Afren suspends shares on poor production news

Embattled oil explorer Afren suspended its shares amidst uncertainty over its financial position, though analysts were sceptical about the real reasons for the move.

The oil explorer was near the end of a lengthy business review but said a slump in oil production had threatened its outcome.

Afren told the market on Wednesday morning its expected level of near-term production was likely to be materially lower than assumptions made in March when it decided to restructure.

It said it needed to suspend shares while discussion the review.

“There is significant uncertainty at this stage regarding the outcome of the review.”

Westhouse, which maintained a ‘sell’ rating on the stock, was sceptical of the trading halt.

Analyst Mark Henderson said he believed Afren’s partners were trying to pressure it to breach production sharing agreements so they could take over Afren’s producing interests.

“We suggest that it is possibly just a matter of time before the bondholders end up owning the entire company, under the terms of the proposed restructuring,” he said in a note.