Max Petroleum 2006 Interim Results Announcement

Max Petroleum 2006 Interim Results Announcement

Max Petroleum plc, an oil and gas exploration and development company focused on Kazakhstan, provides its Interim Results for the six months ended 30 September 2006.

Financial Highlights

Max Petroleum’s key financial highlights for the interim period ended 30 September 2006 are as follows:

”¢ Group’s initial well completed in its Zhana Makat discovery during September 2006, generating turnover of $65,000, or $27.84 per barrel, from the sale of 2,335 barrels before the end of the month (2005: nil); ”¢ Net loss of $10.3 million, or $0.03 per share (2005: $3.8 million, or $0.13 per share); ”¢ Capitalised expenditures on its oil and gas properties of $17.5 million (2005: nil); ”¢ Net cash outflow from operations of $3.6 million (2005: outflow of $3.3 million); ”¢ Net cash proceeds of $71.8 million from the issuance of convertible bonds on 8 September 2006, supporting the acceleration of the Group’s drilling programme and ordering of large long-lead items; and

Ӣ Cash balance of $70.8 million as of 30 September 2006 (2005: $8.4 million).

The Group intends to fund its remaining 2006 and calendar year 2007 capital expenditure programme utilizing a combination of cash proceeds from its convertible bond offering and operating cash flows generated from the sale of crude oil production in Kazakhstan.

Operational Highlights

Max Petroleum has made significant operational progress since the Group’s listing on AIM in October 2005, including the following:

Seismic Activities

”¢ Reprocessing of 1,600 km of older Soviet 2D seismic completed across the A & E and East Alibek Blocks; ”¢ Over 2,170 km of 2D seismic shot across the A & E, East Alibek and Astrakhanskiy Blocks; ”¢ Completed and processed a 380km2 3D seismic shoot in the E Block, which is currently being analyzed; ”¢ Obtained 80km2 of 3D seismic data as part of a cooperation agreement entered into with KazMunaiGaz Exploration & Production (KMGEP) which provides the Group with access to KMGEP’s technical data on Block E, as well as free processing of up to 300,000 tons annually of crude oil through 2010 and at a nominal rate thereafter; ”¢ Substantial and ongoing efforts to identify and rank shallow, intermediate, and deep leads and prospects over all three license areas. Results to date include identification of a minimum of 9 shallow prospects, 39 shallow leads, 3 intermediate prospects, 25 intermediate leads, and 11 deep leads;

”¢ Updated competent person’s report in progress and expected in January 2007, including a reserve report for the Zhana Makat discovery in Block E.

Drilling and Operating Activities

Max Petroleum has drilled five wells to date in the A location of the Zhana Makat discovery, four of which are commercially productive. The Group is also nearing completion of a sixth well in a second location, Zhana Makat E. The Group is currently producing approximately 900 barrels of oil per day and is marketing its crude oil locally for approximately $27 per barrel. The Group anticipates it will begin selling its crude oil into the export market in early 2007, which is expected to significantly increase the Group’s price received per barrel.

During 2007, Max Petroleum plans to drill up to 24 additional shallow wells, between six and nine intermediate wells, and up to three deep wells. The Group’s short-term strategy is to add proven reserves, production and cash flow through its shallow and intermediate programmes in Blocks A & E, while drilling more capital intensive, but higher impact deep tests in all three of its licence areas. We now have three rigs under contract, with the shallow rig currently drilling in Block E, an intermediate rig mobilising to spud the Group’s first deep well in East Alibek, and a deep rig scheduled to be on location to finalise the East Alibek well during the latter part of the 2nd quarter of 2007. The Group will begin its intermediate drilling programme during the 1st quarter of 2007 and is evaluating options to accelerate its deep well programme. Additionally, the Group is continuing to pursue its comprehensive geological evaluation of its acreage, with additional seismic shoots scheduled in 2007 as well as ongoing processing and interpretation of existing seismic and other technical data.

Jim Jeffs, Executive Chairman, commented:

”The amount of work accomplished by Max Petroleum over such a short period of time is quite remarkable. When we listed in October 2005, Max had four employees and a highly prospective asset base in Blocks A & E and East Alibek. In less than a year, the Group has assembled a key team of technical and operational managers and support personnel with significant operating experience in the region, acquired and evaluated a tremendous amount of technical data in our three license areas, initiated the shallow drilling programme making a discovery with our first well, and begun marketing and selling our initial production almost immediately thereafter. Additionally, we closed a $66 million institutional placing, acquired the Astrakhanskiy licence in January 2006, and completed the $75 million convertible debt offering in September.

Max Petroleum’s asset base is significant. One of our most compelling challenges is to properly evaluate and rank our ample opportunities. Our board and management have a clear strategy to manage our capital spending to ensure a broad exposure to our shallow, intermediate and deep drilling programmes, any of which could form an excellent foundation for a much larger independent oil and gas company. We are focused on utilising our shallow and intermediate drilling programmes to add substantial production and cash flow to sustain our ongoing exploration and development activities throughout 2007 and beyond. It is a very exciting time to be in the industry, particularly in Kazakhstan.”

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