Afren shares drop after Kurdistan shutdown

Afren, which operates in Nigeria and Iraqi Kurdistan, slashed its full-year production forecast by 20 percent after counting its losses from the shutdown of operations in Iraqi Kurdistan, dragging its shares to their lowest level in more than two and half years.

The forecast cut came a day after the company suspended two senior employees as part of an investigation into the alleged receipt of “unauthorised payments” that had already led to the temporary suspension of its chief executive and chief operating officer.

The oil explorer cut its 2014 production outlook to between 32,000 and 36,000 barrels of oil per day (bopd), from an initial forecast of 40,000 bopd.

Afren had shut production at its Barda Rash oil field in Kurdistan on August 8 and started evacuating staff due to escalating security risks in the area.

“I’m not going to risk anybody’s life for anything. Not one drop of blood for a million barrels,” said Egbert Imomoh, Afren’s executive chairman, during the presentation of the company’s half-year results.

Shares in Afren dropped as much as 9 percent, making them the second-biggest losers in London’s FTSE 250 index of mid-sized companies. They traded as low as 90.35 pence, their lowest since late 2011.

Afren said it would restart operations at Barda Rash, which produced an average of 536 bopd over the first half of the year, “as soon as is prudent to do so” adding that before production can resume the company will have to go through a lengthy process of re-mobilising some of the rigs at the field.

Afren said its net production fell 25 percent to 33,488 bopd over the first half of the year, halving the company’s pretax profit to $133 million.