company.