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Max Petroleum: Stuck Drill String Suspends NUR-1

Max Petroleum Plc, an oil and gas exploration and production company focused on Kazakhstan, announces that drilling at the NUR-1 pre-salt well on its Blocks A&E Licence has been temporarily suspended.

Since announcing on 22 June 2012 that the drill string on the NUR-1 well had become stuck, the Company has been unable to free the drill string and resume drilling ahead through the salt. Therefore, the Company has decided to temporarily suspend drilling operations and to seek additional sources of financing to resume the drilling of NUR-1 to its total depth of 7,250 metres. Based on a review conducted by the Company’s in-house technical team and external consultants with expertise in drilling high pressure, pre-salt wells, the Company believes that it is technically feasible to complete the drilling of NUR-1 with certain modifications to the existing drilling programme to address the higher than expected pressures encountered in the salt.

The Company intends to either release the Saipem rig or place it on standby once the operations to temporarily suspend the well have been completed. If the rig is released, the Company expects that a smaller rig could be used to complete the NUR-1 well, given that the well is in good condition and cased down to a depth of 5,681 metres. The Company has also initiated discussions to seek regulatory approval to allow additional time to complete the drilling of NUR-1 beyond the existing deadline of 4 March 2013, should that be necessary.

The Company is currently generating positive net cash flow from operations and is continuing to have constructive discussions with its senior lender, Macquarie Bank Limited, as well as with other sources of debt and equity financing regarding providing additional capital to enable the Company to complete its post-salt exploration programme.

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