Platform 
of potential
Max Petroleum Plc
Annual Report & Accounts 2008
Max Petroleum Plc
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Tel: +44 20 7355 9590
Fax: +44 20 7355 9591
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32A Manas Street  
Almaty 050008 
Republic of Kazakhstan
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Fax: +7 7272 378 381
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United States of America
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Fax: +1 713 493 2245
info@maxpetroleum.com
Max Petroleum Plc Annual Report & Accounts 2008 Kazakhstan
Blocks A&E
Astrakhanskiy
Astana
Almaty
Max Petroleum is  
an independent oil  
and gas exploration,  
development  
and production  
company , with a  
focus on Kazakhstan.
Maps created by 01
Max Petroleum Plc 
Annual Report & Accounts 2008
Highlights
Financial highlights
 > Revenue of $27.5 million, up from $1.5 million in 2007;
 > Total sales volumes of 460,000 bbls of crude oil, up 667% from 60,000 bbls of test production 
sold in 2007;
 > Exited fiscal year-end generating in excess of $6 million in revenue in March, with net 
positive cash flow from operations; 
 > Average realised price of $59.72 per bbl, up 139% from $25.03 per bbl in 2007;
 > Export sales comprised 65% of total revenue with average realised price of $73.70 per bbl;
 > Raised $32.1 million in net proceeds from the exercise of 21.4 million share options; and 
 > Entered $100 million mezzanine credit facility with Macquarie Bank Limited, with a  
$50 million borrowing base and $23.5 million drawn down at year-end.
Operational highlights
 > Drilled a total of 26 shallow wells in Block E to date, including 20 successful wells, all of 
which were in the Zhana Makat field, and six dry holes;
 > Drilled one dry hole in the East Alibek licence area, which was plugged and abandoned  
in October 2007;
 > Ongoing geological and geophysical programme resulting in excess of 4,265 km
2
 of 3D 
seismic data and 2,700 km of 2D seismic data acquired to date;
 > Proved and probable reserves for the Zhana Makat field of 9.1 million bbls based on  
Ryder Scott reserve report at 31 March 2008, with an after-tax NPV at 10% of $197.2 million;
 > Board approved three-year strategic plan to drill up to 26 exploration prospects in  
Blocks A&E and Astrakhanskiy through 2010, with exposure to 829 million barrels of  
risked resources;
 > Group has tendered for two drilling rigs for shallow and intermediate drilling programme  
in Blocks A&E and one rig for pre-salt well in Astrakhanskiy;
 > Formal launch of farmout process for Blocks A&E and Astrakhanskiy licences in June 2008; 
 > In July 2008, exploration period of Blocks A&E licence extended for two years until March 2011; 
and
 >  Remaining 20% interest in Blocks A&E acquired from Horizon Services N.V. in July 2008 in 
exchange for 37 million ordinary shares and 80% interest in East Alibek licence. 
Contents
01 Highlights
02 Chairman’s Statement
04 Our Assets
06 Chief Executive Officer’s Review
08 Operational Review
12 Finance Director’s Statement
16 Board of Directors
18 Directors’ Report
24 Financial Review
28 Directors’ Remuneration Report
31 Corporate Governance
33 Independent Auditors’ Report to the Members of  
Max Petroleum Plc
34 Consolidated and Company Income Statements
35 Consolidated and Company Balance Sheets
36 Consolidated Statement of Changes in Equity
37 Company Statement of Changes in Equity
38 Consolidated and Company Cash Flow Statements
39 Notes to the Financial Statements
77 Supplemental Disclosure –  
Oil and Gas Reserves and Resources (unaudited)
78 Glossary/Technical Terms
80 Corporate Directory 02
Max Petroleum Plc 
Annual Report & Accounts 2008
Chairman’s Statement
Max Petroleum Plc made 
appreciable progress 
toward achieving  
our goal of realising  
the value of our 
considerable 
hydrocarbon 
prospectivity  
in the Republic  
of Kazakhstan.  03
Max Petroleum Plc 
Annual Report & Accounts 2008
Dear Shareholder,
 
During the year ended 31 March 2008, Max 
Petroleum Plc made appreciable progress toward 
achieving our goal of realising the value of our  
considerable hydrocarbon prospectivity in the 
Republic of Kazakhstan. Despite the turbulence of the 
prior year, the Board of Directors remain extremely 
optimistic that our 3.4 million acres within the Pre-
Caspian basin will yield pervasive opportunities for 
Max Petroleum’s shareholders.
Toward that end, in July 2007, Management 
embarked on an extensive four crew seismic 
programme to fully evaluate the technical merits of 
our Block A, Block E and Astrakhanskiy assets and 
accelerated our efforts to effect strategic alliances to 
exploit our resource base. Commercial production 
and marketing capabilities of the Zhana Makat field 
were enhanced during the latest fiscal year, as well, 
with proceeds from oil sales, combined with Max’s 
$100 million credit facility entered into in June 2007, 
providing significant funding for our exploration and 
development programme. 
The story of Max started with a vision: to convert  
what we believe to be one of the most prospective 
independent portfolios of oil and gas assets in  
the world into substantial tangible shareholder 
value. That vision cannot manifest itself without  
an experienced, qualified team and effective 
leadership. The experience, technical sagacity, and 
operational and management skills Mark Johnson 
has demonstrated as CEO since joining Max last 
January have assured the Board that he is the right 
person to lead our competent team and that Max 
can and will successfully execute our strategic plan 
within a framework of financial discipline and 
resource optimisation. 
We would like to thank our shareholders for their 
continued support of the Group and its vision.  
We can assure you that the Board and all of our 
employees, with Mark Johnson at the helm,  
are focused and dedicated to bringing this  
vision to reality. 
James A Jeffs
Non-executive Chairman 04
Max Petroleum Plc 
Annual Report & Accounts 2008
Our Assets 05
Max Petroleum Plc 
Annual Report & Accounts 2008
Blocks A&E
Astrakhanskiy Block
The Blocks A&E licence area extends over 12,455 km
2
 
in the highly prolific Pre-Caspian Basin in Western 
Kazakhstan. The onshore acreage position contains 
significant resource potential in both pre-salt and 
post-salt structures. Max has identified approximately 
60 leads and prospects over the two blocks, with 
currently estimated combined unrisked mean 
resource potential of 4.5 billion boe and risked  
mean resource potential of 590 Mmboe. 
The principal terms of the Blocks A&E licence are  
as follows:
Grandfathered tax/royalty exploration and 
production contract, executed in March 2003; 
Exploration period of six years plus two two-year 
extensions. First extension received in July 2008;
Production period ranging from 15 to 25 years for 
commercial discoveries;
Corporate income tax rate of 30%;
Royalty rates ranging from 2–6%, depending 
upon annual production levels;
Manageable capital and work commitments; and 
Economic and tax stability provisions. 
•
•
•
•
•
•
•
The Group acquired an 80% interest in the Blocks 
A&E subsoil licence in October 2005 from Horizon 
Service N.V. (‘Horizon’). In July 2008, the Group 
increased its ownership in Blocks A&E to 100% upon 
completion of its acquisition of the remaining 20% 
interest from Horizon in exchange for 37 million 
ordinary shares in Max Petroleum and the Group’s 
80% interest in the East Alibek licence. 
Max Petroleum currently has one discovery  
on Block E, the Zhana Makat field, brought on 
production in August 2007 with estimated proved 
and probable reserves of 9.1 million bbls at  
31 March 2008. 
The Group has completed more than 75% of its 
exploration programme to acquire in excess of  
5,000 km
2
 of 3D seismic over Blocks A&E, with the 
acquisition of the remaining data expected by  
early 2009. Leveraging off its processed 3D seismic 
data, Max Petroleum intends to evaluate up to 24 
independent exploration structures through 2010, 
including 22 shallow and intermediate structures up 
to depths of 3,000 metres and two deep structures to 
be drilled in Block E. 
The Astrakhanskiy Block consists of 1,273 km
2
 located 
onshore in the Atyrau Oblast in Western Kazakhstan. 
The Block is adjacent to the giant gas-condensate 
Astrakhan Field in Russia and its extension into 
Kazakhstan, Imashevskoye. Max Petroleum acquired 
a 100% interest in the Astrakhanskiy licence in 
January 2006. 
The principal terms of the Astrakhanskiy licence are 
as follows:
Tax/royalty exploration contract, executed in 
January 2006; 
Exploration period of four years plus one two-year 
extension; 
Corporate income tax rate of 30%;
Royalty rates ranging from 2–6%, depending 
upon annual production levels;
No economic or tax stabilisation provisions; and 
Commitment to begin drilling initial exploration 
well by 31 December 2008.
•
•
•
•
•
•
The Group has completed its seismic acquisition 
programme over the Astrakhanskiy Block, consisting 
of 380 km
2
 of 3D and 445 km of 2D seismic in the 
western section of the Astrakhanskiy licence area. 
Astrakhanskiy contains a minimum of four prospects 
with unrisked mean resource potential of 1.1 billion 
boe and risked mean resource potential of  
560 Mmboe. 
Over the next three years, the Company expects to 
drill two structures in Astrakhanskiy, testing currently 
identified deep structures with estimated risked 
mean resource potential of 435 Mmboe.  06
Max Petroleum Plc 
Annual Report & Accounts 2008
Chief Executive Officer’s Review
My first order of business 
upon joining Max was  
to establish a realistic  
and achievable  
three-year  
strategic plan. 07
Max Petroleum Plc 
Annual Report & Accounts 2008
Dear Shareholder,
 
Since joining Max Petroleum as Chief Executive 
Officer in January 2008, I have spent considerable 
time assessing the Group’s assets, operations, and 
personnel to ensure we have the appropriate 
structure and resources to convert Max Petroleum’s 
significant oil and gas exploration potential into real, 
tangible value for our shareholders. The breadth 
and quality of our assets continues to impress me.
My first order of business was to establish a realistic 
and achievable three-year strategic plan capable of 
unlocking the value inherent in our Blocks and set 
objectives, milestones and performance metrics to 
measure our progress. This plan was unanimously 
approved by our Board of Directors and presented to 
the market in April 2008. 
The future success of our business strategy involves 
achieving three short-term goals:
1.  Shore up Max’s near-term liquidity to fund current 
operations;
2.  Strengthen our technical and operational 
capabilities to optimally high grade our prospects 
and leads, capitalising on our processed 3D and 
2D seismic data; and 
3.  Enter into a joint venture or other farmout 
arrangement to share in the risk and funding of 
our long-term exploration drilling and appraisal 
programme. 
I am pleased to report that we have made good 
progress in all three areas. 
We have enhanced Max’s liquidity position through 
facility and process improvements in Zhana Makat, 
thereby increasing the reliability of production and 
revenues from the field, as well as the expansion of 
the borrowing base of our Macquarie debt facility  
by $30 million, secured in the midst of an extremely 
tight global credit environment. More consistent 
production coupled with higher commodity prices 
allowed Max to generate net positive cash flows from 
operations after capital expenditures during July 
2008, a significant milestone for the Group. 
We have also boosted the technical expertise 
needed to fully exploit the information and insight 
acquired from our ongoing 2D and 3D seismic 
evaluation of Blocks A&E and Astrakhanksiy. We 
have established an exceptional exploration team in 
Houston, hiring four highly experienced oil and gas 
finders to augment our Almaty based personnel. The 
expanded technical group allows us to accelerate 
the analysis and assessment of our geological and 
geophysical data to quickly generate and rank our 
drillable exploration prospects based on our 
growing library of processed 3D seismic data. We 
believe this approach will substantially increase the 
probability of success of Max’s exploration drilling 
programme over the next several years. 
Although a portion of our future capital requirements 
will be funded from ongoing production and the 
Macquarie credit facility, up to $200 million of further 
funding will be required to complete our entire 
three-year exploration and appraisal programme. 
Our focus is to meet these additional capital needs 
through the farmout of minority interests in one or 
both of our Kazakh assets. In this regard, we initiated 
a formal farmout process in June, offering up to 25% 
of the Blocks A&E licence and 50% of the 
Astrakhanskiy licence for third-party participation. 
The farmout effort is proceeding with many 
interested companies reviewing our data with an 
objective of concluding a joint venture agreement, 
subject to government approval, by the end of the 
third quarter or early fourth quarter 2008.
My experience from 22 years at Texaco and 
ChevronTexaco has enabled me to quickly establish 
new initiatives and strengthen existing policies and 
practices, focusing on operational excellence, 
business processes and value optimisation. I am 
pleased to say that our personnel have embraced 
these changes and I consider our employees to be 
world class professionals who will provide the Group 
with a competitive advantage moving forward. 
As CEO, I can assure you that the Board and 
Management are focused on directing Max 
Petroleum’s strategy and activities to continuously 
increase shareholder value. My near-term goal is to 
enhance our balance sheet enabling us to execute 
our business strategy in a rapid and prudent manner. 
Looking towards the future I will be seeking to 
capitalise on our core assets and extensive knowledge 
of Kazakhstan to create more opportunities to further 
enhance the value of the Group.
Mark L Johnson 
Chief Executive Officer   08
Max Petroleum Plc 
Annual Report & Accounts 2008
Operational Review
The principal goal of  
the Strategic Plan is to 
maximise the value 
generated from the 
Group’s capital spending 
programme over the 
next three to five years. 09
Max Petroleum Plc 
Annual Report & Accounts 2008
Strategic Plan 
Max Petroleum’s strategic plan for the three-year 
period ending 31 December 2010 (the ‘Strategic Plan’) 
was prepared by Management and approved by the 
Group’s Board of Directors after an extensive review 
of its assets, operations and personnel. The principal 
goal of the Strategic Plan is to maximise the value 
generated from the Group’s capital spending 
programme over the next three to five years by 
properly utilising its extensive 3D and 2D seismic and 
other geological data acquired on its exploration 
acreage in Blocks A&E and Astrakhanskiy in the  
Pre-Caspian Basin.
The highlights of the Group’s Strategic Plan are  
as follows:
Drill up to 57 wells evaluating 26 independent 
exploration structures across Blocks A&E and 
Astrakhanskiy, including: 
Total of 24 shallow, intermediate and deep 
structures in Blocks A&E; and 
Two deep structures in Astrakhanskiy.
Exposure to risked mean resource potential of  
829 Mmboe (3,552 Mmboe unrisked)
Complete acquisition, processing and 
interpretation of over 5,500 km
2
 of 3D and  
2,700 km of 2D seismic data;
Expanded technical team to accelerate and 
optimise review of seismic data and high grade 
drilling prospects; and 
Drilling programme to use up to five drilling rigs 
in Blocks A&E and one rig in Astrakhanskiy. 
Total budgeted capital expenditures for the three-
year period are between $300 to $400 million,  
which are expected to be funded using a 
combination of operating cash flow, the Group’s 
existing credit facility with Macquarie Bank  
Limited, and proceeds and capital carry from 
farmout or other joint venture arrangements entered 
into on one or both licence areas.
•
°
°
•
•
•
•
G&G programme
After its listing in October 2005, Max Petroleum began 
acquiring extensive amounts of 2D seismic data 
across its various acreage positions in the Pre-
Caspian Basin, which were used to identify multiple 
shallow, intermediate and deep leads and prospects. 
Based on the initial results of the 2D data, the Group 
initiated a 3D seismic acquisition programme across 
limited portions of Block E with an additional 3D shoot 
scheduled for the Western portion of Astrakhanskiy.  
In July 2007, the Group made a strategic decision to 
accelerate its seismic acquisition programme over 
both licence areas, engaging up to four seismic crews 
to simultaneously acquire 3D data across Block A, 
Block E and Astrakhanskiy over target areas identified 
using the 2D. 
Ultimately, the Group’s G&G exploration programme 
will acquire, process and interpret in excess of 5,500 
km
2
 of 3D seismic and 2,700 km 2D seismic over all 
three blocks. As of 31 July 2008, approximately 78%  
of the 3D and 100% of the 2D seismic acquisition 
programme had been completed, with the remaining 
data expected by the first quarter of 2009. 
During June 2008, the Group received approximately 
1,720 km
2
 of time processed data from various 3D 
seismic surveys in its Blocks A&E and Astrakhanskiy 
licence areas, including:
380 km
2
 from its 3D survey in the western section 
of the Astrakhanskiy block;
400 km
2
 from the north-west corner of its 1,610 km
2
 
3D survey in the southern Kuzbak area of Block E; 
and 
940 km
2
 from the western portion of its 2,060 km
2
 
3D survey in the northern section of Block A. 
Although additional processing for depth imaging is 
ongoing, interpretation of the time-processed data 
has begun. Utilising the Group’s expanded G&G team 
•
•
• 10
Max Petroleum Plc 
Annual Report & Accounts 2008
The Group expects to drill 
up to 57 onshore wells 
through 2010, evaluating  
26 structures with estimated 
risked mean resource 
potential of 829 Mmboe.
Operational Review/continued 11
Max Petroleum Plc 
Annual Report & Accounts 2008
to accelerate the evaluation of the large volume of 
available seismic and other technical data, the Group 
anticipates that over 70% of the planned 3D seismic 
programme will have been interpreted and multiple 
independent, drillable shallow and intermediate 
exploration prospects will be fully mapped and high 
graded by 31 December 2008, allowing a sustainable 
shallow and intermediate drilling programme to 
begin in January 2009.
Drilling programme 
Max Petroleum plans to expand its exploration 
drilling activities significantly beginning in 2009, 
with a goal to substantially evaluate the Group’s 
prospective asset base over the next three years. The 
Group expects to drill up to 57 onshore wells through 
2010, evaluating 26 structures in Blocks A&E and 
Astrakhanskiy with estimated risked mean resource 
potential of 829 Mmboe.
The Group has tendered for two intermediate rigs to 
drill exploration and appraisal wells on Blocks A&E up 
to depths of 3,000 metres and plans to have the first 
rig on location in January 2009, providing additional 
time for the Group to complete its seismic acquisition 
programme and perform a quality review of the 
resulting data. Eight drilling rig companies have 
submitted proposals for 14 different drilling rigs for the 
Group to consider. Max is currently evaluating the 
bids and plans to award a contract for at least one of 
two drilling rigs during the third quarter of 2008. The 
intermediate rigs will be dedicated to drilling 22 
shallow and intermediate structures in Blocks A&E 
with risked mean resources of 191 Mmboe, as well  
as up to three horizontal development wells in the 
Zhana Makat area. Following successful appraisal 
efforts, the Group intends to mobilise a third 
intermediate rig dedicated to drilling appraisal  
and development wells. 
In accordance with the Strategic Plan, two deep 
structures will also be drilled in Block E in 2010, with 
estimated mean risked resource potential of 203 
Mmboe. The timing of the initial deep well is 
dependent upon the processing and interpretation of 
the ongoing 3D seismic survey in the southern portion 
of the Block. It is anticipated that the initial deep 
exploration well will begin drilling in late 2009 or 
early 2010, followed by the drilling of a second  
deep well.
The Group also plans to drill two deep wells in 
Astrakhanskiy with estimated risked mean resource 
potential of 435 Mmboe. The wells will test the pre-
salt carboniferous platform and overlying reef 
closures, which are thought to be an extension of  
the giant Astrakhan gas-condensate field to the 
north-west of the Block. The first exploration well  
in Astrakhanskiy is scheduled to begin drilling in 
December 2008 to be followed by an appraisal well, 
or, if unsuccessful, a second exploration well. Max’s 
dedicated Astrakhanskiy project team is making 
significant progress toward securing a suitable 
drilling rig and obtaining the necessary government 
approvals and permissions involved with drilling the 
initial well. The Group is currently evaluating bids for 
a suitable deep rig and plans to award a contract 
during the third quarter of 2008.
The Group has drilled a total of 26 shallow wells on 
Block E to date, including 20 wells successfully 
completed in the Zhana Makat field and six dry 
holes. The Group released the shallow rig in May 
2008 after it had drilled all the shallow vertical wells 
in the Zhana Makat area the shallow rig was 
capable of drilling. The Group also drilled an 
exploratory dry hole in the East Alibek licence area, 
which was plugged and abandoned in October 
2007. The Group disposed of its interest in East Alibek 
in July 2008. 12
Max Petroleum Plc 
Annual Report & Accounts 2008
Finance Director’s Statement
Max Petroleum continued 
to strengthen its financial 
position in order  
to execute its  
long-term  
exploration  
and appraisal  
programme  
in Western  
Kazakhstan.  13
Max Petroleum Plc 
Annual Report & Accounts 2008
Dear Shareholder,
 
During the fiscal year ended 31 March 2008, Max 
Petroleum continued to strengthen its financial 
position in order to execute its long-term exploration 
and appraisal programme in Western Kazakhstan. 
Consistent production from the Zhana Makat field, 
combined with higher commodity prices, has 
significantly increased the Group’s revenues 
generated from crude oil sales. Combined with  
the Group’s existing credit facility with Macquarie 
Bank, Max Petroleum’s operating cash flow is fully 
funding the Group’s current operational and capital 
expenditures while it pursues longer-term financing 
through a farmout of interests in one or both of the 
Blocks A&E and Astrakhanskiy oil and gas licences. 
Results of operations 
The Group’s 2008 financial statements and the 
financial results for all comparable periods have 
been presented in accordance with International 
Financial Reporting Standards (IFRS) as adopted  
by the European Union. 
The Group recognised a loss of $34.5 million,  
or $0.107 per ordinary share, for the year ended  
31 March 2008, compared to a loss of $29.7 million,  
or $0.097 per ordinary share, during the prior period. 
Oil revenues increased from $1.5 million, or $25.03 
per bbl, in 2007 to $27.5 million, or $59.72 per bbl,  
in 2008, based upon a 667% increase in annual 
production and a 139% increase in the average 
realised oil price received per bbl. The Group 
produced 460,000 bbls during 2008, consisting  
of 301,000 bbls sold into the export market  
generating $22.2 million in revenue, or $73.70  
per bbl, and 159,000 bbls sold into the domestic 
market generating $5.3 million in revenue, or $33.25 
per bbl. Comparatively, the Group produced 60,000 
bbls during 2007, including 3,000 bbls sold into the 
export market generating $157,000 in revenue, or 
$52.33 per bbl, and 57,000 bbls sold domestically 
generating $1.3 million in revenue, or $23.60 per bbl. 
Cost of sales increased from $1.5 million in 2007 to 
$14.0 million in the current period, due to increased 
production from the Zhana Makat field and its 
transition from test to commercial production in 
August 2007. Test production through August 2007 
was accounted for by crediting revenue for the 
proceeds received, net of VAT, with an offsetting 
charge to cost of sales resulting in no net margin 
being recognised. The Group’s cost of sales for 2007 
were entirely attributable to test production and 
have been recorded as operating costs during the 
period. The individual components of 2008 cost of 
sales included:
operating costs of $8.5 million, or $18.52 per bbl, 
an increase of 467% from the $1.5 million, or  
$25.03 per bbl, incurred in 2007; 
depreciation, depletion and amortisation of  
$5.0 million; and 
royalties of $0.5 million. 
The Group incurred $15.9 million in exploration and 
appraisal costs during the current year compared to 
$8.4 million in 2007, relating to the cost of dry holes 
drilled during the respective periods. An additional 
$5.2 million loss was recognised on remeasuring 
assets held for sale to fair value in 2008 in connection 
with the Group’s subsequent disposal of its 80% 
interest in its East Alibek licence in July 2008. 
•
•
• 14
Max Petroleum Plc 
Annual Report & Accounts 2008
The Group’s liquidity 
position is further 
supplemented by the 
Macquarie debt facility , 
which has a current 
borrowing base of  
$50 million.
Finance Director’s Statement/continued 15
Max Petroleum Plc 
Annual Report & Accounts 2008
The Group incurred total administrative expenses of 
$28.1 million for the year ended 31 March 2008, 
compared to administrative expenses of $24.4 million 
in 2007. Administrative expenses for the current and 
prior years principally reflect costs incurred to staff-
up and run the Group’s operations in the United 
Kingdom and Kazakhstan, including non-cash  
share based payment charges of $4.6 million and 
$9.8 million, respectively. Current year administrative 
expenses include $3.8 million in non-recurring costs 
relating to the Group’s internal investigation into the 
undisclosed receipt of beneficial interests in share 
options by certain employees and members of  
senior management.
As further discussed in the Directors’ Report, Max 
Petroleum has significantly improved its internal 
control systems during the last year and has 
strengthened its finance departments in both its UK 
and Kazakhstan offices, enhancing the Group’s 
internal and external financial reporting capabilities.
Liquidity and capital resources
Max Petroleum had $4.0 million in cash on its 
balance sheet as of 31 March 2008 and ended the 
latest fiscal year generating in excess of $6 million  
in revenue per month from the sale of crude oil. In 
addition, production from the Zhana Makat field, 
combined with the higher commodity price 
environment, allowed the Group to fully fund its 
operating costs and capital expenditures out of 
operating cash flow during July 2008. 
The Group’s liquidity position is further supplemented 
by the Macquarie debt facility, which has a current 
borrowing base of $50 million, of which $32.5 million 
has been drawn down to date. The $17.5 million  
in available borrowing capacity can be used to 
fund any aspect of the Group’s exploration or 
development programme, including operating and 
administrative expenses, as necessary. 
Apart from the Group’s available liquidity and 
capital resources from operating cash flow and the 
Macquarie debt facility, the Group intends to fund its 
three-year exploration and appraisal programme 
through the farmout of interests in one or both of its oil 
and gas licences, which Management believes is 
most likely to provide the Group’s shareholders the 
best opportunity to realise the potential value of its 
assets. The Group has not ruled out the possibility of 
equity financing, however, if it believes available 
terms are more favourable than would otherwise be 
obtainable through a farmout arrangement. 
Michael B Young
Finance Director 16
Max Petroleum Plc 
Annual Report & Accounts 2008
Board of Directors
< James A Jeffs
Non-Executive Chairman
Mr Jeffs has extensive 
experience as a director and 
senior executive with oil and gas 
exploration companies as well 
as in investment banking and 
fund management. He  
has been chief investment 
officer of the $4 billion Whittier 
Trust since 1994. He is a former 
director and chairman of both 
Whittier Energy and Chaparral 
Resources, Inc.
< Mark Johnson
Chief Executive Officer
Mr Johnson has over 26 years 
experience in the oil and gas 
sector, including senior positions 
around the world with Chevron, 
Texaco, and British Gas. He was 
the managing director of 
Texaco’s North Buzachi project 
in Kazakhstan from 1998–2003, 
negotiating its eventual sale to 
the Chinese National Petroleum 
Company in 2003.
< Michael B Young
Finance Director and CFO
Mr Young is a Certified Public 
Accountant. He was the chief 
financial officer of Whittier 
Energy Corporation, an oil  
and gas exploration and 
production company based  
in the United States from 2003 to 
August 2006. Mr Young was the 
vice president and chief 
financial officer of Chaparral 
Resources, Inc. from 1998 until 
November 2002.
< Robert B Holland III 
Non-Executive Director
Mr Holland was a member of the 
Bush Administration until April 
2006, serving as United States 
executive director of the World 
Bank. From 1993 to 1999, he 
served in various positions, 
including general counsel  
and chief executive officer, with 
Triton Energy Ltd, a New York 
Stock Exchange listed 
exploration company that  
was sold to Amerada Hess. 
      David Belding
Non-Executive Director
Previously a senior executive 
and co-founder of Mandalay 
Resort Group, which was 
acquired by MGM Resorts, Inc 
for US$7.8 billion in June 2005. 
Also previously co-founded Gold 
Strike Resorts, a hotel and casino 
operator, which he developed 
from 1977 to 1995. He graduated 
in Economics and Finance from 
the University of Arizona and 
received a Doctorate in Law 
from Georgetown University.
< 17
Max Petroleum Plc 
Annual Report & Accounts 2008
< Maksut Narikbayev
Non-Executive Director
Mr Narikbayev served as 
chairman of the Highest Judicial 
Board of Kazakhstan from 2003 to 
2006, chairman of the Supreme 
Court of Kazakhstan from 1996 to 
2000, and as Prosecutor General 
of Kazakhstan from 1995 to 1996. 
Mr Narikbayev is a qualified 
lawyer and has authored a 
wide range of books covering 
economic issues of the Supreme 
Court of Kazakhstan, criminal law, 
and the protection of civil rights.
< Lee O Kraus Jr
Non-Executive Director
Mr Kraus has extensive  
energy investment banking 
experience, much of it in the CIS. 
He runs his own boutique 
investment banking firm, 
Composite Capital LLC and 
previously has had more than 20 
years’ experience as an energy 
investment banker with 
Dresdner Kleinwort, Lazard 
Freres, where he served on the 
Board of Lazard Moscow, and 
Morgan Stanley.
<
     James C Langdon Jr
Mr Langdon is one of three 
senior executive partners of 
Akin, Gump, Strauss, Hauer & 
Feld, LLP, one of the leading 
international law firms with a 
focus on the energy industry. 
He is the senior member of the 
firm’s energy practice and a 
member of the firm’s strategic 
planning and management 
committees.
      Thomas Fuller
A Registered Professional 
Engineer, and a founding 
partner in Diverse Energy 
Management Company since 
1988. Diverse is a private, 
upstream USA exploration and 
production company that 
makes equity investments 
predominantly in energy 
related businesses. Previously a 
director of Hillin Oil Company, 
and senior vice president and 
energy group manager of First 
City Bank, Dallas and Houston. 
Advisory Committee
< 18
Max Petroleum Plc 
Annual Report & Accounts 2008
Directors’ Report
The directors submit their report together with the audited consolidated and company financial statements 
for the year ended 31 March 2008 of Max Petroleum Plc (‘Max Petroleum’ or the ‘Company’) and its 
subsidiaries (altogether the ‘Group’).
Results and dividend
The Group results are set out on page 34 and show a consolidated loss attributable to equity holders of the 
Company of $34.5 million for the year ended 31 March 2008 (2007: loss of $29.7 million).
The directors do not propose to pay a dividend.
Principal activities, business review and future developments
Max Petroleum was incorporated in the United Kingdom on 8 April 2005 and listed on the Alternative 
Investment Market (‘AIM’) on 27 October 2005. Max Petroleum operates through subsidiary companies as set 
out in note 17 to the consolidated financial statements. The principal activity of the Group is the exploration, 
development and production of oil and gas assets within the Republic of Kazakhstan. As at 31 March 2008, 
the Group owned rights over three contract areas consisting of four oil and gas blocks in the Pre-Caspian 
Basin, including Blocks A&E, East Alibek, and Astrakhanskiy. The Company, through its subsidiaries, owned 
an 80% interest in the A&E and East Alibek Blocks, and 100% of the rights to the Astrakhanskiy contract area. 
As more fully disclosed in notes 21 and 33 to its consolidated financial statements, in July 2008 the Company 
acquired the remaining 20% interest in Blocks A&E in exchange for its 80% interest in East Alibek plus  
37 million new ordinary shares in the Company. Subsequent to the acquisition, the Company owns,  
through its various subsidiaries, a 100% interest in Blocks A&E and the Astrakhanskiy Block.
The Group’s business strategy over the next three years is to evaluate up to 26 exploration prospects  
in Blocks A&E and Astrakhanskiy, capitalising on the Group’s extensive 3D and 2D seismic and other 
geological data acquired on its exploration acreage in the Pre-Caspian Basin. The exploration  
drilling programme will test currently identified shallow, intermediate and deep structures with  
estimated risked mean resource potential of 829 million barrels of oil equivalent (‘Mmboe’). 
The highlights of the Group’s activities for the fiscal year ended March 2008 are as follows:
Drilled a total of 26 wells in Block E to date, including 20 successful wells, all of which were in the Zhana 
Makat field, and six dry holes. 
Drilled one dry hole in the East Alibek licence area, which was plugged and abandoned in October 2007.
Max Petroleum’s Competent Person, Ryder Scott Company, estimated the 2008 fiscal year-end proved and 
probable reserves for the Zhana Makat field to be 9.1 million barrels of crude oil (‘bbls’), with an after-tax 
net present value discounted at 10% of $197.2 million, based on a constant weighted average sales price 
of $71.93 per bbl assuming 75% of the Group’s future production is sold on the export market. 
Continued an extensive geological and geophysical (G&G) programme to further evaluate the Group’s 
asset base, including acquiring in excess of 4,265 km
2
 of 3D seismic data and 2,700 km of 2D seismic data 
to date, of which approximately 40% of the 3D and 100% of the 2D data has been processed and is 
currently being interpreted. 
In August 2007, obtained regulatory approval for a three-year trial production project, allowing 
commencement of commercial production from the Zhana Makat field. 
Lifted a total of 460,000 bbls, generating revenue of $27.5 million, or $59.72 per bbl, consisting of export 
sales of 301,000 bbls, generating revenue of $22.2 million, or $73.70 per bbl, and domestic sales of 159,000 
bbls, generating revenue of $5.3 million, or $33.25 per bbl.
 
A full review of the Group’s activities during the year, recent events and future developments in the Group’s 
business is contained in the Chief Executive Officer’s Statement on pages 6 to 7.
The Group’s principal risk factors and uncertainties are set out in the Financial Review.
Investigation into certain related party transactions
In January 2006, the Company issued a total of 50 million share options as partial consideration for the 
acquisition of the Astrakhanskiy licence (the ‘Astrakhanskiy Options’), including 12.5 million to Manty 
Investment Services Ltd (‘Manty’), 18.75 million to Fantara Company, Inc. (‘Fantara’) and 18.75 million to Diego 
Production Ltd (‘Diego’). In 2007, it became evident that certain employees in Kazakhstan beneficially owned 
six million of the Astrakhanskiy Options originally issued to Manty, including: (i) 2.1 million share options 
distributed to a number of the Company’s expatriate employees in Kazakhstan; and (ii) five million share 
options received by the Group’s Kazakhstan partner of which he allocated 1.1 million to unrelated third  
party advisors, retaining 3.9 million of the Astrakhanskiy Options. The Group’s Kazakhstan partner further 
allocated 1.95 million to Mr Dauren Myrzagaliyev, the Group’s sole Kazakh non-executive director at the time 
of the Astrakhanskiy Acquisition, and retained 1.95 million for himself. 
•
•
•
•
•
• 19
Max Petroleum Plc 
Annual Report & Accounts 2008
In connection with the apparent undisclosed receipt of share option grants by certain employees of the 
Company, the Board commissioned Barlow Lyde & Gilbert LLP (‘BLG’), a leading international law firm,  
to lead an independent review of the matter and to report their findings to the Group’s Audit Committee. 
The review having been completed, all of the related party beneficial owners of the six million Astrakhanskiy 
Options have agreed to not exercise the underlying Astrakhanskiy Options prior to their expiration in 
January 2009. The expatriate employees and Mr Myrzagaliyev are no longer employed by the Company. 
Policy and procedure recommendations
As a result of BLG’s findings, the Group has put in place a procedural framework to scrutinise any potential 
exercise of the Astrakhanskiy Options in the future. In the light of the results of the investigation, BLG 
recommended that the Audit Committee implement certain policies and procedures to strengthen the 
Group’s internal control structure. As of the date of this report, the policies and procedures recommended  
by BLG had been implemented by the Group, as follows:
1 Established clear guidance/training on the Group’s policies regarding share dealings, anti-corruption 
policy, and other ethical policies (including conflicts of interest), including induction training for new 
recruits and regular refresher training for existing staff.
1.1 Established clear reporting lines for compliance issues to specific Max Petroleum personnel for:  
(a) Kazakh staff; (b) London staff; and (c) Board members.
1.2 Ensured guidance is available and obtained from the applicable compliance officer on possible ‘grey’ 
areas, eg seeking approval to deal whilst in possession of potentially price sensitive information.
2 A confidential whistleblowing hotline for suspected wrongdoing is in the process of being established.
3 Established corporate governance and regulatory training (eg AIM rules) for new directors and other 
new members of senior management, including refresher training for existing Board/senior management.
4 Established a procedure for creating an audit trail for dealings with other companies in the sector  
(eg potential or actual competitor companies).
4.1 Established a threshold of permitted non-notifiable dealings with third parties.
4.2 Ensuring written notification/obtaining written permission from Board or senior officers for  
notifiable dealings.
Key performance indicators (KPIs) 
The Group’s key financial and performance indicators during the year were as follows:
      2008 2007 % Change
Crude oil sales volumes (Mboe)     460 60  667%
 Export sales volumes (Mboe)     301  3 9,933%
 Domestic sales volumes (Mboe)     159 57  179%
 Commercial production volumes (Mboe)    419 – n/a
 Test production volumes (Mboe)     41 60 (32%)
Oil sales revenue (US$000)      $27,470 $1,502 1,729%
 Export sales revenue (US$000)     $22,184 $157 14,030%
 Domestic sales revenue (US$000)     $5,286 $1,345 293%
Average realised price per bbl     $59.72 $25.03 139%
 Average realised export price per bbl    $73.70 $52.33 41%
 Average realised domestic price per bbl    $33.25 $23.60 41%
Operating costs (US$000)
1
      $8,517 $1,502 467%
 Operating costs – commercial production (US$000)   $6,619 – n/a
 Operating costs – test production (US$000)    $1,898 $1,502 26%
Operating costs per bbl
1
      $18.52 $25.03 (26%)
 Operating costs per bbl – commercial production    $15.80 – n/a
 Operating costs per bbl – test production     $46.29 $25.03 85%
Net cash used in operating activities      $(7,122) $(19,851) (64%)
1 Operating costs equals cost of sales less royalties and depreciation, depletion and amortisation. 20
Max Petroleum Plc 
Annual Report & Accounts 2008
Directors
The directors, who served during the year, and to date, were: 
      Appointed Ceased
James A Jeffs, Non-executive Chairman   1 July 2005 –
Mark L Johnson, Chief Executive Officer   22 January 2008 –
Michael B Young, Finance Director    22 January 2008 –
Steven J Kappelle
1
, Chief Executive Officer   1 June 2005  17 October 2007
Lee O Kraus, Jr, Non-executive    10 June 2007 –
David R Belding, Non-executive    29 September 2005 –
Robert B Holland III, Non-executive    27 April 2006 –
Maksut S Narikbayev, Non-executive    10 October 2006 –
1 Dismissed 17 October 2007
The Company’s directors appointed to the Board subsequent to the 2008 Annual General Meeting will  
stand for election at the next Annual General Meeting, as well as one third of the then existing directors,  
who will retire by rotation and offer themselves for re-election in accordance with the Company’s  
Articles of Association.
Directors’ interests
The directors, who served during the year, and to date, had the following beneficial interests in the shares  
of the Company:
 Share options  Ordinary shares of 0.01p each
   Exercise price (p) 31 March 2008 31 March 2007 31 March 2008 31 March 2007
James A Jeffs    35–120.5 10,281,271 10,281,271 107,091 50,000
Mark L Johnson    61 4,500,000 – – –
Michael B Young    78–115 2,000,000 1,500,000 80,178 80,178
Steven J Kappelle
1
    35–120.5 688,796 10,281,271 – –
Lee O Kraus, Jr    78–185 2,500,000 – 50,000 –
David R Belding    35 2,000,000 2,000,000 4,142,729 4,000,000
Robert B Holland III    78–100 3,500,000 2,500,000 96,732 39,641
Maksut S Narikbayev     100 2,000,000 2,000,000 – –
1 Dismissed 17 October 2007
Substantial shareholders 
At 31 March 2008 the following parties had notifiable major interests of 3% or greater in the nominal value  
of the Company’s issued 0.01p ordinary shares:
 2008
       Number  
       of shares Percentage
Credit Suisse Securities (Europe) Limited     30,982,362  9.44%
Deutsche Bank AG       23,505,551  7.16%
FMR LLC       23,336,097 7.11%
Fidelity International Limited      17,072,900 5.20%
Eagle Point Investments Ltd      14,750,000  4.49%
G Kachshapov        15,000,000 4.57%
Compass Asset Management      10,184,101 3.10%
Options granted
As at 31 March 2008, the Company had granted a total of 125,093,413 options (2007: 113,317,313) of which 
options over 25,888,408 shares (2007: 4,460,000) had been exercised and 8,618,302 options (2007: 605,000)  
had been forfeited or cancelled unexercised.
Directors’ Report/continued 21
Max Petroleum Plc 
Annual Report & Accounts 2008
Interests in contracts
There were no contracts or arrangements during the period in which a director of the Company was 
materially interested and which were significant in relation to the business of the Group or the Company. 
In July 2008, Composite Capital LLP, a private company beneficially owned by Mr Kraus, and Mr Kachshapov 
and various companies affiliated with Mr Kachshapov, entered into a Deed of Right of First Refusal (the 
‘ROFR’) in conjunction with the Company’s completion of the exchange agreement with Horizon Services N.V. 
The ROFR grants Composite Capital, or its designee, a pre-emption right to acquire up to 41 million ordinary 
shares in the Company beneficially owned by Mr Kachshapov within 30 business days of a proposed sale of 
such shares by Mr Kachshapov or his affiliates.
Creditors’ payment policy and practice
The Group aims to pay all its creditors promptly. For trade creditors, it is the Group’s policy to:
(i) agree the terms of the payment at the start of business with that supplier;
(ii)  ensure that suppliers are aware of the terms of payment; and 
(iii) pay in accordance with contractual and other obligations. 
The number of days of average daily purchases included in trade creditors at 31 March 2008 was 35 days 
(2007: 41 days).
Corporate Social Responsibility
The Group is committed to managing its business to have an overall positive impact on society. We seek to 
achieve this through a corporate culture which fosters a fundamental commitment in our management and 
workforce to ethical business practices in terms of our operations, our impact on the environment and local 
communities, and in how we treat and develop our workforce.
We value our relationships within the communities in which we operate and realise that nurturing those 
relationships can benefit us all – employees, shareholders and society as a whole. This belief is central to  
our commitment to operate our core business in a socially responsible way, and is complemented by our 
investment in the social programmes administered by the local governments in the regions where we 
operate, as a contributing partner to help improve the social infrastructure of Kazakhstan. 
During the fiscal year ended 31 March 2008, the Group contributed $850,000 (2007: $53,000) to the social 
investment programmes of the Aktobe and Atyrau Oblasts, and to the City of Astana. Max Petroleum’s 
ongoing social investment programme has contributed a total of $2.9 million. The Group did not make  
any political contributions during the period. 
We continue to be active in funding foreign study programmes for Kazakh students attending universities 
abroad and we are particularly proud of our training and continuing education programmes for our  
local employees. Max Petroleum is a committed long-term partner within the Kazakh communities in  
which it operates.
Employment policies
The Group is committed to pursuing an equal opportunity employment policy, covering recruitment  
and selection, training, development, appraisal and promotion. The Group recognises the diversity of  
its employees, its customers, and the community at large and seeks to use employees’ talents and abilities  
to the fullest. This approach extends to the fair treatment of people with disabilities, in relation to their 
recruitment, training and development. Full consideration is given to the retention of staff who become 
disabled during employment. 
Employee communication 
The Group is committed to effective communications, which it maintains through regular information 
releases and staff briefings. Formal communications with employees take place through these channels. 
With respect to the Group’s operations in Kazakhstan and recruitment of Kazakhstani employees, 
announcements, contracts, interviews, and advertisements are conducted in English, Russian and Kazakh 
languages, as applicable. 
Health, safety and environment
The Group’s policy and practice is to comply with health, safety and environmental regulations and 
requirements of the countries in which it operates, to protect its employees, contractors, assets and the 
environment. Environmental risk factors are more fully considered in the accompanying financial review. 22
Max Petroleum Plc 
Annual Report & Accounts 2008
Financial instruments risk assessment
The directors’ financial instruments risk assessment is disclosed in note 24 to the accompanying financial 
statements.
Share capital
The Company’s authorised and issued share capital as at 31 March 2008 is set out in note 28 to the financial 
statements on page 65.
Post balance sheet events
All post balance sheet events are described in note 37 to the Group’s financial statements on page 76.
Statement of disclosure of information to auditors
As at the date of this report the serving directors confirm that: 
so far as the directors are aware, there is no relevant audit information of which the Company’s auditors 
are unaware; and
they have taken all steps that they ought to have taken as a director in order to make themselves  
aware of any relevant audit information and to establish that the Company’s auditors are aware  
of that information.
Auditors
The Company’s auditors, PricewaterhouseCoopers LLP, have indicated their willingness to continue in office 
and a resolution concerning their reappointment will be proposed at the next Annual General Meeting.
Statement of directors’ responsibilities
The directors are responsible for preparing the Annual Report and the financial statements. The directors 
are required to prepare financial statements for the Group in accordance with International Financial 
Reporting Standards (IFRS) as adopted by the European Union and have also elected to prepare financial 
statements for the Company in accordance with IFRS. Company law requires the directors to prepare such 
financial statements in accordance with IFRS, the Companies Act 1985 and Article 4 of the IAS Regulation.
International Accounting Standard 1 requires that financial statements present fairly for each financial  
year the Company’s financial position, financial performance and cash flows. This requires the faithful 
representation of the effects of transactions, other events and conditions in accordance with the definitions 
and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting 
Standards Board’s ‘Framework for the Preparation and Presentation of Financial Statements’. In virtually all 
circumstances, a fair presentation will be achieved by compliance with all applicable IFRS disclosure 
requirements. In preparing those financial statements the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and estimates that are reasonable and prudent; 
state that the financial statements comply with IFRS as adopted by the European Union; and
prepare the financial statements on the going concern basis, unless it is inappropriate to presume  
that the Group will continue in business, in which case there should be supporting assumptions or 
qualifications as necessary. 
The directors confirm that they have complied with the above requirements in preparing the  
financial statements.
The directors are responsible for keeping proper accounting records which disclose with reasonable 
accuracy at any time the financial position of the Company and the Group, for safeguarding the assets  
of the Company and the Group, for taking reasonable steps for the prevention and detection of fraud  
and other irregularities and for the preparation of a directors’ report which complies with the  
requirements of the Companies Act 1985.
•
•
•
•
•
•
Directors’ Report/continued 23
Max Petroleum Plc 
Annual Report & Accounts 2008
Electronic communications
The maintenance and integrity of the Max Petroleum Plc website is the responsibility of the directors; the work 
carried out by the auditors does not involve consideration of these matters and accordingly, the auditors 
accept no responsibility for any changes that may have occurred to the financial statements since they were 
initially presented on the website. 
The Company’s website is maintained in compliance with AIM Rule 26.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may 
differ from legislation in other jurisdictions. 
By order of the Board
James A Jeffs Mark L Johnson
Non-executive Chairman  Chief Executive Officer
12 August 2008
  24
Max Petroleum Plc 
Annual Report & Accounts 2008
Results for the year
The Group recorded a loss attributable to equity holders of the Company of $34.5 million for the year ended 
31 March 2008 (2007: $29.7 million). No dividends have been paid or proposed for the year (2007: none). 
Adoption of International Financial Reporting Standards (IFRS)
The 2008 financial statements are the Group’s and Company’s first full year financial statements prepared 
under International Financial Reporting Standards and IFRIC interpretations as endorsed by the European 
Union and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS, with  
a transition date to IFRS of 1 April 2006. Consequently, the comparative figures for 2007 and the Group’s and 
Company’s balance sheets as at 1 April 2006 have been restated from generally accepted accounting 
principles in the United Kingdom (‘UK GAAP’) to comply with IFRS. The reconciliations to IFRS from the 
previously published UK GAAP financial statements are summarised in note 36 of the consolidated financial 
statements. In addition, IFRS 1 on first time adoption allows certain exemptions from retrospective application 
of IFRS in the opening balance sheet for 2006. Where these exemptions have been used, they are explained 
in note 36.
The Group has also changed its basis for accounting for exploration and evaluation expenditure in line with 
the requirements of IFRS 6 ‘Exploration for and Evaluation of Mineral Assets’ to the modified successful efforts 
method. The Group’s policy requires initial capitalisation of all licence acquisition, geological and geophysical 
exploration and appraisal costs pending determination of the existence of commercial reserves. Similarly, 
the costs of successful exploratory wells containing hydrocarbons are capitalised while drilling expenditure 
and directly attributable operational overheads associated with exploratory dry holes are immediately 
expensed. The effect of changing to successful efforts is provided in note 36 to the financial statements.
Issue of share capital
During the year to 31 March 2008, the Company issued 21,428,408 million shares upon the exercise of share 
options (2007: 3.9 million shares), generating $32.1 million in net proceeds (2007: $2.5 million).
Bank borrowings 
In June 2007, the Group entered into a $100 million revolving mezzanine credit facility with Macquarie  
Bank Limited (the ‘Macquarie Facility’) to finance the development of Max Petroleum’s oil and gas assets  
in Kazakhstan. The Macquarie Facility has a four-year term maturing on 1 June 2011 and bears interest  
at a rate ranging from LIBOR plus 4% to 6.5%, depending upon the underlying value of the Group’s oil  
and gas reserves. The Macquarie Facility had an initial borrowing base of $20 million, which was  
increased to $50 million in March 2008. As at 31 March 2008, the Group had borrowed $23.5 million  
under the Macquarie Facility.
Upon closing in June 2007, the Company issued Macquarie with a five-year warrant to acquire five million 
ordinary shares in the Company at an exercise price of 160.6p per share. Subsequently, with the increase  
of the borrowing base from $20 million to $50 million in March 2008, the Company issued Macquarie with  
a further five-year warrant to acquire 15 million shares at an exercise price of 75p per share. 
Cash flow
Group net cash outflow from operating activities was $7.1 million (2007: $19.9 million), consisting principally  
of general and administrative expenses incurred to staff up and run the Group’s operations in the United 
Kingdom and in Kazakhstan. As at 31 March 2008, the Group held cash balances of $4.0 million (2007:  
$28.8 million) and ended the fiscal year generating in excess of $6 million in revenue per month from  
the sale of crude oil. 
The Group intends to fund its operating expenditures using a combination of cash flow from operations, cash 
on hand, and borrowings under its Macquarie Facility. The Group is also seeking to finance its three-year 
exploration and appraisal programme through the farmout of interests in one or both of its Blocks A&E and 
Astrakhanskiy contract areas.
The Group produced an average of 2,200 bopd during the month of June 2008 and currently has 
approximately 500 bopd shut-in from several wells subject to reserve reclassification by the local regulatory 
authorities. Updated reserve calculations for the Zhana Makat area have been submitted to the required 
government agencies for approval. Once approved, the wells should be promptly returned to production. 
Going concern
The Group and Company’s financial statements are presented on the basis they are a going concern. 
Financial Review 25
Max Petroleum Plc 
Annual Report & Accounts 2008
Capital expenditure 
Group capital expenditures for the year totalled $77.4 million (2007: $47.6 million).
Total Group capital expenditures were comprised of $67.3 million in cash expenditures, $4.7 million in cash 
interest capitalised, $1.2 million in share based payments, $2.4 million in non-cash interest capitalised and 
$1.8 million in decommissioning costs capitalised to intangible exploration and appraisal expenditure and 
oil and gas properties during the year. 
Revenue 
The Group generated $27.5 million in revenue from the sale of approximately 460,000 bbls of crude oil 
production during the year, or $59.72 per bbl (2007: $1.5 million on sales of 60,000 bbls of crude oil, or $25.03 
per bbl). The Group began selling crude oil into the export market in March 2007, lifting a total of 301,000 bbls 
generating $22.2 million in revenue, or $73.70 per bbl (2007: 3,000 bbls generating $157,000 in revenue, or 
$52.33 per bbl). Domestic sales totalled 159,000 bbls of crude oil generating $5.3 million in revenue, or $33.25 
per bbl (2007: 57,000 bbls generating $1.3 million in revenue, or $23.60 per bbl). All of the Group’s production 
from the Zhana Makat field prior to August 2007 was considered test production, which was accounted for  
by crediting revenue for the proceeds, net of VAT, with an offsetting charge to cost of sales resulting in no net 
margin being recognised. 
Operating loss
The Group operating loss for the year was $35.8 million (2007: $32.8 million) which includes charges relating 
to share based payments of $4.6 million (2007: $9.8 million) and $3.8 million in non-recurring costs relating to 
an internal investigation focused on the undisclosed receipt of beneficial interests in options over six million 
shares in the Company by certain employees and members of senior management. 
The Group’s operating loss also includes $15.9 million in exploration and appraisal costs (2007: $8.4 million) 
related to the cost of dry holes drilled during the period, as well as a $5.2 million loss on remeasuring assets 
held for sale to fair value in connection with the Group’s subsequent disposal of its 80% interest in the East 
Alibek licence in July 2008. 
Loss before and after tax and before minority interest
The Group recognised a loss after tax and before minority interest of $34.5 million (2007: $29.7 million) 
including interest earned of $0.8 million (2007: $1.7 million) arising from the Group’s management of  
cash reserves. 
Financial instruments
The financial instruments of the Group are comprised of cash resources, trade debtors, prepayments and 
trade creditors arising directly from operational activity, as well as the Group’s convertible bond and the 
Macquarie Facility, described in note 22 to the Group’s financial statements. 
Risk factors
The Group is subject to various risks relating to political, economic, legal, social, industry, business and 
financial conditions. The following risk factors, which are not exhaustive, are particularly relevant to the 
Group’s business activities:
Volatility of prices for oil and gas
The supply, demand and prices for oil and gas are volatile and are influenced by factors beyond the Group’s 
control. These factors include global demand and supply, exchange rates, interest and inflation rates and 
political events. A significant prolonged decline in oil and gas prices could impact the viability of some of 
the Group’s exploration activities. Additionally, production from geographically isolated countries may be 
sold at a discount to current market prices.
Substantially all of the Group’s revenues and cash flows will come from the sale of oil and gas. If oil and gas 
prices should fall below and remain below the Group’s cost of production for any sustained period, the Group 
may experience losses and may be forced to curtail or suspend some or all of the Group’s production, at the 
time such conditions exist. In addition, the Group would also have to assess the economic impact of low oil 
and gas prices on the Group’s ability to recover any losses the Group may incur during that period and on 
the Group’s ability to maintain adequate reserves.
While the Group does not currently hedge its crude oil production to reduce its exposure to oil price volatility, 
management expects that it will do so in the future as it increases its daily production sold into the export 
market. The Group would enter into price hedging contracts in order to achieve more predictable cash flows 
from its future crude oil production and to comply with the terms of its Macquarie Facility, if applicable.  26
Max Petroleum Plc 
Annual Report & Accounts 2008
Financial Review/continued
Exploration risk
Whilst the Group will seek to apply the latest technology to assess exploration licences, the exploration for, 
and development of, hydrocarbons is speculative and involves a high degree of risk. These risks include the 
uncertainty that the Group will discover sufficient oil or gas resources to exploit the discovered resource.
Environmental risk
The oil and gas industry is subject to environmental hazards, such as oil spills, gas leaks, ruptures and 
discharges of petroleum products and hazardous substances. These environmental hazards could expose 
the Group to material liabilities for property damages, personal injuries, or other environmental harm, 
including costs of investigating and remediating contaminated properties. The Group is subject to stringent 
environmental laws in the Republic of Kazakhstan with regards to its oil and gas operations. Failure to 
comply with such laws and regulations could subject the Group to material administrative, civil, or criminal 
penalties or other liabilities. Additionally, compliance with these laws may, from time to time, result in 
increased costs to the Group’s operations, impact production, or increase the costs of potential acquisitions. 
The Group was compliant with all material environmental and health and safety laws during the year.
Risk of operating oil and gas properties
The oil and gas business involves certain operating hazards, such as well blowouts, cratering, explosions, 
uncontrollable flows of oil, gas or well fluids, fires, pollution, and releases of toxic substances. Any of these 
operating hazards could cause serious injuries, fatalities, or property damage, which could expose the 
Group to liabilities. The settlement of these liabilities could materially impact the funds available for the 
exploration and development of the Group’s oil and gas properties. The Group maintains insurance against 
many potential losses and liabilities arising from its operations in accordance with customary industry 
practices, but the Group’s insurance coverage cannot protect it against all operational risks. 
Foreign currency risk
The Group’s operating costs, export revenues, and debt financing facilities are principally denominated in 
US dollars. The Group’s UK PLC office costs and share consideration are in British pounds. Also, some costs  
are incurred and settled in tenge, the local currency of the Republic of Kazakhstan. Any changes in the 
relative exchange rates among US dollars, tenge and British pounds could positively or negatively affect  
the Group’s results. The Group has reduced its US dollar–British pounds exposure by structuring further  
funds in US dollars.
Business in Kazakhstan
Amongst the risks that face the Group in conducting business and operations in Kazakhstan are:
Economic instability, including in other countries or the global economy that could lead to consequences 
such as hyperinflation, currency fluctuations and a decline in per capita income in the Kazakh economy.
Insufficient or underdeveloped physical infrastructure.
Governmental and political instability that could disrupt, delay or curtail economic and regulatory 
reform, increase centralised authority or result in nationalisation.
Social instability from any ethnic, religious, historical or other divisions that could lead to a rise in 
nationalism, social disturbances or conflict.
Uncertainties in the developing legal and regulatory environment, including, but not limited to, 
conflicting laws, decrees and regulations applicable to the oil and gas industry and foreign investment.
Unlawful or arbitrary action against the Group and its interests by the regulatory authorities, including 
the suspension or revocation of its licences.
Lack of independence and experience of the judiciary, difficulty in enforcing court or arbitration 
decisions and governmental discretion in enforcing claims.
Unpredictable federal and local tax systems.
Laws restricting foreign investment in the oil and gas industry.
•
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• 27
Max Petroleum Plc 
Annual Report & Accounts 2008
Legal systems
Kazakhstan, and other countries in which the Group may transact business in the future, have or may have 
legal systems that are less well developed than in the United Kingdom. This could result in risks such as:
Potential difficulties in obtaining effective legal redress in the courts of such jurisdictions, whether in 
respect of a breach of contract, law or regulation, including an ownership dispute.
A higher degree of discretion on the part of government authorities.
The lack of judicial or administrative guidance on interpreting applicable rules and regulations.
Inconsistencies or conflicts between and within various laws, regulations, decrees, orders and resolutions.
Relative inexperience of the judiciary and courts in such matters.
In certain jurisdictions, the commitment of local business people, government officials and agencies and the 
judicial system to abide by legal requirements and negotiated agreements may be more uncertain, creating 
particular concerns with respect to licences and agreements for business. These may be susceptible to 
revision or cancellation and legal redress may be uncertain or delayed. There can be no assurance that 
joint ventures, licences, licence applications or other legal arrangements will not be adversely affected by 
the jurisdictions in which the Group operates.
Liquidity risk 
The Group will require significant additional funding to explore and develop its current oil and gas licences 
in Kazakhstan, towards which the Group has raised $75 million of convertible debt capital in the prior year 
and during the current year entered into the Macquarie Facility, a $100 million revolving mezzanine credit 
facility. The Group has also raised $32.1 million through the exercise of the Company’s share options during 
the year ended 31 March 2008, is generating production and cash flow from operations from the sale of 
crude oil and is seeking broader long-term capitalisation through the farmout of interests in its Blocks A&E 
and Astrakhanskiy licences.
The Group expects to fund its future exploration and development programme, as well as its administrative 
and operating expenses, through a combination of existing working capital, cash flow from operations  
from the sale of future oil and gas production, borrowings from the Macquarie Facility, anticipated  
proceeds and capital carry from a farmout of interests in one or both of its oil and gas licences, and future 
issuances of debt or equity financing, as necessary. If the Group is unsuccessful in generating sufficient 
liquidity to fund its future expenditures, the Group’s ability to execute its long-term growth strategy could  
be significantly affected. 
Post balance sheet events
All post balance sheet events are described in note 37 to the Group’s financial statements. 
•
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• 28
Max Petroleum Plc 
Annual Report & Accounts 2008
Directors’ Remuneration Report
In common with the Board’s commitment to compliance with the Combined Code, the Company has adopted 
the Principles of Good Governance relating to directors’ remuneration. The Company discloses certain 
information relating to directors’ remuneration in this report, which is not audited.
Compensation Committee
The Company established a Compensation Committee in June 2006, as set out in Corporate Governance on 
pages 31 and 32. The Compensation Committee advises the Board on Group compensation policy and may 
obtain advice from independent remuneration consultants appointed by the Company. The Compensation 
Committee meets as required and executive directors do not vote on their own remuneration or incentives. 
Remuneration policy
The Company’s policy is to maintain levels of compensation for the Group that are comparable and 
competitive with peer group companies, so as to attract and retain individuals of the highest calibre, by 
rewarding them as appropriate for their contribution to the Group’s performance. The Company takes 
independent advice in structuring remuneration packages of directors and employees.
Terms of appointment
The terms of each director’s appointment are set out in their service agreements which are effective for  
an indefinite period but may be terminated in accordance with specified notice periods. Each service 
agreement sets out details of basic salary, fees, benefits-in-kind and share option grants. The directors  
do not participate in any Group pension scheme and their remuneration is not pensionable. 
The non-executive directors are not eligible for payment of cash bonuses. The executive directors are entitled 
to payment of cash bonuses in accordance with the terms of their service agreements.
Details of directors’ compensation are set out in Table 1.
Basic salaries
The basic salary of each executive director is established by reference to their responsibilities and  
individual performance. 
Fees
The fees paid to non-executive directors are determined by the Board and reviewed periodically to reflect 
current rates and practice commensurate with the size of the Company and their roles. 
Share options
The Company operates a policy of granting share options to all employees and directors as a long-term 
incentive and retention plan. The share options are exercisable over varying periods and at varying strike 
prices. The right to exercise is not contingent upon any performance criteria but is subject to terms relating to 
the respective individual’s continued employment with the Group, with the exception of 500,000 share options 
granted to Mr Johnson which are subject to non-market performance conditions related to certain 
operational metrics. 
The Company’s share options granted in the year to 31 March 2008 were independently valued by a third-
party consultant. The proportion charged to the income statement under IFRS 2, which relates to directors’ 
share options, amounts to $3.6 million (2007: $4.9 million).
Details of directors’ share options are set out in Table 2. 29
Max Petroleum Plc 
Annual Report & Accounts 2008
Annual Remuneration of Directors
Remuneration paid to the directors in the year to 31 March 2008 was as follows:
Table 1
 2008  2007
   Salary Bonuses Fees Benefits Total Total 
   US$ US$ US$ US$ US$ US$
J A Jeffs
1
   395,264 – 20,000 16,278 431,542  421,942
M L Johnson  
 (Appointed 22 January 2008)  87,097 50,000 – 443 137,540 –
M B Young
2
  
 (Appointed 22 January 2008)  71,635 – – 68,571 140,206 –
S J Kappelle
3
  
 (Dismissed 17 October 2007)  519,343  – – 66,594 585,937  567,961
L O Kraus, Jr
4
  
 (Appointed 10 June 2007)   – – 220,477 – 220,477 –
D R Belding   – – 26,149 – 26,149  23,488
R B Holland III
5
   – – 238,465 – 238,465  44,696
M S Narikbayev   – – 50,188 – 50,188  22,753
D Myrzagaliyev  
 (Resigned 10 October 2006)  – – – – – 12,702
   1,073,339 50,000 555,279 151,886 1,830,504 1,093,542
1 Non-executive fee from 1 February 2008.
2 Remuneration from 22 January 2008 until 31 March 2008.
3 Dismissed 17 October 2007.
4 Includes additional fees of $167,000 for acting as the Group’s interim COO from 6 September 2007 until 21 January 2008.
5 Includes additional fees of $176,666 for acting as the Group’s interim CEO from 6 September 2007 until 21 January 2008.
Directors’ interests in the share capital of the Company
The interests of the directors who held office during the year ended 31 March 2008 are given in the  
Directors’ Report.
There has been no change in the interest of any director between 1 April 2008 and the date of this report, 
with the exception of Mr Johnson who purchased 100,000 ordinary shares of the Company on 17 July 2008. 30
Max Petroleum Plc 
Annual Report & Accounts 2008
Directors’ Remuneration Report/continued
Directors’ interests in share option agreements
The interests of the directors in office during the year to 31 March 2008 were as follows:
Table 2
  Number Number Number Number Number at Option   Realised Unrealised 
 Grant at start granted forfeited exercised 31 March price Date Expiry gains gains
8
 
 date of period in period in period in period 2008 (pence) exercisable date $000 $000
J A Jeffs 26.10.05 8,831,171
1
 – – – 8,831,171 35.0 26.10.06
3
 26.10.15 – 3,964
J A Jeffs 14.12.05 51,000
2
 – – – 51,000 99.2 26.10.06
3
 26.10.15 – –
J A Jeffs 06.01.06 1,280,100
2
 – – – 1,280,100 120.5 26.10.06
3
 26.10.15 – –
J A Jeffs 29.03.06 119,000
2
 – – – 119,000 118.5 26.10.06
3
 26.10.15 – –
M L Johnson 31.12.07 – 4,000,000 – – 4,000,000 61.0 31.12.08
5
 31.12.14 – –
M L Johnson 31.12.07 – 250,000 – – 250,000 61.0 22.01.09
6
 31.12.14 – –
M L Johnson 31.12.07 – 250,000 – – 250,000 61.0 31.03.09
7
 31.12.14 – –
M B Young 27.07.06 1,500,000 – – – 1,500,000 115.0 27.07.07
4
 27.07.13 – –
M B Young 29.10.07 – 500,000 – – 500,000 78.0 29.10.08
5
 29.10.14 – –
S J Kappelle 26.10.05 8,831,171
1
 – (4,636,365) (4,194,806) – 35.0 26.10.06
3
 26.10.15 3,066 –
S J Kappelle 14.12.05 51,000
2
 – (26,775) – 24,225
9
 99.2 26.10.06
3
 26.10.15 – –
S J Kappelle 06.01.06 1,280,100
2
 – (672,054) – 608,046
9
 120.5 26.10.06
3
 26.10.15 – –
S J Kappelle 29.03.06 119,000
2
 – (62,475) – 56,525
9
 118.5 26.10.06
3
 26.10.15 – –
L O Kraus, Jr. 31.05.07 – 1,500,000 – – 1,500,000 185.0 31.05.08
4
 31.05.14 – –
L O Kraus, Jr. 29.10.07 – 1,000,000 – – 1,000,000 78.0 29.10.08
5
 29.10.14 – –
D R Belding 26.10.05 2,000,000 – – – 2,000,000 35.0 26.10.06
4
 26.10.12 – 898
R B Holland III 24.03.06 2,500,000 – – – 2,500,000 100.0 24.03.07
4
 24.03.13 – –
R B Holland III 29.10.07 – 1,000,000 – – 1,000,000 78.0 29.10.08
5
 29.10.14 – –
M S Narikbayev 10.10.06 2,000,000 – – – 2,000,000 100.0 10.10.07
4
 10.10.13 – –
  28,562,542 8,500,000 (5,397,669) (4,194,806) 27,470,067    3,066 4,862
 
1 Non-dilutable for initial 12 months; shares under option are increased by 3.4% of any issue of new ordinary shares within 12 months  
of the date of admission to AIM (27 October 2005) (excluding on exercise of options and on any capital reorganisation).
2 Arising under non-dilution on issue of new ordinary shares.
3 Exercisable 47.5% on first anniversary of date of grant and 12.5% on second, third and fourth anniversaries of date of grant.
4 Exercisable 40.0% on first anniversary of date of grant and 20.0% on second, third and fourth anniversaries of date of grant.
5 Exercisable 33.4% on first anniversary of date of grant and 33.3% on second and third anniversaries of date of grant.
6 Exercisable 33.4% on 22 January 2009 and 33.3% on second and third anniversaries thereafter, subject to meeting non-market performance 
condition on 22 January 2009.
7 Exercisable 33.4% on 31 March 2009 and 33.3% on second and third anniversaries thereafter, subject to meeting non-market performance 
condition on 31 March 2009.
8 Fair value of outstanding options at difference between option price and closing market price at 31 March 2008. 
9 Balance at date of dismissal, 17 October 2007.
Upon his dismissal on 17 October 2007, Mr Kappelle’s unvested options totalling 5,397,669 shares expired 
without being exercised. 
Mid-market prices of the Company’s ordinary 0.01p shares during the year and at 31 March 2008 were  
as follows:
 2008  2007
     US$ Pence US$ Pence
High     4.45 219.0 2.49 127.9
Low     0.94 48.3 1.61 82.0
Closing     1.15 57.5 2.48 126.2
No payments were made during the year to past directors of the Company, other than to Mr T R Fuller who is 
paid an annual fee of $50,000 as a member of the Advisory Committee.
On behalf of the Board of Directors of Max Petroleum Plc.
David R Belding 
Chairman of the Compensation Committee 
12 August 2008 31
Max Petroleum Plc 
Annual Report & Accounts 2008
Corporate Governance
Although Max Petroleum Plc, as an AIM listed company, is not required to comply with the Combined Code 
on Corporate Governance, the Board of Directors are committed where practicable to developing and 
applying high standards of corporate governance appropriate to the Company’s size.
This statement sets out measures taken by the Board to apply the principles of the Code to the year ended  
31 March 2008 and to the date of the Directors’ Report.
Board of Directors
The Board currently comprises two executive directors and five non-executive directors: 
James A Jeffs Non-executive Chairman
1
Mark L Johnson (appointed 22 January 2008) Executive Director (Chief Executive Officer)
Michael B Young (appointed 22 January 2008) Executive Director (Finance Director)
Lee O Kraus, Jr (appointed 10 June 2007) Non-executive
2
David R Belding Non-executive
Robert B Holland III Non-executive
3
Maksut S Narikbayev Non-executive
1 Executive Chairman to 21 January 2008
2 Interim COO from 6 September 2007 until 21 January 2008
3 Interim CEO from 6 September 2007 until 21 January 2008
Mr Steven Kappelle, the former Chief Executive Officer of the Group, was dismissed effective 17 October 2007, 
along with the Group’s Chief Operating Officer, Mr Ole Udsen. Two of the Company’s non-executive directors, 
Messrs Holland and Kraus, temporarily assumed certain executive level responsibilities until Mr Johnson was 
appointed the Company’s Chief Executive Officer on 22 January 2008. 
Mr Jeffs was the Executive Chairman until 21 January 2008 and continues as the non-executive Chairman  
of the Executive Committee. All other non-executive directors are considered to be independent of 
management and free from any contractual relationships with the Group, thereby allowing them to  
exercise full independent judgement on any issue. There is a clear division from the responsibilities  
of the executive directors. 
All directors are permitted access to independent professional advice in the course of execution of their 
duties, at the Company’s expense. 
The Board has established the following committees:
Audit Committee
The Audit Committee was appointed in June 2006 and is comprised of four directors: Messrs Holland, Kraus 
(appointed June 2007), Belding and Jeffs. Mr Holland is the Audit Committee Chairman. 
This Audit Committee is responsible for selecting the Group’s independent auditors, pre-approving all audit 
and non-audit related services, reviewing with management and the independent auditors the Group’s 
financial statements, significant accounting and financial policies and practices, audit scope and adequacy 
of internal audit and control systems. The Audit Committee appointed a special committee, consisting of 
Messrs Holland and Kraus (two non-executive directors at the time), which supervised the Company’s internal 
investigation into certain related party transactions disclosed within the Directors’ Report. 
Compensation Committee
The Compensation Committee was also appointed in June 2006 and is comprised of Messrs Belding, Holland 
and Jeffs. The Compensation Committee is responsible for determining the terms and conditions of service of 
the executive directors and of senior management of the Group.
The Directors’ Remuneration Report is set out on pages 28 to 30.
Executive Committee
Prior to the suspensions of Messrs Kappelle and Udsen on 5 September 2007, the Executive Committee 
comprised Messrs. Jeffs, Kappelle, Udsen, and Young. Following the dismissal of Messrs Kappelle and Udsen 
in October 2007, Messrs Holland and Kraus joined the Executive Committee in their capacity as the 
Company’s interim CEO and COO, respectively, until Mr Johnson joined the Group in January 2008 as a 
director and CEO. Mr Jeffs then became Non-executive Chairman of the Board, Messrs Holland and Kraus 
resumed their roles as non-executive directors, and Mr Young joined the Board as Finance Director. The 
Executive Committee currently comprises Messrs Jeffs, Holland, Kraus, Johnson and Young. 
This Executive Committee is responsible for the strategic oversight of the Group.  32
Max Petroleum Plc 
Annual Report & Accounts 2008
Corporate Governance/continued
Advisory Committee
The Advisory Committee is currently comprised of two independent international advisors with extensive 
experience in, and knowledge of, the energy sector.
The role of this committee is to provide financial, operational, geopolitical and technical advice to the Board 
and to senior non-Board officers of the Group.
Nominations Committee
The directors have considered that the Company is not of a size for a nominations committee to be 
appropriate at the current time. The Board will continue to monitor the situation. In the absence of a 
committee, all appointments are decided by the full Board. 
Board meetings
The Board met five times during the financial year (2007: eight times) with the following attendance:
       2008 2007
J A Jeffs       5 8
M L Johnson (appointed 22 January 2008)     1 –
M B Young (appointed 22 January 2008)     1 –
S J Kappelle (dismissed 17 October 2007)     3 7
L O Kraus, Jr (appointed 10 June 2007)      3 –
D R Belding       5 8
R B Holland III        5 8
M S Narikbayev        2 –
D Myrzagaliyev (resigned 10 October 2006)     – 5
Investor relations
The Board is committed to provide regular communication with shareholders. Peter Moss, Jr was appointed 
as investor relations manager in May 2006. 
Internal controls
The Board acknowledges responsibility for maintaining appropriate internal controls systems and 
procedures to safeguard the shareholders’ investments and the assets, employees and business of the Group.
The directors have recognised the changing requirements of the Group as it has developed from private 
company start-up, through re-registration as a public company and listing on AIM, to a growing multi-asset 
and international operating Group. 
The Board has established and operates a policy of continuous review and development of appropriate 
financial, operational, compliance and risk management controls, which cover expenditure approval, 
authorisation and treasury management, together with operating procedures consistent with the accounting 
policies of the Group. The internal control system is designed to manage rather than eliminate the risk of 
failure to achieve business objectives and can provide reasonable but not absolute assurance against 
material misstatement or loss.
The Board has approved the Group’s three-year budget and strategic plan. Performance against budget  
is monitored and reported to the Board on a monthly basis.
The directors confirm that the effectiveness of the internal control system during the accounting period has 
been reviewed by the Board. In light of the results of the investigation discussed separately in the Directors’ 
Report, the Board has taken additional steps to strengthen the Group’s overall internal control structure, 
including, but not limited to, expanding the training of Group personnel regarding the Group’s applicable 
policies and procedures relating to share dealings, potential conflicts of interest, and business ethics. 
The Board does not consider it appropriate to the current size of the Group to establish an internal audit 
function.  33
Max Petroleum Plc 
Annual Report & Accounts 2008
Independent Auditors’ Report to the Members of 
Max Petroleum Plc
We have audited the Group and Company financial statements (the ‘‘financial statements’’) of Max Petroleum 
Plc for the year ended 31 March 2008 which comprise the Consolidated Group and Company Income 
Statements, the Consolidated Group and Company Balance Sheets, the Consolidated Group and Company 
Statements of Changes in Equity, the Consolidated Group and Company Cash Flow Statements, and the 
related notes. These financial statements have been prepared under the accounting policies set out therein. 
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report and the financial statements in accordance 
with applicable law and International Financial Reporting Standards (IFRS) as adopted by the European 
Union are set out in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory 
requirements and International Standards on Auditing (UK and Ireland). This report, including the opinion, 
has been prepared for and only for the Company’s members as a body in accordance with Section 235 of 
the Companies Act 1985 and for no other purpose.  We do not, in giving this opinion, accept or assume 
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands 
it may come save where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the financial statements give a true and fair view and have been 
properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion 
the information given in the Directors’ Report is consistent with the financial statements.
In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we 
have not received all the information and explanations we require for our audit, or if information specified 
by law regarding directors’ remuneration and other transactions is not disclosed.
We read other information contained in the Annual Report and consider whether it is consistent with the 
audited financial statements. The other information comprises only the Highlights, the Chairman’s Statement, 
Our Assets, the Chief Executive Officer’s Review, the Finance Director’s Statement, the Directors’ Report, the 
Financial Review, the Directors’ Remuneration Report and the Corporate Governance Report. We consider 
the implications for our report if we become aware of any apparent misstatements or material 
inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued  
by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to  
the amounts and disclosures in the financial statements. It also includes an assessment of the significant 
estimates and judgments made by the directors in the preparation of the financial statements, and of 
whether the accounting policies are appropriate to the Group’s and Company’s circumstances, consistently 
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we 
considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the 
financial statements are free from material misstatement, whether caused by fraud or other irregularity or 
error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in 
the financial statements.
Opinion
In our opinion:
the financial statements give a true and fair view, in accordance with IFRS as adopted by the European 
Union, of the state of the Group’s and the Company’s affairs as at 31 March 2008 and of the Group’s and 
the Company’s loss and cash flows for the year then ended;
the financial statements have been properly prepared in accordance with the Companies Act 1985; and
the information given in the Directors’ Report is consistent with the financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London
13 August 2008
•
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• 34
Max Petroleum Plc 
Annual Report & Accounts 2008
Consolidated and Company Income Statements
For the year ended 31 March 2008 (in thousands of US$)
 Group  Company 
 Year ended 31 March  Year ended 31 March
    Note 2008 2007 2008 2007
Continuing operations
Revenue     27,470 1,502 6,088 5,034
Cost of sales    5 (14,018) (1,502) (5,567) (4,653)
Gross profit     13,452 – 521 381
Exploration and appraisal costs    (15,881) (8,385) – –
Impairment of assets held for sale   21 (5,200) – (18,200) –
Administrative expenses     (28,148) (24,423) (14,615) (7,842)
Operating loss     (35,777) (32,808) (32,294) (7,461)
Finance income    6 811 1,729 1,451 1,727
Finance costs    7 (1,954) (2,058) (8,970) (4,138)
Loss before taxation     (36,920) (33,137) (39,813) (9,872)
Income tax expense    8 (64) – (64) –
Loss for the year    9 (36,984) (33,137) (39,877) (9,872)
Attributable to: 
Equity holders of the Company    (34,509) (29,702) (39,877) (9,872)
Minority interests     (2,475) (3,435) – –
     (36,984) (33,137) (39,877) (9,872)
Loss per share for loss attributable to the equity  
  holders of the Company during the year
– Basic and diluted (US cents)   13 10.7 9.7  
No interim or final dividend has been paid or proposed during the year.
The notes on pages 39 to 76 are an integral part of these financial statements. 35
Max Petroleum Plc 
Annual Report & Accounts 2008
Consolidated and Company Balance Sheets
As at 31 March 2008 (in thousands of US$)
 As at 31 March
 Group  Company
    Note 2008 2007 2008 2007
Assets
Non-current assets
Intangible assets – exploration and appraisal  
 expenditure    14 212,080 230,897 – –
Oil and gas properties    15 29,474 – – –
Property, plant and equipment   16 9,752 1,478 425 138
Investments in subsidiaries   17 – – 145,655 176,576
Prepayments    18 851 1,338 – –
     252,157 233,713 146,080 176,714
Current assets
Inventories    19 12,178 7,512 – –
Trade and other receivables   18 15,136 12,240 139,420 95,066
Cash and cash equivalents   20 3,847 28,772 1,324 26,473
Assets held for sale    21 33,534 – 40,737 –
     64,695 48,524 181,481 121,539
Total assets     316,852 282,237 327,561 298,253
Liabilities
Non-current liabilities
Borrowings    22 81,016 62,253 81,016 62,253
Provision for liabilities and other charges  26 3,231 1,619 – –
     84,247 63,872 81,016 62,253
Current liabilities
Trade and other payables   27 14,367 13,204 2,352 1,432
Liabilities directly associated with assets classified  
 as held for sale    21 559 – – –
     14,926 13,204 2,352 1,432
Total liabilities     99,173 77,076 83,368 63,685
Net assets     217,679 205,161 244,193 234,568
Capital and reserves
Share capital    28 7,923 7,919 7,923 7,919
Share premium    29 228,753 196,636 228,753 196,636
Other reserves    30 74,790 57,409 74,790 57,409
Accumulated deficit     (87,516) (53,007) (67,273) (27,396)
Equity attributable to equity holders of the parent  223,950 208,957 244,193 234,568
Minority interests in equity    (6,271) (3,796) – –
Total equity     217,679 205,161 244,193 234,568
The notes on pages 39 to 76 are an integral part of these financial statements.
The financial statements were approved by the Board of Directors on 12 August 2008.
Mark L Johnson Michael B Young
Chief Executive Officer Finance Director
  36
Max Petroleum Plc 
Annual Report & Accounts 2008
 Attributable to equity holders of the Company
  Share Share Other Accumulated  Minority Total 
 Note capital premium reserves deficit Total interest equity
Balance at  
 1 April 2006  7,918 194,114 35,272 (23,305) 213,999 (361) 213,638
Total recognised  
 income and  
 expense for  
 the year  – – – (29,702) (29,702) (3,435) (33,137)
Issue of share  
 capital – exercise  
 of share options 28, 29 1 2,522 – – 2,523 – 2,523
Share based  
 payments 30 – – 11,330 – 11,330 – 11,330
Convertible bond  
 issued – equity  
 portion 22 – – 11,292 – 11,292 – 11,292
Convertible bond  
 issuance costs –  
 equity portion 22 – – (485) – (485) – (485)
  1 2,522 22,137 – 24,660 – 24,660
Balance at  
 31 March 2007  7,919 196,636 57,409 (53,007) 208,957 (3,796) 205,161
Total recognised  
 income and  
 expense for  
 the year  –  – (34,509) (34,509) (2,475) (36,984)
Issue of share  
 capital – exercise  
 of share options 28, 29 4 32,117 – – 32,121 – 32,121
Share based  
 payments 30 – – 5,849 – 5,849 – 5,849
Warrants issued 30 – – 11,532 – 11,532 – 11,532
  4 32,117 17,381 – 49,502 – 49,502
Balance at  
 31 March 2008  7,923 228,753 74,790 (87,516) 223,950 (6,271) 217,679
The notes on pages 39 to 76 are an integral part of these financial statements.
Consolidated Statement of Changes in Equity
For the year ended 31 March 2008 (in thousands of US$) 37
Max Petroleum Plc 
Annual Report & Accounts 2008
Company Statement of Changes in Equity
For the year ended 31 March 2008 (in thousands of US$)
    Share Share Other Accumulated 
   Note capital premium reserves deficit Total
Balance at 1 April 2006    7,918 194,114 35,272 (17,524) 219,780
Total recognised income and  
 expense for the year    – – – (9,872) (9,872)
Issue of share capital – exercise of  
 share options   28, 29 1 2,522 – – 2,523
Share based payments   30 – – 11,330 – 11,330
Convertible bond issued – equity portion 22 – – 11,292 – 11,292
Convertible bond issuance costs –  
 equity portion   22 – – (485) – (485)
    1 2,522 22,137 – 24,660
Balance at 31 March 2007   7,919 196,636 57,409 (27,396) 234,568
Total recognised income and expense  
 for the year    – – – (39,877) (39,877)
Issue of share capital – exercise of  
 share options   28, 29 4 32,117 – – 32,121
Share based payments   30 – – 5,849 – 5,849
Warrants issued   30 – – 11,532 – 11,532
    4 32,117 17,381 – 49,502
Balance at 31 March 2008   7,923 228,753 74,790 (67,273) 244,193
The notes on pages 39 to 76 are an integral part of these financial statements. 38
Max Petroleum Plc 
Annual Report & Accounts 2008
Consolidated and Company  
Cash Flow Statements
For the year ended 31 March 2008 (in thousands of US$)
 Group  Company
    Note 2008 2007 2008 2007
Cash flows from operating activities
Net cash generated from/(used in) operating  
 activities    32 (7,122) (19,851) (75,015) (61,441)
Cash flows from investing activities
Purchases of plant and equipment     (9,217) (1,187) (429) (80)
Payment for exploration and appraisal expenditure  (58,072) (42,418) – –
Interest received    6 811 1,729 1,451 1,727
Net cash used in investing activities    (66,478) (41,876) 1,022 1,647
Cash flows from financing activities
Proceeds from issuance of ordinary shares  28, 29 32,121 2,523 32,121 2,523
Proceeds from issuance of convertible bonds    22 – 75,000 – 75,000
Proceeds from borrowings   22 23,500 – 23,500 –
Debt issuance costs    22 (888) (3,223) (888) (3,223)
Interest paid    7 (5,889) (2,532) (5,889) (2,532)
Net cash generated from/(used in) financing activities  48,844 71,768 48,844 71,768
Net (decrease)/increase in cash and  
 cash equivalents      (24,756) 10,041 (25,149) 11,974
Cash and cash equivalents at beginning of year  20 28,772 18,731 26,473 14,499
     4,016 28,772 1,324 26,473
Less: cash classified as assets held for sale  21 (169) – – –
Cash and cash equivalents at end of year  20 3,847 28,772 1,324 26,473
The notes on pages 39 to 76 are an integral part of these financial statements.
See note 32 for cash flows relating to major non-cash transactions.  39
Max Petroleum Plc 
Annual Report & Accounts 2008
1. General information
Max Petroleum Plc (‘Max Petroleum’ or the ‘Company’) and its subsidiaries (together the ‘Group’) is in the 
business of exploration, development and production of oil and gas assets within the Republic of Kazakhstan. 
The Group owns rights over three contract areas consisting of four oil and gas blocks in the Pre-Caspian 
Basin, including Blocks A&E, East Alibek and Astrakhanskiy. The Company, through its subsidiaries, owns an 
80% interest in the A&E and East Alibek Blocks, and 100% of the rights to the Astrakhanskiy contract area.
The Company is a public limited company incorporated and domiciled in the United Kingdom and listed  
on the Alternative Investment Market (‘AIM’). The address of its registered office is Second Floor, 81 Piccadilly, 
London W1J 8HY, United Kingdom.
As more fully disclosed in notes 21 and 33, in July 2008 the Company acquired the remaining 20% interest in 
Blocks A&E in exchange for its 80% interest in East Alibek plus 37 million of the Company’s ordinary shares. 
Subsequent to the acquisition, the Company owns, through its various subsidiaries, a 100% interest in Blocks  
A&E and the Astrakhanskiy Block.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. 
These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of preparation 
These financial statements have been prepared in accordance with International Financial Reporting 
Standards and IFRIC interpretations as endorsed by the European Union (collectively ‘IFRS’) and with those 
parts of the Companies Act 1985 applicable to companies reporting under IFRS. 
The 2008 financial statements are the Group’s and Company’s first full year financial statements prepared 
under IFRS, with a transition date to IFRS of 1 April 2006. Consequently, the comparative figures for 2007 and 
the Group’s and Company’s balance sheets as at 1 April 2006 have been restated from generally accepted 
accounting principles in the United Kingdom (‘UK GAAP’) to comply with IFRS. The reconciliations to IFRS from 
the previously published UK GAAP financial statements are summarised in note 36. In addition, IFRS 1 on first 
time adoption allows certain exemptions from retrospective application of IFRS in the opening balance sheet 
for 2006. Where these have been used, they are explained in note 36.
The financial statements have been prepared on the going concern basis under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires management to make estimates and 
assumptions that affect the reported amounts of revenues and expenses during the period, assets and 
liabilities, and the disclosure of contingent liabilities at the date of the financial statements. The key estimates 
and assumptions are set out in the critical accounting estimates and judgements in note 3. Such estimates 
and assumptions are based on historical experience and various other factors that are believed to be 
reasonable in the circumstances and constitute management’s best judgement at the date of the financial 
statements. In the future, actual experience may deviate from these estimates and assumptions. This could 
affect future financial statements as the original estimates and assumptions are modified, as appropriate, in 
the year in which the circumstances change. 
Accounting Standards and Interpretations issued but not yet adopted
Certain Accounting Standards and Interpretations are in issue which are not required to be adopted until 
after 2008 and have not been early adopted by Max Petroleum Plc. As at the date of these financial 
statements, the following Standards and Interpretations, which have not been applied in these financial 
statements but may have an impact on the Group’s accounting policies, were in issue but not yet effective: 
Amendment to IAS 1 ‘Presentation of financial statements’
IAS 27 (revised) ‘Consolidated and separate financial statements’
IAS 28 (revised) ‘Investments in associates’
IAS 31 (revised) ‘Interests in joint ventures’
Amendment to IAS 32 ‘Financial instruments: Presentation’
Amendment to IFRS 2 ‘Share based payment’
IFRS 3 (revised) ‘Business combinations’
IFRS 8 ‘Operating segments’
IFRIC 12 ‘Service concession arrangements’
IFRIC 13 ‘Customer loyalty programmes’
IFRIC 15 ‘Agreements for the construction of real estate’
IFRIC 16 ‘Hedges of a net investment in a foreign operation’
Amendments to the following standards IFRS 5, IAS 1, IAS 16, IAS 19, IAS 20, IAS 23, IAS 27, IAS 28, 
arising from the May 2008  IAS 29, IAS 31, IAS 36, IAS 38, IAS 39, IAS 40, IAS 41
Annual Improvements process: 
Notes to the Financial Statements
For the year ended 31 March 2008 40
Max Petroleum Plc 
Annual Report & Accounts 2008
2. Summary of significant accounting policies/continued
The assessment of the impact of the above Standards and Interpretations on the Group’s accounting policies 
or on the presentation of the financial statements is at an early stage but are not expected to have a 
significant impact on the Group’s financial statements.
Accounting Standard early adopted by the Group and Company
In addition, the Group has elected to adopt IAS 23 Borrowing Costs (revised 2007) in advance of its effective 
date (effective for accounting periods beginning on or after 1 January 2009). The revisions made to IAS 23 
have had no impact on the Group’s accounting policies, as it has always been the Group’s accounting policy 
to capitalise borrowing costs incurred on qualifying assets.
Consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the financial and operating 
policies generally accompanying a shareholding of more than one half of the voting rights. The existence 
and effect of potential voting rights that are currently exercisable or convertible are considered when 
assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date  
on which control is transferred to the Group. They are de-consolidated from the date that control ceases. 
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.  
The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and 
liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. 
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination  
are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority 
interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net 
assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets  
of the subsidiary acquired, the difference is recognised directly in the income statement.
Intercompany transactions, balances and unrealised gains on transactions between Group companies  
are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset 
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency 
with the policies adopted by the Group.
A list of the subsidiaries has been included in note 17.
(b) Transactions and minority interests
The Group applies a policy of treating transactions with minority interests as transactions with parties external 
to the Group. Disposals to minority interests result in gains and losses for the Group that are recorded in the 
income statement. Purchases from minority interests result in goodwill, being the difference between any 
consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary.
Non-current assets held for sale
Non-current assets and disposal groups classified as held for sale are measured at the lower of carrying 
amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for  
sale if their carrying amounts will be recovered through a sale transaction rather than through continuing 
use. This condition is regarded as met only when the sale is highly probable and the asset or disposal  
group is available for immediate sale in its present condition. Management must be committed to the  
sale, which should be expected to qualify for recognition as a completed sale within one year from the  
date of classification. Property, plant and equipment and intangible assets once classified as held for sale 
are not depreciated.
Intangible assets – exploration and appraisal expenditure
The Group follows the modified successful efforts method of accounting under which all licence acquisition, 
geological and geophysical (‘G&G’) exploration and appraisal costs are initially capitalised to well, field or 
specific exploration licences as appropriate, pending determination of the existence of commercial reserves. 
The costs of licence acquisitions and G&G exploration and appraisal costs are amortised over a period of the 
lower of 25 years or the expected life of the reserves from the date the seismic data has been fully evaluated. 
In line with IFRS 6, any pre-acquisition licence costs are directly expensed to the income statement.
Expenditures incurred during the various exploration and appraisal phases are then written off unless 
probable (‘commercial’) reserves have been established or the determination process has not been 
completed. Drilling expenditure and directly attributable operational overheads associated with an 
exploratory dry hole are expensed immediately if commercially viable quantities of hydrocarbons  
are not found.
Notes to the Financial Statements/continued
For the year ended 31 March 2008 41
Max Petroleum Plc 
Annual Report & Accounts 2008
2. Summary of significant accounting policies/continued
When an oil or gas field has been approved for development, the accumulated exploration and appraisal 
costs are transferred to oil and gas properties.
Oil and gas properties
Development expenditure is stated at cost less accumulated depletion and any impairment in value. Where 
commercial production in an area of interest has commenced, the capitalised costs together with any 
estimated future costs necessary to develop the underlying proved and commercial reserves are subject to 
depletion and amortisation using the unit-of-production method over the total estimated reserves. Costs are 
amortised only once commercial reserves associated with a development project can be determined and 
commercial production has commenced.
Changes in factors such as estimates of proved and commercial reserves that affect unit-of-production 
calculations do not give rise to prior year financial period adjustments and are dealt with on a  
prospective basis. 
Segment reporting
A business segment is a group of assets and operations engaged in providing products or services that are 
subject to risks and returns that are different from those of other business segments. A geographical segment 
is engaged in providing products or services within a particular economic environment that are subject  
to risks and returns that are different from those of segments operating in other economic environments.
Foreign currencies
Foreign currency transactions are translated into the functional currency using the exchange rates 
prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies 
are translated using the closing rate at the balance sheet date. Non-monetary items are measured at the 
exchange rate in effect at the historical transaction date and are not translated at each balance sheet date. 
Income statement accounts are translated at their historical exchange rate. Translation gains and losses are 
recorded in administrative expenses for the year. Items included in the financial statements of each of the 
Group’s entities are measured using the currency of the primary economic environment in which the entity 
operates (‘the functional currency’). The consolidated financial statements are presented in US dollars (‘US$’), 
which is the Company’s and its subsidiaries’ functional and presentation currency. 
The average and year-end historical exchange rates between the US dollar and other currencies were:
 2008  2007
     Average rate Closing rate Average rate Closing rate
British pounds (‘GBP’)     2.01 1.99  1.89  1.96
Kazakh tenge (‘KZT’)      121.40  120.69  124.56  123.84
Property, plant and equipment
Property, plant and equipment is stated in the balance sheet at cost, less accumulated depreciation and  
any provision for impairment. Property, plant and equipment is depreciated on a straight-line basis at  
rates sufficient to write off the cost, less estimated residual values, of individual assets over their estimated 
useful lives. 
Improvements to leasehold property 2-10 years (or over the remaining life of the lease if shorter)
Office systems, equipment and furniture 3-10 years 
Plant and equipment 4 years 
Motor vehicles 4 years 
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance  
sheet date.
Inventories
Crude oil inventories are valued at the lower of production cost and net realisable value. Materials and 
supplies inventories are valued on a first-in, first-out basis at the lower of cost or estimated net realisable value.  42
Max Petroleum Plc 
Annual Report & Accounts 2008
2. Summary of significant accounting policies/continued
Impairment – exploration and appraisal expenditure
Exploration and appraisal costs are tested for impairment when reclassified to oil and gas properties or 
whenever facts and circumstances indicate potential impairment. An impairment loss is recognised for the 
amount by which the exploration and appraisal expenditure’s carrying amount exceeds its recoverable 
amount. The recoverable amount is the higher of the exploration and appraisal expenditure’s fair value less 
costs to sell and their value in use. For the purposes of assessing impairment, the exploration and appraisal 
expenditure subject to testing is grouped with existing cash-generating units of production fields that are 
located in the same geographical region.
Impairment – oil and gas properties
Proven oil and gas properties are reviewed for impairment whenever events or changes in circumstances 
indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount 
by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher 
of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, oil and 
gas properties are evaluated on a field by field basis.
Provision for abandonment
Provision is made for the present value of the future cost of abandonment of oil and gas wells and related 
facilities. This provision is recognised when the asset is installed. The estimated costs, based on engineering 
cost levels prevailing at the balance sheet date, are computed on the basis of the latest assumptions as to the 
scope and method of abandonment. The corresponding amount is capitalised as part of exploration and 
appraisal expenditure or oil and gas properties and is amortised on a unit-of-production basis as part of the 
depreciation, depletion and amortisation charge. Any adjustment arising from the reassessment of estimated 
cost of decommissioning is capitalised, whilst the charge arising from the accretion of the discount applied 
to the abandonment provision is treated as a component of finance costs.
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and 
services in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, returns, 
rebates and discounts and after eliminating sales within the Group.
Revenue is recognised when the amount can be reliably measured, it is probable that future economic 
benefits will flow to the entity, and when specific criteria have been met for each of the Group’s activities as 
described below. The amount of revenue is not considered to be reliably measurable until all contingencies 
relating to the sale have been resolved. The Group bases its estimates on historical results, taking into 
consideration the type of customer, the type of transaction and the specifics of each arrangement.
Revenues from crude oil and natural gas sales are recognised when the oil and gas has been lifted and the 
risk of loss transferred to a third-party purchaser. The Group uses the entitlement method to account for its 
revenue from sales of oil and gas production, whereby the Group recognises revenue based on its direct 
ownership interest in its underlying oil and gas properties. 
Taxation 
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted  
at the balance sheet date in the countries where the Company and its subsidiaries operate and generate 
taxable income. Management periodically evaluates positions taken in tax returns with respect to situations 
in which applicable tax regulation is subject to interpretation and establishes provisions where appropriate 
on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between 
the tax basis of assets and liabilities and their carrying amounts in the Group and Company financial 
statements. However, deferred income tax is not accounted for if it arises from initial recognition of an asset 
or liability in a transaction other than a business combination that at the time of the transaction affects 
neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) 
that have been enacted or substantially enacted by the balance sheet date and are expected to apply when 
the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be 
available against which the temporary differences can be utilised. 
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and 
associates, except where the timing of the reversal of the temporary difference is controlled by the Group 
and it is probable that the temporary difference will not reverse in the foreseeable future.
Notes to the Financial Statements/continued
For the year ended 31 March 2008 43
Max Petroleum Plc 
Annual Report & Accounts 2008
2. Summary of significant accounting policies/continued
Investments in subsidiaries
Investments in subsidiaries are included in the Company’s balance sheet at cost less any provisions  
for impairment.
Financial assets 
Financial assets are classified into the following categories: loans and receivables and cash and cash 
equivalents. The classification depends on the purpose for which the financial assets were acquired. 
Management determines the classification of its financial assets at initial recognition.
(a) Loans and receivables
Trade receivables, loans and other receivables, which are non-derivative financial assets that have fixed  
or determinable payments that are not quoted in an active market, are classified as loans and receivables. 
They are included in current assets, except for maturities greater than 12 months after the balance sheet 
date, which are classified as non-current assets. The Group’s loans and receivables comprise trade, other 
receivables, and prepayments in the balance sheet. 
Loans and receivables are carried at their amortised cost using the effective interest rate method, net of any 
impairment. Interest income is recognised by applying the effective interest rate method, except for short 
term receivables where the recognition of interest would be immaterial.
(b) Effective interest rate method
The effective interest rate method is a method of calculating the amortised cost of a financial asset or  
liability and allocating interest income or expense over the relevant period. The effective interest rate is  
the applicable discount rate for the estimated future cash receipts or payments over the expected life  
of the financial asset or liability.
 
(c) Impairment of financial assets
Financial assets are assessed for impairment at each balance sheet date. Financial assets are impaired 
when there is objective evidence that the estimated future cash flows of the asset have been impacted. For 
loans and receivables, the amount of the impairment is the difference between the asset’s carrying amount 
and the present value of estimated future cash flows, discounted at the original effective interest rate.
In the event of an impairment, the carrying amount of the financial asset is reduced by the impairment loss, 
except for trade receivables where the carrying amount is reduced through the use of an allowance 
account. When a trade receivable is uncollectible, it is written off against the allowance account, and the 
amount of loss is recognised in the income statement. Subsequent recoveries of amounts previously written 
off are credited against the income statement.
(d) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, current balances and deposits with banks and similar 
institutions, which are readily convertible to cash and which are subject to insignificant risk of changes  
in value.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual 
arrangements entered into.
(a) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the Group after 
deducting all of its liabilities. Equity instruments of the Group are recorded at the proceeds received, net  
of incremental costs directly attributable to the issue of new shares or options, which are shown in equity  
as a deduction, net of tax, from the proceeds. Ordinary shares are classified as equity. 
(b) Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using 
the effective interest rate method. Interest income is recognised by applying the effective interest rate, except 
for short term payables when the recognition of interest would be immaterial. 44
Max Petroleum Plc 
Annual Report & Accounts 2008
2. Summary of significant accounting policies/continued
(c) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are 
subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and 
the redemption value is recognised over the term of the borrowings using the effective interest rate method 
and charged to the Income Statement as finance costs.
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period  
of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are 
expensed. To the extent that the Group borrows funds generally and uses them for the purpose of obtaining 
a qualifying asset, the Group determines the amount of borrowing costs eligible for capitalisation by 
applying a capitalisation rate to the expenditures on that asset. The capitalisation rate is the weighted 
average of the borrowing costs applicable to the borrowings of the Group that are outstanding during the 
period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. The amount 
of borrowing costs that the Group capitalises during a period shall not exceed the amount of borrowing costs 
it incurred during that period.
To the extent that the Group borrows funds specifically for the purpose of obtaining a qualifying asset, the 
Group determines the amount of borrowing costs eligible for capitalisation as the actual borrowing costs 
incurred on that borrowing during the period less any investment income on the temporary investment of 
those borrowings. 
 
(d) Compound instruments
The component parts of compound instruments issued by the Group are classified separately as financial 
liabilities and equity in accordance with the substance of the contractual arrangement. 
The Group records the proceeds received from the issuance of convertible debt instruments, net of issuance 
costs, as an allocation between long-term debt and equity reserve based on the Group’s estimate of the fair 
value of the instrument without consideration of its conversion feature. At the date of issue of the convertible 
debt instrument, the fair value of the liability component is estimated using the prevailing interest rate for a 
similar non-convertible instrument. This amount is recorded as a liability on an amortised cost basis using 
the effective interest method until extinguished on conversion or at the instrument’s maturity date. The equity 
component is determined by deducting the amount of the liability component from the fair value of the 
compound instrument as a whole. This is recognised and included in equity, net of income tax effects, and  
is not subsequently remeasured.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement 
of the liability for at least 12 months after the balance sheet date.
Operating leases
Rentals under operating leases are charged to the income statement on a straight-line basis over the term  
of the relevant leases.
Share based payments
The Company operates an equity-settled, share-based compensation plan. The fair value of the employee 
services received in exchange for the grant of the options is recognised as an expense. The total amount  
to be expensed over the vesting period is determined by reference to the fair value of the options granted, 
excluding the impact of any non-market vesting conditions (for example, profitability and sales growth 
targets). Non-market vesting conditions are included in assumptions about the number of options that are 
expected to vest, and at each balance sheet date, the entity revises its estimates of the number of options  
that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income 
statement, with a corresponding adjustment to equity.
When the options are exercised, the nominal value of the underlying shares is credited to share capital,  
and the excess of the proceeds received net of any directly attributable transaction costs are credited to 
share premium.
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings 
in the Group is treated as a capital contribution. The fair value of employee services received, measured by 
reference to the grant date fair value, is recognised over the vesting period as an increase to investment in 
subsidiary undertakings, with a corresponding credit to equity.
Notes to the Financial Statements/continued
For the year ended 31 March 2008 45
Max Petroleum Plc 
Annual Report & Accounts 2008
2. Summary of significant accounting policies/continued
Pension obligations
The Group does not incur any expenses in relation to pensions for its employees. In accordance with the 
legal requirements of the Republic of Kazakhstan, the Group withholds pension contributions from employee 
salaries and transfers them into third party state or private pension funds at the direction of the employee. 
The Group is not responsible for the administration of the pension funds or future distributions to the employees. 
3. Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates  
will, by definition, seldom equal the related actual results. Such estimates and assumptions are continually 
evaluated and are based on historical experience and other factors, including expectations of future events 
that are believed to be reasonable under the circumstances.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying 
amounts of assets and liabilities within the next financial year are discussed below.
Estimation of oil and gas reserves
Proved oil and gas reserves are the estimated quantities of oil and gas which geological and engineering 
data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under 
existing economic and operating conditions. Estimates of oil and gas reserves are inherently imprecise, 
require the application of judgement and are subject to future revision. Accordingly, financial and 
accounting measures (such as the standardised measure of discounted cash flows, depreciation, depletion 
and amortisation charges, and decommissioning provisions) that are based on proved reserves are also 
subject to change.
Capitalised exploration and appraisal expenditure
In making decisions about whether to continue to capitalise exploration and appraisal expenditure, it is 
necessary to make judgements about the probable commercial reserves and the level of activities that 
constitute on-going appraisal determination. If there is a change in any judgement in a subsequent period, 
then the related capitalised exploration and appraisal expenditure would be expensed in that period, 
resulting in a charge to income. 
Provision for abandonment
Estimates of the amounts of provision for abandonment recognised are based on current legal and 
constructive requirements, technology and price levels. As actual outflows may be different from estimates 
due to changes in laws, regulations, technology, prices and conditions, and can take place in the future, the 
carrying amounts of provisions are regularly reviewed and adjusted to take account of such changes.
4. Segmental reporting
Business segments
In the opinion of the directors, the operations of the Group comprise one class of business: oil and gas 
exploration, development and the sale of hydrocarbons and related activities. 
Geographic segments
The Group conducts business within two geographical regions. The Group’s operational activities are wholly 
focused in the Republic of Kazakhstan. The Group’s head office is in London, England. Inter-segment revenue 
represents rechargeable costs which are invoiced, with a mark-up, to the Company’s subsidiaries. These 
transactions and any unrealised profits and losses are eliminated on consolidation. Since the UK head office 
does not earn revenue from external customers, it is not a reportable segment under IAS 14. 
Relevant disclosures have been made elsewhere in these financial statements. 46
Max Petroleum Plc 
Annual Report & Accounts 2008
5. Cost of sales
 Group
       2008 2007 
       US$000 US$000
Operating costs:
– commercial production       6,619 –
– test production       1,898 1,502
Royalties       531 –
Depreciation, depletion and amortisation     4,970 –
       14,018 1,502
6. Finance income 
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Interest income on short-term bank deposits   811 1,729 807 1,727
Intercompany interest income    – – 644 –
Finance income     811 1,729 1,451 1,727
7. Finance costs
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Interest expense:
– Interest payable on bank borrowings (note 22)   1,422 – 1,422 –
– Interest payable on convertible bond (note 22)   7,548 4,138 7,548 4,138
– Other: accretion expense on discounted provisions (note 26)  135 102 – –
     9,105 4,240 8,970 4,138
Less:
–  Interest expense capitalised to exploration and appraisal  
expenditure     (7,151) (2,182) – –
Finance costs     1,954 2,058 8,970 4,138
Interest expense related to bank borrowings includes stated and effective interest expense including 
amortisation of the cost of warrants issued and other debt issuance costs.
Interest expense relating to the convertible bond includes stated and effective interest expense plus 
amortisation of debt issuance costs. 
Other interest expense includes interest expense relating to the accretion expense on discounted provisions 
for decommissioning costs for the Group’s oil and gas properties. 
Interest expense of US$7.2 million (2007: US$2.2 million) arising on the general borrowing pool during the year 
was capitalised in the cost of qualifying assets, calculated by applying a capitalisation rate of 13% (2007: 7%) 
to the average cumulative expenditure on such assets. The borrowing costs capitalised are included in 
‘Additions’ in exploration and appraisal expenditure. 
Notes to the Financial Statements/continued
For the year ended 31 March 2008 47
Max Petroleum Plc 
Annual Report & Accounts 2008
8. Income tax expense 
 Group and Company
       2008 2007 
       US$000 US$000
Current tax        – –
Deferred tax (note 25)       – –
Withholding taxes       64 –
       64 –
The Group’s principal business activities are in the Republic of Kazakhstan and are subject to a current 
corporate income tax rate of 30%. The Group and Company have generated recurring net operating losses 
and no deferred tax assets have been recognised with respect to such losses. 
The tax on the Group’s loss before tax differs from the theoretical amount that would arise using the UK 
statutory rate applicable to the loss of the Group, as follows:
 Group
       2008 2007 
       US$000 US$000
Loss before taxation       (36,920) (33,137)
Tax calculated at 30%       (11,076) (9,941)
Expenses not deductible for tax purposes     2,922 548
Withholding taxes        64 –
Tax losses utilised       (491) –
Effects of deferred tax assets not recognised – losses    8,645 7,112
Effects of deferred tax assets not recognised – other    – 2,281
Tax charge        64 –
The tax on the Company’s loss before tax differs from the theoretical amount that would arise using the UK 
statutory rate applicable to loss of the Company, as follows:
 Company
       2008 2007 
       US$000 US$000
Loss before taxation       (39,813) (9,872)
Tax calculated at 30%       (11,944) (2,962)
Expenses not deductible for tax purposes     5,435 458
Withholding taxes        64 –
Effects of deferred tax assets not recognised – losses    6,509 2,504
Tax charge        64 –
9. Loss for the year
Loss for the year is stated after charging/(crediting):
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Exchange loss/(gain)     (70) (803) (200) (1,118)
Staff costs (note 11)     25,847 21,836 6,861 4,305
Operating lease rentals      2,524 657 384 71
Depreciation, depletion and amortisation (note 10)   5,383 184 130 38
Loss on disposal of fixed assets    12 – 12 –
Exploration and appraisal costs    15,881 8,385 – –
Impairment of assets held for sale (note 21)   5,200 – 18,200 –
Share based payments      4,605 9,846 2,713 1,871
Investigation costs     3,059 – 3,059 –
Auditors’ remuneration (note 12)    1,417 845 1,277 604
The Company incurred aggregate costs relating to an internal investigation of US$3.8 million, including 
US$3.1 million in third party costs and US$0.7 million in costs included within auditors’ remuneration (note 12). 
The investigation primarily focused on certain related party transactions, including the undisclosed receipt 
of beneficial interests in options over six million shares in Max Petroleum by certain employees and members 
of senior management.  48
Max Petroleum Plc 
Annual Report & Accounts 2008
10. Depreciation, depletion and amortisation
Depreciation, depletion and amortisation are included within the following headings in the income 
statement:
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Cost of sales     4,970 – – –
Administrative expenses     413 184 130 38
     5,383 184 130 38
11. Employees and key management
The number of staff employed by the Group during the financial year was as follows:
 Group  Group 
 2008  2007
     Average As at Average As at 
     in year 31 March in year 31 March
Administrative     89 85 66 99
Exploration and production operations   99 100 34 65
Directors     7 7 5 5
     195 192 105 169
The number of staff employed by the Company during the financial year was as follows:
 Company  Company 
 2008  2007
     Average As at Average As at 
     in year 31 March in year 31 March
Administrative     5 5 5 5
Directors     7 7 5 5
     12 12 10 10
Staff costs in respect of those employees were as follows:
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Wages and salaries     18,653 12,612 3,882 2,298
Social security     1,345 850 266 136
Share options granted to directors and employees   5,849 8,374 2,713 1,871
     25,847 21,836 6,861 4,305
Wages and salaries include the cost of tax gross-up for expatriate employees whose contracts provide for 
them to receive salaries without deduction of local taxes. A proportion of the Group’s staff costs shown above 
is capitalised into the cost of fixed assets under the Group’s accounting policy for exploration and appraisal 
expenditure and oil and gas properties. 
Notes to the Financial Statements/continued
For the year ended 31 March 2008 49
Max Petroleum Plc 
Annual Report & Accounts 2008
11. Employees and key management/continued
Key management compensation 
Key management personnel, as defined by IAS 24 ‘Related Party Disclosures’, have been identified as the 
Board of Directors. Detailed disclosures of directors’ individual remuneration, directors’ transactions and 
directors’ interests and share options, for those directors who served during the year, are given in the 
Directors’ Remuneration Report. The aggregate amounts of directors’ remuneration during the year were  
as follows:
       2008 2007 
       US$000 US$000
Salaries and short-term employee benefits     1,831 1,094
Share-based payments       3,553 4,895
       5,384 5,989
None of the Group’s directors exercised share options while serving in their capacity as directors during the 
two years ended 31 March 2008. 
Mr Steven Kappelle was dismissed as a director of the Company on 17 October 2007 and subsequently 
exercised options over 4,194,806 shares realising a gain of US$3.1 million in the period to 31 March 2008.
12. Auditors’ remuneration
During the year the Group (including its subsidiaries) obtained the following services from the Group’s 
auditor and its associates at costs as detailed below:
       2008 2007 
       US$000 US$000
Audit services:
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts:
 Current year audit fee       269 385
 Under-accrual of prior year audit fee      82 –
Non-audit services:
Fees payable to the Company’s auditor and its associates for other services:
 Audit of the Company’s subsidiaries pursuant to legislation     140 241
 Share options investigation      686 –
 Tax services       225 202
 Other services        15 17
Total       1,417 845
13. Loss per share 
       2008 2007
Loss attributable to equity holders of the Company (US$000)    (34,509) (29,702)
Weighted average number of ordinary shares in issue (thousands)   321,489 304,734
Basic and diluted loss per share (US cents)     10.7 9.7
Basic loss per share
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the 
weighted average number of ordinary shares in issue during the year.
Diluted loss per share
Diluted loss per share is calculated using the loss for the period divided by the weighted average number of 
shares outstanding assuming the conversion of its potentially dilutive equity derivatives outstanding, being 
share options, warrants and convertible debt. All of the Group’s equity derivatives were anti-dilutive for the 
years ended 31 March 2008 and 2007, respectively. 50
Max Petroleum Plc 
Annual Report & Accounts 2008
14. Intangible assets – exploration and appraisal expenditure
 Group
        Total 
        US$000
Cost
At 1 April 2006        194,850
Additions         46,394
Amounts written off to exploration and appraisal costs     (8,385)
Reclassifications        (1,945)
At 31 March 2007        230,914
Additions         74,603
Transfers to oil and gas properties (note 15)      (30,459)
Transfers to property, plant and equipment (note 16)     (7,369)
Amounts written off to exploration and appraisal costs     (15,881)
Less: amounts classified as assets held for sale (note 21)     (37,241)
At 31 March 2008        214,567
Amortisation
At 1 April 2006        –
Charge for the year        17
At 31 March 2007        17
Charge for the year        2,470
At 31 March 2008        2,487
Net book value
At 31 March 2006        194,850
At 31 March 2007        230,897
At 31 March 2008        212,080
In 2007, the Group reclassified US$1.9 million of acquisition costs capitalised in intangible fixed assets to 
prepayments of crude oil processing costs. This reflects an exchange of limited acreage in its Blocks A&E 
licence area for a right to free processing of up to 300,000 metric tons of crude oil per year through 2010 
under its cooperation agreement with KazMunaiGas E&P. The prepaid processing costs are being amortised 
over the life of the cooperation agreement.
Included within exploration and appraisal expenditures at 31 March 2008 was a decommissioning asset of 
US$1.3 million (2007: US$1.5 million).
Acquisitions
The Group did not complete any acquisitions during the years ended 31 March 2008 and 2007. 
Notes to the Financial Statements/continued
For the year ended 31 March 2008 51
Max Petroleum Plc 
Annual Report & Accounts 2008
15. Oil and gas properties
 Group
       Decom- 
      Proved missioning 
      properties asset Total 
      US$000 US$000 US$000
Cost
At 1 April 2006      – – –
At 31 March 2007      – – –
Additions – transfers from intangible exploration and  
 appraisal expenditures (note 14)     30,356 103 30,459
Change in decommissioning estimate     – 1,008 1,008
At 31 March 2008      30,356 1,111 31,467
Depreciation
At 1 April 2006      – – –
At 31 March 2007      – – –
Charge for the year      1,953 40 1,993
At 31 March 2008      1,953 40 1,993
Net book value
At 31 March 2006      – – –
At 31 March 2007      – – –
At 31 March 2008      28,403 1,071 29,474
16. Property, plant and equipment
 Group
     Office 
    Improvements systems, 
    to leasehold equipment Plant and Motor 
    property and furniture equipment vehicles Total 
    US$000 US$000 US$000 US$000 US$000
Cost
At 1 April 2006    12 415 3 45 475
Additions    36 557 109 485 1,187
At 31 March 2007    48 972 112 530 1,662
Additions     386 820 255 388 1,849
Additions – transfers from intangible exploration  
 and appraisal expenditures (note 14)   – 183 7,186 – 7,369
Disposals    (12) (23) – – (35)
Less: amounts classified as assets held for sale (note 21) – (14) – – (14)
At 31 March 2008    422 1,938 7,553 918 10,831
Depreciation
At 1 April 2006    1 13 – 3 17
Charge for the year    4 133 2 28 167
At 31 March 2007    5 146 2 31 184
Charge for the year    90 287 409 134 920
Disposals    – (23) – – (23)
Less: amounts classified as assets held for sale (note 21) – (2) – – (2)
At 31 March 2008    95 408 411 165 1,079
Net book value
At 31 March 2006    11 402 3 42 458
At 31 March 2007    43 826 110 499 1,478
At 31 March 2008    327 1,530 7,142 753 9,752 52
Max Petroleum Plc 
Annual Report & Accounts 2008
16. Property, plant and equipment/continued
 Company
       Office 
      Improvements systems, 
      to leasehold equipment 
      property and furniture Total 
      US$000 US$000 US$000
Cost
At 1 April 2006      12 91 103
Additions      35 45 80
At 31 March 2007      47 136 183
Additions      387 42 429
Disposals      – (23) (23)
At 31 March 2008      434 155 589
Depreciation
At 1 April 2006      1 6 7
Charge for the year      4 34 38
At 31 March 2007      5 40 45
Charge for the year      90 40 130
Disposals      – (11) (11)
At 31 March 2008      95 69 164
Net book value
At 31 March 2006      11 85 96
At 31 March 2007      42 96 138
At 31 March 2008      339 86 425
17. Investments in subsidiaries
 Company
       2008 2007 
       US$000 US$000
Cost
At 1 April       176,576 167,116
Increase in investment in subsidiaries related to share based payments   3,189 9,460
Less: amounts classified as assets held for sale (note 21)    (34,110) –
At 31 March       145,655 176,576
Net book value
At 1 April       176,576 167,116
At 31 March       145,655 176,576
The following summarises the Company’s participation in the Group structure:
    Proportion 
  Country of Effective of voting  Nature of  Statutory 
Subsidiary undertakings  incorporation holding rights held  business  year end
Sherpico Investments Ltd  UK 80% 80% Holding Company 31 March
Madiran Investment B.V.  Netherlands 80% 80% Holding Company 31 December
Samek Development  
 Enterprise LLP  Kazakhstan 80% 80%* Operating Company 31 December
Samek International LLP  Kazakhstan 80% 80%* Operating Company 31 December
Vasse Investments Ltd  BVI 100% 100%* Holding Company 31 March
Max Petroleum  
 Astrakhanskiy  
 Holding Ltd   BVI 100% 100% Holding Company 31 March
Alga Caspiygas LLP  Kazakhstan 100% 100%* Operating Company 31 December
* Indirect shareholding of parent company
Notes to the Financial Statements/continued
For the year ended 31 March 2008 53
Max Petroleum Plc 
Annual Report & Accounts 2008
17. Investments in subsidiaries/continued
The results of the above subsidiaries have all been included in the consolidated accounts. The Company’s 
foreign subsidiaries have calendar year ends for local statutory reporting purposes only. 
The directors believe that the carrying value of the investments is supported by the value of the underlying 
net assets.
Max Exploration Services, Inc., a United States corporation registered in the state of Delaware, was 
incorporated as a wholly owned subsidiary of the Company on 1 April 2008.
As more fully disclosed in note 21, in July 2008 the Company disposed of its 80% holding in Sherpico 
Investments Ltd and Samek Development Enterprise LLP, and acquired the remaining 20% of Madiran 
Investment B.V. and Samek International LLP.
18. Trade and other receivables
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Trade receivables     4,096 174 – –
Less: provision for impairment of trade receivables  – – – –
Trade receivables      4,096 174 – –
Advances to suppliers     855 7,675 – –
Prepaid marketing costs     1,337 1,823 – –
Other prepayments     6,228 1,787 5,526 890
Loans from the Company to its subsidiaries* (note 33)  – – 154,066 91,457
Other amounts due from subsidiaries (note 33)   – – 4,504 2,581
Other receivables     4,322 2,119 151 138
     16,838 13,578 164,247 95,066
Less: amounts classified as assets held for sale (note 21)  (851) – (24,827) –
     15,987 13,578 139,420 95,066
Less non-current portion: 
– prepaid marketing costs     (851) (1,338) – –
Current portion     15,136 12,240 139,420 95,066
* Loans from the Company to its subsidiaries are repayable on demand. The Company does not intend to demand repayment of loans within one 
year. The loans are non-interest bearing, except for a loan of US$19.3 million which bears interest at the rate of two times LIBOR (US$ 90 day).
Group
Other receivables include recoverable Kazakh VAT and social taxes. 
Prepayments include prepaid marketing costs of US$1.3 million (2007: US$1.8 million), net of amortisation 
charges, resulting from the Group’s cooperation agreement with KazMunaiGaz E&P, expiring December 2010, 
of which US$0.85 million has been classified as due after one year (2007: US$1.34 million). In the prior year, 
these were reclassed from intangible oil and gas assets (note 14) to prepayments falling due within and after 
one year.
Group and Company
Other prepayments include a balance of US$4.6 million (2007: US$nil) relating to prepaid debt issuance costs 
on the Macquarie Facility (note 22). 54
Max Petroleum Plc 
Annual Report & Accounts 2008
18. Trade and other receivables/continued
Impairment losses
Trade receivables that are less than three months past due are not considered impaired. As of 31 March 
2008, trade receivables of US$0.2 million (2007: US$nil) were past due but not impaired. These relate to the 
Group’s sole export customer for whom there is no history of default. There were no trade receivables against 
which a doubtful debt allowance had been raised, as at 31 March 2008 and 2007, respectively. The ageing 
analysis of these trade receivables is as follows:
 Group  Group 
 2008  2007
   Gross Impairment Net Gross Impairment Net 
   US$000 US$000 US$000 US$000 US$000 US$000
Not past due   3,892 – 3,892 174 – 174
Past due 0-30 days   204 – 204 – – –
Total   4,096 – 4,096 174 – 174
There were no amounts past due or impaired due to the Company as at 31 March 2008 and 2007.
19. Inventories
 Group
       2008 2007 
       US$000 US$000
Materials and supplies       12,504 7,064
Crude oil inventory       135 448
Total inventory       12,639 7,512
Less: amounts classified as assets held for sale (note 21)    (461) –
       12,178 7,512
Materials and supplies are principally comprised of drilling equipment to be used in the exploration and 
development of the Group’s oil and gas properties in Kazakhstan. 
20. Cash and cash equivalents
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Cash at bank and on hand    4,016 28,772 1,324 26,473
Less: amounts classified as assets held for sale (note 21)  (169) – – –
     3,847 28,772 1,324 26,473
Group
Included in cash at bank and on hand are amounts of US$0.8 million (2007: US$0.2 million) required to be 
deposited in an environmental restoration and rehabilitation fund under the hydrocarbon contracts.
Group and Company
Under the terms of the Group’s US$100 million revolving mezzanine credit facility with Macquarie Bank 
Limited (note 22), the Company is required to maintain a balance on a debt service reserve account 
representing the next three months’ expected interest charge. The balance on this account at 31 March 2008 
amounted to US$0.6 million (2007: US$nil), and is included in the total of cash at bank and on hand for the 
Group and Company, above.
Notes to the Financial Statements/continued
For the year ended 31 March 2008 55
Max Petroleum Plc 
Annual Report & Accounts 2008
21. Assets held for sale 
In February 2008, the Company entered into an exchange agreement (the ‘Exchange Agreement’) with 
Horizon Services N.V. (‘Horizon’) and Oriental Limited (‘Oriental’) for the Company to acquire Horizon’s 20% 
interest in Madiran Investment B.V. (‘Madiran’), in exchange for Oriental receiving the Company’s 80% interest 
in Sherpico Investments Limited (‘Sherpico’), and up to 37 million ordinary shares in the Company. Madiran is 
the 100% owner of Samek International LLP, which owns and operates the Blocks A&E licence. Sherpico is the 
100% owner of Samek Development LLP, which owns and operates the East Alibek licence.
Under the terms of the Exchange Agreement, Oriental agreed not to dispose of any ordinary shares received 
pursuant to the Exchange Agreement for one year after completion without the written consent of the 
Company. Furthermore, Horizon, Oriental, Incomeborts Limited (‘Incomeborts’) and Norgulf Holding Limited 
(‘Norgulf’), all of which are companies beneficially owned by Mr Garifolla Kachshapov, a related party, 
agreed to enter into irrevocable powers of attorney granting the Company’s board of directors certain rights 
to vote the Max Petroleum ordinary shares held by each entity for routine corporate matters.
The Company closed the Exchange Agreement on 11 July 2008, after receiving the necessary regulatory 
consents from the Republic of Kazakhstan. 
During the year, the Group’s net cash outflow included US$1.1 million of operating cash outflow and  
US$9.1 million of capital expenditures related to these assets.
The major classes of assets and liabilities classified as held for sale are as follows:
       Group Company 
       2008 2008 
       US$000 US$000
Intangible – exploration and appraisal expenditure    37,241 34,110
Plant and equipment       12 –
Inventories       461 –
Trade and other receivables      851 –
Intercompany receivables      – 24,827
Cash and cash equivalents      169 –
       38,734 58,937
Less: impairment to fair value      (5,200) (18,200)
Total assets classified as held for sale      33,534 40,737
Trade and other payables      260 –
Provision for liabilities and other charges     299 –
Total liabilities associated with assets classified as held for sale   559 –
Net assets of disposal group classified as assets held for sale    32,975 40,737
The re-measurement of the Group’s and Company’s investment in Sherpico as of 31 March 2008 to its fair 
value less costs to sell resulted in a loss of US$5.2 million being recognised in the consolidated income 
statement and a loss of US$18.2 million being recognised in the Company’s income statement, for the year 
ended 31 March 2008.
22. Borrowings
 Group and Company
       2008 2007 
       US$000 US$000
Non-current
Bank borrowings        16,278 –
Convertible bond       64,738 62,253
Total borrowings       81,016 62,253
The carrying amounts of the Group’s and Company’s borrowings are denominated in US dollars.  56
Max Petroleum Plc 
Annual Report & Accounts 2008
22. Borrowings/continued
Convertible bond
Max Petroleum completed an offering of convertible debentures on 8 September 2006, raising a total of 
US$75 million before issuance costs, through the issuance of convertible bonds bearing interest at 6.75% per 
annum, payable semi-annually, convertible at an initial conversion price of £1.33 per ordinary share, subject 
to certain anti-dilution adjustments. The convertible bonds will mature in September 2011, at which time  
the Group will be required to redeem the principal amount of the convertible bonds then outstanding. The 
holders of the bonds have a right to convert the bonds through to final maturity. Furthermore, the holders will 
have certain rights to force the Group to redeem the bonds if certain material events of default occur such  
as revocation of the Group’s licences to its oil and gas properties in Kazakhstan. The Group has the right to 
redeem the bonds after three years if the bonds trade at an average price of 130% of the conversion price for 
a minimum of 20 out of 30 consecutive trading days or if at any time a minimum of 85% of the bonds have 
been converted.
 
The Group allocated the proceeds of the convertible bonds, net of debt issuance costs of US$3.2 million, 
between long-term debt and equity reserve based on the Group’s estimate of the fair value of the bond 
without consideration of its conversion feature. The Group used an interest rate of 11%, being an estimate of 
the market rate of interest on an equivalent bond without the convertibility option, to estimate the fair value 
of the debt portion of the convertible bonds on the date of issuance. The Group allocated US$10.8 million of 
the net proceeds from the bond offering to the equity component. Interest expense on the net carrying value 
of the long-term debt portion of the convertible bonds is calculated at the effective interest rate of 11%. 
A reconciliation of the amounts outstanding on the convertible bond is as follows:
 Group and  
 Company 
        US$000
Balance at 1 April 2006        –
Face value of convertible bonds issued 8 September 2006     75,000
Debt issuance costs         (3,223)
Net proceeds from convertible bond issue      71,777
Equity component net of issue costs       (10,807)
Liability component at 8 September 2006, net of issue costs     60,970
Finance cost         3,829
Interest paid        (2,855)
Amortisation of debt issuance costs to interest expense     309
Balance at 31 March 2007        62,253
Finance cost         7,000
Interest paid        (5,063)
Amortisation of debt issuance costs to interest expense     548
Balance at 31 March 2008        64,738
The finance cost on the convertible bond is calculated using the effective interest rate of 11%.
The fair value of the convertible bond as at 31 March 2008 and 2007 is determined by reference to the 
published closing price quotation from the Channel Islands Stock Exchange on that date, as follows:
 Group and Company
       2008 2007 
       US$000 US$000
Fair value of convertible bond      59,250 93,000
Bank borrowings
In June 2007, the Group entered into a US$100 million revolving mezzanine credit facility with Macquarie 
Bank Limited (the ‘Macquarie Facility’) to finance the development of Max Petroleum’s oil and gas assets in 
Kazakhstan. The Macquarie Facility has a four year term maturing on 1 June 2011 and bears interest at a 
rate ranging from LIBOR plus 4% to LIBOR plus 6.5%, depending upon the underlying value of the Group’s oil 
and gas reserves. The Macquarie Facility had an initial borrowing base of US$20 million (tranche one), with 
a further US$30 million available (tranche two), of which a total of US$23.5 million had been borrowed as of 
31 March 2008 and US$32.5 million borrowed as of the date of this report.
Notes to the Financial Statements/continued
For the year ended 31 March 2008 57
Max Petroleum Plc 
Annual Report & Accounts 2008
22. Borrowings/continued
Debt issuance costs take the form of cash payments plus warrants. The Macquarie Facility and related 
warrants have been treated as a compound financial instrument, with both debt and equity components. 
The debt component (once the Macquarie Facility has been drawn down) is carried at amortised cost. 
 
Debt issuance cost payments are credited to cash, and warrants issued are credited to a warrant reserve in 
equity. The debit entry for these debt issuance costs is capitalised as a prepayment, and subsequently offset 
against the liability as the Macquarie Facility is drawn down. The debt issuance costs deducted from the 
liability are spread over the life of the Macquarie Facility as part of the finance cost, using the effective 
interest rate method. The effective interest rate at which these debt issuance costs were being written off  
was 11.9% for the year ended 31 March 2008. A portion of this interest is capitalised as part of the related 
intangible exploration and appraisal expenditures.
Upon closing in June 2007, the Company issued Macquarie with a five year warrant to acquire five million 
ordinary shares in the Company at an exercise price of 160.6p per share. Subsequently, with the increase of 
the borrowing base from US$20 million to US$50 million in March 2008, the Company issued Macquarie with 
a further five-year warrant to acquire 15 million shares at an exercise price of 75p per share. As more fully 
disclosed in note 30, the warrants have been recorded at fair value at the date of issuance and are not 
subsequently remeasured.
The balance of prepaid debt issuance costs included in prepayments at 31 March 2008 was US$4.6 million 
(note 18).
A reconciliation of the amounts outstanding on the Macquarie Facility is as follows:
 Group and  
 Company 
        US$000
Drawdown of loan facility        23,500
Debt issuance costs        (888)
Net proceeds from bank borrowings       22,612
Equity component relating to warrants      (6,930)
Net bank borrowings        15,682
Finance cost         1,422
Interest paid        (826)
Balance at 31 March 2008        16,278
The fair value of the floating rate bank borrowings as at 31 March 2008 approximates to their gross carrying 
value of US$23.5 million.
The Macquarie Facility is secured by pledges in favour of Macquarie over substantially all of the  
Group’s assets. 
The Group and Company had the following undrawn borrowing facilities available from the Macquarie 
Facility as at 31 March 2008:
 Group and Company
       2008 2007 
       US$000 US$000
Floating rate:
– Expiring within one year      – –
– Expiring beyond one year      26,500 –
       26,500 –
The borrowing capacity under the Macquarie Facility is subject to review and adjustment on a periodic 
basis, with the total availability at any given time subject to a number of factors, including commodity prices 
and reserve levels. 
Interest expense
During the year ended 31 March 2008, the Group incurred US$9.1 million (2007: US$4.2 million) in interest 
expense, of which US$7.2 million (2007: US$2.2 million) was capitalised to intangible exploration and 
appraisal expenditures.  58
Max Petroleum Plc 
Annual Report & Accounts 2008
23. Fair values
The directors have reviewed the financial statements and have concluded that, other than as disclosed 
relating to the fair values of the borrowings (note 22), there are no significant differences between the  
book values and the fair values of the assets and liabilities of the Group and Company as at 31 March  
2008 and 2007.
24. Financial risk management 
Capital risk management 
The Group is engaged in the exploration, development, and production of oil and gas assets in the Republic 
of Kazakhstan, with a broad portfolio of shallow, intermediate, and deep exploration targets. The Group’s 
strategy is to generate reserves, production and cash flow during the short-term from its shallow and 
intermediate oil and gas prospects, while attempting to add significant reserves and value through its  
deep exploration programme. 
The Group’s approach to managing capital is to ensure that the Group has enough liquidity to execute its 
business strategy during the next three to five years, with an ultimate goal of becoming self-financing from 
cash flow from operations and adding significant tangible asset value by proving up oil and gas reserves. 
The Group’s capital structure consists of debt, including its convertible bond and Macquarie Facility (note 22), 
cash and cash equivalents (note 20), and equity attributable to equity holders of the parent (notes 28, 29 and 
30), comprising issued share capital, reserves and retained earnings. The Group is generating production 
and cash flow from operations from the sale of crude oil and is actively seeking additional capital to finance 
its exploration and appraisal drilling programme through joint venture or farmout relationships for its 
Astrakhanskiy and Blocks A&E licence areas in Western Kazakhstan.
There were no material changes in the Group’s approach to capital management in the year.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. 
Financial instruments risk management 
The Group has exposure to the following risks from its use of financial instruments:
Credit risk
Liquidity risk
Market risk.
This note presents information about the Group’s exposure to each of the above risks. Further quantitative 
disclosures are included throughout these consolidated financial statements.
The Group’s principal financial instruments comprise cash, short-term deposits, and borrowings. Together 
with the issue of equity share capital, the main purpose of these is to finance the Group’s operations and 
expansion. The Group has other financial instruments such as trade receivables and trade payables which 
arise directly from normal trading.
The Group has not entered into any derivative or other hedging instruments. 
Credit risk 
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial 
loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties as a 
means of mitigating the risk of financial loss from default. 
The credit risk on cash and cash equivalent balances is limited as the counterparties are banks with high 
credit ratings assigned by international ratings agencies. 
The Group sells to a small number of domestic crude buyers in Kazakhstan and has one international 
customer for its export sales. The credit risk arising from domestic sales of crude oil in the Republic of 
Kazakhstan is low as the Group typically is paid in advance for the delivery of crude oil to the local buyer. 
Credit risk on export sales of crude oil from the Republic of Kazakhstan is managed by stand-by letters of 
credit issued in the Group’s favour by a recognised international bank with a high credit rating.
The Group and Company do not hold any other collateral as security against trade and other receivables.
•
•
•
Notes to the Financial Statements/continued
For the year ended 31 March 2008 59
Max Petroleum Plc 
Annual Report & Accounts 2008
24. Financial risk management/continued
Exposure to credit risk 
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure 
to credit risk at the reporting date was:
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Trade and other receivables (note 18)    16,838 13,578 164,247 95,066
Cash and cash equivalents (note 20)    4,016 28,772 1,324 26,473
     20,854 42,350 165,571 121,539
The Group’s most significant customer, an international crude oil trader, accounts for US$4.1 million of the 
trade and other receivables carrying amount at 31 March 2008 (2007: US$0.2 million). Trade and other 
receivables also include US$3.5 million of Kazakh VAT recoverable at 31 March 2008.
Liquidity risk 
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The 
Group’s approach to managing its liquidity is to ensure, as far as possible, that it will always have sufficient 
liquid funds and available debt and equity capital to meet its liabilities when due, without incurring 
unacceptable losses or risking damage to the Group’s reputation. 
Due to the nature of the underlying business, this is managed by careful monitoring of rolling forecasts of the 
Group’s liquidity reserve (comprised of undrawn borrowing facilities (note 22) and cash and cash equivalents 
(note 20)) on the basis of expected cash flow and projected amount of capital expenditure required. 
The Group will require significant additional funding to explore and develop its current oil and gas licences 
in Kazakhstan, towards which the Group has raised US$75 million of convertible debt capital in the prior  
year and during the current year entered into the Macquarie Facility, a US$100 million revolving mezzanine 
credit facility. The Group has also raised US$32.1 million through the exercise of the Company’s share options 
during the year ended 31 March 2008, is generating production and cash flow from operations from the sale 
of crude oil and is seeking broader long-term capitalisation through the farmout of interests in its Blocks A&E 
and Astrakhanskiy licences.
The Group expects to fund its future exploration and development programme, as well as its administrative 
and operating expenses, through a combination of existing working capital, cash flow from operations from 
the sale of future oil and gas production, borrowings from the Macquarie Facility, anticipated proceeds and 
capital carry from a farmout of interests in one or both of its oil and gas licences, and future issuances of debt 
or equity financing, as necessary. If the Group is unsuccessful in generating sufficient liquidity to fund its future 
expenditures, the Group’s ability to execute its long-term growth strategy could be significantly affected. 
The table below analyses the Group’s and Company’s financial liabilities into relevant maturity groupings 
based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed 
in the table are the contractual undiscounted cash flows at maturity. Balances due within 12 months equal 
their carrying balances as the impact of discounting is not significant. 60
Max Petroleum Plc 
Annual Report & Accounts 2008
24. Financial risk management/continued
 Group
       Total 
  Less than 6-12 1-2 2-5 More than contractual Carrying 
  6 months months years years 5 years cash flows value 
At 31 March 2008  US$000 US$000 US$000 US$000 US$000 US$000 US$000
Convertible bond  2,531 2,531 5,063 82,594 – 92,719 64,738
Bank borrowings  1,146 1,146 12,197 13,912 – 28,401 16,278
Trade and other payables 14,329 38 – – – 14,367 14,367
Liabilities directly  
 associated with assets  
 held for sale  559 – – – – 559 559
  18,565 3,715 17,260 96,506 – 136,046 95,942
At 31 March 2007  US$000 US$000 US$000 US$000 US$000 US$000 US$000
Convertible bond  2,531 2,531 5,063 87,656 – 97,781 62,253
Trade and other payables 13,204 – – – – 13,204 13,204
  15,735 2,531 5,063 87,656 – 110,985 75,457
 Company
       Total 
  Less than 6-12 1-2 2-5 More than contractual Carrying 
  6 months months years years 5 years cash flows value 
At 31 March 2008  US$000 US$000 US$000 US$000 US$000 US$000 US$000
Convertible bond  2,531 2,531 5,063 82,594 – 92,719 64,738
Bank borrowings  1,146 1,146 12,197 13,912 – 28,401 16,278
Trade and other payables 2,352 – – – – 2,352 2,352
  6,029 3,677 17,260 96,506 – 123,472 83,368
At 31 March 2007  US$000 US$000 US$000 US$000 US$000 US$000 US$000
Convertible bond  2,531 2,531 5,063 87,656 – 97,781 62,253
Trade and other payables 1,432 – – – – 1,432 1,432
  3,963 2,531 5,063 87,656 – 99,213 63,685
Market risk 
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other 
market prices will affect the Group’s income or the value of its holdings of financial instruments. The Group’s 
activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest 
rates. The Group has not entered into any derivative or other hedging instruments. 
Foreign currency risk management 
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposures to 
exchange fluctuations may arise from sales, purchases, cash balances and borrowings that are 
denominated in a currency other than the functional currency of the Group, being the US dollar. The 
currency in which these transactions and balances are primarily denominated is US dollars, and as such, 
the Group is not exposed to significant foreign exchange risk. It is the Group’s policy to manage its foreign 
exchange risk by minimising balances and transactions in foreign currencies, as analysed below:
The Group’s borrowings are denominated in US dollars and therefore not subject to foreign exchange risk.
The Group invoices export crude oil sales in US dollars which are therefore not subject to foreign 
exchange risk.
The Group invoices domestic crude oil sales in the local currency, the Kazakh tenge, on a  
prepayments basis. 
The Group holds the majority of its cash and cash equivalents in US dollars. 
•
•
•
•
Notes to the Financial Statements/continued
For the year ended 31 March 2008 61
Max Petroleum Plc 
Annual Report & Accounts 2008
24. Financial risk management/continued
Exposure to currency risk
The Group is mainly exposed to currency risks on certain bank deposits, debtors and creditors denominated 
in GBP and KZT.
The Group’s exposure to foreign currency risk was as follows, based on US dollar equivalent carrying 
amounts at the reporting date:
 Group  Group 
 2008  2007
In US$000 equivalent   GBP KZT EUR GBP KZT EUR
Trade and other receivables  923 4,178 – 704 1,995 –
Cash and cash equivalents  282 365 – 289 196 –
Trade and other payables  (991) (8,983) (337) (986) (9,970) (21)
Net exposure   214 (4,440) (337) 7 (7,779) (21)
The Company’s exposure to foreign currency risk was as follows, based on US dollar equivalent carrying 
amounts at the reporting date:
 Company  Company 
 2008  2007
In US$000 equivalent   GBP KZT EUR GBP KZT EUR
Trade and other receivables  923 – – 704 – –
Cash and cash equivalents  282 – – 289 – –
Trade and other payables  (904) – (9) (877) – –
Net exposure   301 – (9) 116 – –
Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 10% strengthening in US dollars against the respective 
foreign currencies, which represents management’s assessment of a reasonable change in foreign 
exchange rates. This analysis assumes that all other variables remain constant and has been determined 
based on the change taking place at the beginning of the financial year and held constant throughout the 
reporting period. 
A 10% strengthening of the US dollar at 31 March would have increased (decreased) the Group’s and 
Company’s equity and profit or loss by the amounts shown below:
 Group  Group 
 2008  2007
Effect in US$000    GBP KZT EUR GBP KZT EUR
Profit or (loss)   (21) 444 34 (1) 778 2
Equity   – – – – – –
 Company  Company 
 2008  2007
Effect in US$000    GBP KZT EUR GBP KZT EUR
Profit or (loss)   (30) – 1 (11) – –
Equity   – – – – – –
A 10% weakening of the US dollar against the currencies above at 31 March would have had an equal but 
opposite effect on the amounts shown above, assuming all other variables remained constant. 62
Max Petroleum Plc 
Annual Report & Accounts 2008
24. Financial risk management/continued
Interest rate risk
The Group is exposed to interest rate risk as entities in the Group borrow funds at both fixed and floating 
interest rates. The Group does not hedge its interest rate exposures.
Exposure to interest rate risk
At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was:
 Group 
 Carrying amount
       2008 2007 
       US$000 US$000
Fixed rate instruments
Convertible bond       75,000 75,000
       75,000 75,000
Variable rate instruments
Cash and cash equivalents      4,016 28,772
Bank borrowings       (23,500) –
       (19,484) 28,772
At the reporting date, the interest rate profile of the Company’s interest-bearing financial instruments was:
 Company 
 Carrying amount
       2008 2007 
       US$000 US$000
Fixed rate instruments
Convertible bond       75,000 75,000
       75,000 75,000
Variable rate instruments
Cash and cash equivalents      1,324 26,473
Bank borrowings       (23,500) –
       (22,176) 26,473
Interest rate sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or 
loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss or equity.
Interest rate sensitivity analysis for variable rate instruments
At the reporting date, if interest rates had been 200 basis points higher/lower and all other variables were 
held constant, the Group’s and Company’s profit or loss and equity would have increased (decreased) by the 
amounts shown below:
 Group and Company
 Profit or (loss)  Equity
     200 bp 200 bp 200 bp 200 bp 
     increase decrease increase decrease 
     US$000 US$000 US$000 US$000
At 31 March 2008
Variable rate instruments     (444) 444 – –
At 31 March 2007
Variable rate instruments     529 (529) – –
The amounts generated from the sensitivity analyses are estimates of the impact of market risk assuming  
that specified changes occur. Actual results in the future may differ materially from these results due to 
developments in the global financial markets which may cause exchange rates or interest rates to vary  
from the hypothetical amounts disclosed above, which therefore should not be considered a projection of 
future events and losses.
Notes to the Financial Statements/continued
For the year ended 31 March 2008 63
Max Petroleum Plc 
Annual Report & Accounts 2008
25. Deferred income tax
 Group
 Deferred tax assets/(liabilities)
      Total Allowance Net 
  Exploration Asset Other Losses deferred against deferred 
  assets retirement temporary carried tax asset/ deferred tax asset/ 
  pool provision differences forward (liability) tax assets (liability) 
  US$000 US$000 US$000 US$000 US$000 US$000 US$000
At 1 April 2006  554 138 2,850 1,159 4,701 (4,701) –
Charged/(credited) to the  
 income statement  – – – – – – –
Movement in the year  1,050 329 6,358 2,504 10,241 (10,241) –
At 31 March 2007  1,604 467 9,208 3,663 14,942 (14,942) –
Charged/(credited) to the  
 income statement  – – – – – – –
Movement in the year  1,383 616 (7,453) 8,860 3,406 (3,406) –
At 31 March 2008  2,987 1,083 1,755 12,523 18,348 (18,348) –
Where the realisation of deferred tax assets is dependent on future profits, the Group recognises losses 
carried forward and other deferred tax assets only to the extent that the realisation of the related tax benefit 
through future taxable profits is probable. At 31 March 2008, the Group had not recognised potential deferred 
tax assets of US$18.3 million (2007: US$14.9 million) as there was insufficient evidence of future taxable profits  
in the relevant Group companies. Losses of US$3.0 million can be carried forward for up to seven years, and 
the balance of losses of US$9.5 million can be carried forward indefinitely.
There are no significant unrecognised temporary differences associated with undistributed profits of 
subsidiaries at 31 March 2008 and 2007, respectively.
 Company
 Deferred tax assets/(liabilities)
      Total Allowance Net 
    Other Losses deferred against deferred 
    temporary carried tax asset/ deferred tax asset/ 
    differences forward (liability) tax assets (liability) 
    US$000 US$000 US$000 US$000 US$000
At 1 April 2006    2,850 1,159 4,009 (4,009) –
Charged/(credited) to the income statement  – – – – –
Movement in the year    6,358 2,504 8,862 (8,862) –
At 31 March 2007    9,208 3,663 12,871 (12,871) –
Charged/(credited) to the income statement  – – – – –
Movement in the year    (7,870) 5,832 (2,038) 2,038 –
At 31 March 2008    1,338 9,495 10,833 (10,833) –
Other temporary differences mainly relate to estimates of future tax deductible amounts for the qualifying 
share options issued by the Company, as at 31 March 2008, 2007 and 2006, respectively. The losses of the 
Company of US$9.5 million can be carried forward indefinitely. 64
Max Petroleum Plc 
Annual Report & Accounts 2008
26. Provision for liabilities and other charges
 Group
      Provision for 
      decommissioning 
      costs Other Total 
      US$000 US$000 US$000
Balance at 31 March 2006      949 57 1,006
Additions       568 – 568
Settlements      – (57) (57)
Accretion of discount (note 7)     102 – 102
Balance at 31 March 2007      1,619 – 1,619
Additions       1,817 – 1,817
Settlements      (41) – (41)
Accretion of discount (note 7)     135 – 135
      3,530 – 3,530
Less: amounts reclassified as liabilities directly associated with assets  
 held for sale (note 21)      (299) – (299)
Balance at 31 March 2008     3,231 – 3,231
The decommissioning provision at 31 March 2007 related to the cost of non-producing oil and gas wells in the 
Group’s licence areas at the time they were acquired. The amount provided at 31 March 2008 was revised to 
include the estimated decommissioning costs of new wells drilled in the year. The decommissioning provision 
reflects the present value of internal estimates of future decommissioning costs of the Company’s oil and gas 
wells as at the relevant balance sheet date determined using local pricing conditions and requirements. 
In relation to the decommissioning provision, the estimated interest rate used in discounting the cash flows  
is reviewed annually. The interest rate used to determine the balance sheet obligation at 31 March 2008 was 
7.4% (2007: 8.0%).
The timing of payments related to provisions is uncertain and is dependent on various items which are not 
always within management’s control.
27. Trade and other payables
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Trade payables     9,430 10,232 1,076 179
Other payables     1,112 186 316 4
Social security and other taxes    1,838 1,643 248 163
Accruals and deferred income    2,247 1,143 712 1,086
     14,627 13,204 2,352 1,432
Less: amounts reclassified as liabilities directly associated  
 with assets held for sale (note 21)    (260) – – –
     14,367 13,204 2,352 1,432
Notes to the Financial Statements/continued
For the year ended 31 March 2008 65
Max Petroleum Plc 
Annual Report & Accounts 2008
28. Share capital
The Company has two classes of share capital, which carry no right to fixed income: ordinary and deferred 
shares. The deferred share class was created in 2005 in a capital restructuring and no further shares will be 
issued. A deferred share carries no voting or dividend rights. On a return of capital on a winding up, the 
holders of deferred shares shall only be entitled to receive the amount paid up on such shares after the 
holders of the ordinary shares have received the sum of 0.01p for each ordinary share held by them and 
shall have no other right to participate in the assets of the Company.
During the year, the Company issued 21,428,408 ordinary shares wholly in respect of exercise of share options 
for total proceeds of US$32.1 million. In the prior period, the Company issued 3,910,000 ordinary shares wholly 
in respect of exercise of share options for total proceeds of US$2.5 million. All shares issued are fully paid up.
 Number of shares
 Authorised share capital  Issued share capital
     Ordinary Deferred Ordinary Deferred 
     shares of shares of shares of shares of 
     0.01p each 14.99p each 0.01p each 14.99p each
At 1 April 2006     400,000,000 400,000,000 302,940,329 28,253,329
Increase      400,000,000 – 3,910,000 –
At 1 April 2007     800,000,000 400,000,000 306,850,329 28,253,329
Increase     – – 21,428,408 –
At 31 March 2008     800,000,000 400,000,000 328,278,737 28,253,329
 Nominal value
 Authorised share capital  Issued share capital
   Ordinary Deferred  Ordinary Deferred 
   shares of shares of Total all shares of shares of Total all 
   0.01p each 14.99p each classes 0.01p each 14.99p each classes 
   US$000 US$000 US$000 US$000 US$000 US$000
At 1 April 2006   70 104,318 104,388 54 7,864 7,918
Increase    87 – 87 1 – 1
At 1 April 2007   157 104,318 104,475 55 7,864 7,919
Increase   – – – 4 – 4
At 31 March 2008   157 104,318 104,475 59 7,864 7,923
29. Share premium 
       Year ended Year ended 
       31 March 31 March 
       2008 2007 
       US$000 US$000
At 1 April        196,636 194,114
Premium on shares issued during the year      32,117 2,522
At 31 March        228,753 196,636 66
Max Petroleum Plc 
Annual Report & Accounts 2008
30. Other reserves
     Convertible Share based 
     bond equity payments Warrant Total other 
     reserve reserve reserve reserves 
     US$000 US$000 US$000 US$000
At 1 April 2006     – 35,272 – 35,272
Share based payments      11,330 – 11,330
Convertible bond issued, equity portion   11,292 – – 11,292
Convertible bond issuance costs, equity portion   (485) – – (485)
At 31 March 2007     10,807 46,602 – 57,409
Share based payments     – 5,849 – 5,849
Warrants issued     – – 11,532 11,532
At 31 March 2008     10,807 52,451 11,532 74,790
Warrants
As more fully disclosed in note 22, the Company entered into a revolving mezzanine credit facility with 
Macquarie Bank Limited in June 2007. Pursuant to the drawdown of the first tranche, Max Petroleum  
issued a warrant to Macquarie to acquire 5,000,000 ordinary shares of the Company at 160.6p.  
In March 2008, a further warrant to acquire 15,000,000 shares at 75p was issued to Macquarie  
with the increase of the borrowing base from US$20 million to US$50 million.
The warrant table below sets out the warrants granted, exercised and outstanding at 31 March 2008. 
   2008
        Weighted 
       Weighted average 
       average market 
       exercise price on 
      Number of price exercise 
      warrants (pence) (pence)
Outstanding at start of year     – – –
Granted      20,000,000 96 –
Forfeited or cancelled      – – –
Exercised      – – –
Outstanding at end of year     20,000,000 96 –
Out of the outstanding warrants at the end of the year, 20,000,000 warrants (2007: n/a) were exercisable.
The warrants were valued independently using the Black-Scholes valuation model to determine the fair value 
of the warrants issued by the Company. 
The following table represents the variables used in their assumptions: 
        2008
Exercise price of warrant         75p–161p
Share price on date of grant       70p–185p
Expected term before warrant exercise      2.5 years
Risk free interest rate         4.0%–5.7%
Expected dividend yield        –
Expected share volatility        38%
The total fair value of the warrants issued of US$11.5 million was credited to other reserves with an offsetting 
debit initially booked to prepaid debt issuance costs. As at 31 March 2008, US$6.9 million of the prepaid debt 
issuance costs had been debited against borrowings, pro-rata with drawdowns on the Macquarie Facility 
during the year (note 22), and the balance of US$4.6 million was included in prepayments (note 18). 
Notes to the Financial Statements/continued
For the year ended 31 March 2008 67
Max Petroleum Plc 
Annual Report & Accounts 2008
31. Share based payments
Share options
The Company has granted share options to directors, employees, strategic consultants and advisors to  
the Group to provide incentives for long-term performance and retention. Furthermore, additional options 
were issued as partial consideration for the acquisition of oil and gas properties in Kazakhstan to align the 
Company’s and the sellers’ interests subsequent to the acquisition. 
In October 2007, the Company granted an additional 564,800 options which vested immediately to ODL 
Securities, its broker at the time of its listing on AIM, as full settlement of a claim of compensation owed  
to ODL by the Company with regard to the Company’s listing on AIM in October 2005.
The share options granted are not subject to any performance criteria apart from, in respect of directors  
and employees, their continued service with and employment by the Group, with the exception of 500,000 of 
share options granted in the year which are subject to non-market performance conditions related to certain 
operational metrics. The Company operates on a wholly equity-settled principle. All employees are granted 
share options at the commencement of their employment with the Group.
The vesting terms of the share options differ between the agreements of the vendors and those engaged  
by the Company and are as follows: 
Options granted to vendors vest immediately and have a three year term from date of grant. 
Options granted to consultants and advisors typically vest in part within six months and proportionately 
on anniversaries thereafter with a three year term from date of grant. 
Options to directors and employees typically vest in part after one year and proportionately thereafter  
up to a seven year term from date of grant. 
In October 2005, an exceptional form of share option was granted to two senior executive directors  
and a consultant responsible for the Company’s capital raising activities prior to its listing on AIM, the 
acquisition of the Company’s initial two subsoil licences in oil and gas properties in Kazakhstan, and  
the AIM Admission of the Company. The option incorporates a non-dilution clause for one year, vesting  
in part on the first anniversary of grant and proportionately thereafter with a term of ten years. 
The maximum term of options granted is ten years and in the normal course of granting, seven years. 
As at 31 March 2008, the Company had 90.6 million share options outstanding, reflecting cumulative grants 
of 125.1 million, net of 25.9 million exercised share options and 8.6 million share options that had been 
cancelled or forfeited by the recipient. The share option table below sets out the options granted, exercised 
and outstanding at 31 March 2008 and 2007.
 2008  2007
     Weighted   Weighted 
    Weighted average  Weighted average 
    average market  average market 
    exercise price on  exercise price on 
   Number of price exercise Number of price exercise 
   share options (pence) (pence) share options (pence) (pence)
Outstanding at start of year  108,252,313 84.9  102,518,013 77.0 
Granted   12,276,100 86.9  10,249,300 142.8 
Forfeited or cancelled   (8,513,302) 64.0  (605,000) 49.8 
Exercised   (21,428,408) 74.2 170.7 (3,910,000) 34.4 101.1
Outstanding at end of year  90,586,703 89.9  108,252,313 84.9 
Of the outstanding options at the end of the year, 62,445,262 options (2007: 74,006,180) were exercisable  
at that date.
The directors retain independent consultants to carry out a fair value review and valuation of the share 
options granted by the Company. The purpose of the review is to ensure that the true cost of the options is 
properly reflected in the cost of investments in the Group and Company balance sheets and in the cost of 
services charged to the income statement. 
The Black-Scholes valuation model is used to determine the fair value of the share options issued by the 
Company. Given the limited trading history of the Company, which was admitted on AIM in October 2005,  
a representative sample of companies from the oil and gas sector with operations in a similar geographic 
region was used in order to determine expected share price volatility. 
•
•
•
• 68
Max Petroleum Plc 
Annual Report & Accounts 2008
31. Share based payments/continued
The following table represents the weighted averages of the variables used in their assumptions: 
       2008 2007 
       Weighted Weighted 
       average average
Exercise price of option contract      86.9p 142.8p
Share price on date of grant      93.6p 104.8p
Expected term before option exercise      4.0 years 3.9 years
Risk free interest rate        5.7% 4.8%
Expected dividend yield       – –
Expected share volatility       38% 38%
The model also assumes lengths of vesting period to date of exercise. 
The directors concluded that the average fair value of the options issued during the current year was 38%  
or 43 pence (US$0.86) (2007: US$0.53). The Group has recorded a charge to administration expenses in its 
consolidated income statement for the value of services of US$4.6 million (2007: US$9.9 million), net of amounts 
capitalised and adjustments for unvested options cancelled or forfeited during the year; and capitalised 
US$1.2 million (2007: US$1.5 million) to exploration and appraisal expenditure. The share based payment 
reserve is stated as US$52.5 million (2007: US$46.6 million). 
The Company did not modify or vary any share option arrangements during the period.
The following table summarises share option activity during the current and prior years to 31 March.  
For options outstanding at the end of the year, the range of exercise prices and the average remaining  
life, analysed into the main groups of recipients, were as follows:
 2008  2007
   Weighted Average   Weighted Average 
 Exercise  average remaining Exercise  average remaining 
 price  exercise contractual price  exercise contractual 
 range Number of price life range Number of price life 
  (pence) share options  (pence)  (years)  (pence) share options  (pence)  (years)
Directors
1
 35.0–185.0 27,470,067 73.0 6.8 35.0–120.5 27,062,542 54.9 7.90
Employees 25.0–450.0 12,328,967 132.6 6.3 25.0–450.0 13,783,300 129.0 5.88
Advisory  
 committee 35.0–100.0 4,500,000 78.3 4.8 35.0–100.0 4,500,000 78.3 5.80
Other  
 advisors and  
 consultants 35.0–120.25 8,287,669 42.8 5.1 35.0–120.5 12,906,471 44.6 7.16
Acquisition  
 vendors 100.0 38,000,000 100.0 0.8 100.0 50,000,000 100.0 1.79
  90,586,703 89.9 4.0  108,252,313 84.9 3.90
1 The directors’ share options at 31 March 2008 include 688,796 share options held by Mr Steven Kappelle, who was dismissed as a director of the 
Company on 17 October 2007.
The average closing market price of the Company’s ordinary 0.01p shares during the year was 120.0p 
(2007: 104.7p). 
Notes to the Financial Statements/continued
For the year ended 31 March 2008 69
Max Petroleum Plc 
Annual Report & Accounts 2008
32. Cash generated from operations
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Loss for the year:     (36,984) (33,137) (39,877) (9,872)
Adjustments for:
– Depreciation, depletion and amortisation (note 10)  5,383 184 130 38
– Loss on disposal of fixed assets (note 9)   12 – 12 –
– Share-based payment charge (note 9)   4,605 9,846 2,713 1,871
– Exploration and appraisal expenditure written-off  15,881 8,385 – –
– Impairment of assets held for sale (note 21)   5,200 – 18,200 –
– Finance income (note 6)     (811) (1,729) (1,451) (1,727)
– Finance costs (note 7)     1,954 2,058 8,970 4,138
Changes in working capital
– Inventories     (5,127) (7,509) – –
– Trade and other receivables    1,342 (8,791) (64,576) (56,261)
– Trade and other payables    1,423 10,842 864 372
Cash generated from operations    (7,122) (19,851) (75,015) (61,441)
Cash flows relating to major non-cash transactions
Summary of non-cash items
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Operating cash flow
Share based payments charge – valuation of options  
 granted for services     4,605 9,846 2,713 1,871
Other     – – 56 –
     4,605 9,846 2,769 1,871
Capital expenditure and financial investment
Share based payments capitalised to oil and gas properties  1,244 1,484 – –
Oil and gas property costs reclassified as pre-paid  
 marketing costs      – (1,823) – –
Non-cash interest expense capitalised to oil and gas properties  2,440 1,283 – –
Depreciation, depletion and amortisation   5,383 184 130 38
Exploration and appraisal expenditure written-off   15,881 8,385 – –
Provision for decommissioning costs    1,776 568 – –
     26,724 10,081 130 38
33. Related party disclosures
The Company has no ultimate controlling party.
Horizon Services N.V. 
Horizon owns a 20% indirect interest in the Group’s subsoil licences for Blocks A&E and East Alibek in the 
Republic of Kazakhstan through its 20% interest in two of the Company’s subsidiaries, Madiran and Sherpico. 
Madiran owns 100% of Samek International LLP (‘SI’), the sole operator of the Blocks A&E subsoil licence and 
Sherpico is the 100% owner of Samek Development Enterprise LLP (‘SDE’), the sole operator of the East Alibek 
subsoil licence. 
There were no balances or transactions with Horizon as at, or for the year ending, 31 March 2007.  70
Max Petroleum Plc 
Annual Report & Accounts 2008
33. Related party disclosures/continued
Mr Garifolla Kachshapov
Mr Kachshapov is the beneficial owner of Horizon, Oriental Limited (‘Oriental’), and Samek LLP. He also 
controls 15 million shares in the Company held by two companies, Incomeborts Ltd and Norgulf Holdings Ltd.
In October 2005, the Company entered into service agreements with Mr Kachshapov employing his services 
as a manager of SI and as general director of SDE in Kazakhstan. Under the terms of the service agreements 
Mr Kachshapov receives US$200,000 per annum, which consists of a salary of US$100,000 from each of SI  
and SDE. 
Exchange agreement between Max Petroleum Plc, Horizon Services N.V. and Oriental Limited 
As more fully described in note 21, Max Petroleum entered into the Exchange Agreement with Horizon  
and Oriental, an affiliate of Horizon, to acquire Horizon’s 20% interest in Madiran in exchange for Oriental 
receiving the Company’s 80% interest in Sherpico and 37 million ordinary shares of the Company. 
The Company closed the Exchange Agreement on 11 July 2008, after receiving the necessary regulatory 
consents from the Republic of Kazakhstan. Completion of the transaction resulted in Max Petroleum 
acquiring Horizon’s 20% indirect interest in Blocks A&E, bringing the Company’s ownership to 100%, in 
exchange for Oriental receiving the Company’s entire 80% interest in the East Alibek licence and 37 million 
newly issued ordinary shares. As a result, the Company’s issued share capital is 365,278,737 ordinary shares. 
Furthermore, Mr Garifolla Kachshapov, the beneficial owner of Horizon and Oriental, now has an indirect 
interest in 52 million, or 14.2%, of the Company’s ordinary shares. 
Share options issued to related parties as part of the Astrakhanskiy Acquisition 
In January 2006, the Company issued a total of 50 million share options as partial consideration for the 
acquisition of the Astrakhanskiy licence (the ‘Astrakhanskiy Options’), including 12.5 million to Manty 
Investment Services Ltd (‘Manty’), 18.75 million to Fantara Company, Inc. (‘Fantara’) and 18.75 million to  
Diego Production Ltd (‘Diego’). In 2007, it became evident that certain employees in Kazakhstan beneficially 
owned 6 million of the Astrakhanskiy Options originally issued to Manty, including: (i) 2.1 million share  
options distributed to a number of the Company’s expatriate employees in Kazakhstan; and (ii) 5 million 
share options received by the Group’s Kazakhstan partner of which he allocated 1.1 million to unrelated third 
party advisors, retaining 3.9 million of the Astrakhanskiy Options. The Group’s Kazakhstan partner further 
allocated 1.95 million to Mr Dauren Myrzagaliyev, the Group’s sole Kazakh non-executive director at the  
time of the Astrakhanskiy Acquisition, and retained 1.95 million for himself. All of the related party beneficial 
owners of the 6 million Astrakhanskiy Options have agreed not to exercise the underlying Astrakhanskiy 
Options prior to their expiration in January 2009 and Mr Myrzagaliyev voluntarily resigned his employment 
with the Company. 
In June 2007, Manty exercised a total of 2 million options, generating proceeds of US$4.0 million.  
The Company understands that the Manty options exercised were held by a non-related party. 
In July 2007, Diego exercised 10 million options, generating proceeds of US$20.0 million. The Company 
understands the ultimate beneficial owner of the shares allotted from the Diego option exercise was  
Mr Rigoll, either directly or indirectly through his ownership in Tigakhan Ltd. 
Samek LLP
During the year ended 31 March 2008, Samek LLP incurred costs on behalf of the Group of US$37,000. During 
the year ended 31 March 2007, Samek International LLP recharged operating costs and service charges 
incurred by Samek LLP of US$135,000. At 31 March 2008, an amount was due to Samek LLP of US$189,000  
(2007: amount due from Samek LLP of US$38,000).
Key management personnel
Disclosures related to the remuneration of key management personnel as defined in IAS 24 ‘Related Party 
Disclosures’ are given in note 11. There is no difference between transactions with key management 
personnel of the Company and the Group.
Notes to the Financial Statements/continued
For the year ended 31 March 2008 71
Max Petroleum Plc 
Annual Report & Accounts 2008
33. Related party disclosures/continued
Inter-company transactions
The Company has entered into transactions with subsidiary undertakings in respect of funding and group 
services which are recharged to the subsidiaries.
The amount of loans repayable on demand from subsidiary undertakings to the Company at 31 March  
2008 totalled US$154.1 million, of which US$19.3 million was interest bearing (2007: US$91.5 million and  
US$nil, respectively). 
Accounts receivable from subsidiary undertakings to the Company at 31 March 2008 totalled US$4.5 million 
(2007: US$2.6 million).
During the year, the Company invoiced rechargeable costs with mark-up to subsidiaries of US$6.1 million 
(2007: US$5.0 million) and received interest of US$0.6 million (2007: US$nil) from subsidiaries on group loans.
34. Operating lease commitments
The future minimum lease payments under non-cancellable operating leases are as follows:
 Group  Company
     2008 2007 2008 2007 
     US$000 US$000 US$000 US$000
Within 1 year     758 1,246 385 424
Within 2–5 years     601 863 601 863
After 5 years     – – – –
35. Capital commitments
The Group is committed under its subsoil licences to certain future expenditures including minimum  
work programmes, social infrastructure contributions and reimbursement of historic costs incurred by  
the Government of the Republic of Kazakhstan. Qualifying licence, exploration and development 
expenditure by the licence holders is deducted from these future commitments. The Group also has  
ongoing licence commitments pertaining to social contributions and training of local personnel. 
The Group’s commitment remaining under its subsoil licences as at 31 March 2008 totalled US$75.9 million 
(2007: US$69.3 million).  72
Max Petroleum Plc 
Annual Report & Accounts 2008
36. Explanation of transition to IFRS
These financial statements for the year ended 31 March 2008 are the Group’s and Company’s first financial 
statements prepared under IFRS. For all accounting periods prior to this, the Group and Company prepared 
its financial statements under generally accepted accounting principles in the United Kingdom (‘UK GAAP’).
In accordance with IFRS 1 ‘First time adoption of IFRS’, certain disclosures relating to the transition to IFRS are 
given in this note. These disclosures are prepared under IFRS as set out in the basis of preparation in note 2.
i)  Reconciliation of consolidated income statement and equity from UK GAAP (as previously reported)  
to IFRS, as at and for the year ended 31 March 2007
Consolidated income statement
For the year ended 31 March 2007
 Group
      UK GAAP Discontinuance 
      (as previously of full cost Restated 
      reported) accounting – IFRS 
      US$000 US$000 US$000
Notes       (a) 
Revenue      1,502 – 1,502
Cost of sales      (1,502) – (1,502)
Gross profit      – – –
Exploration and appraisal costs     – 8,385 8,385
Administrative expenses      24,423 – 24,423
Other income      – – –
Operating loss      24,423 8,385 32,808
Finance income      (1,729) – (1,729)
Finance costs      2,058 – 2,058
Loss before taxation      24,752 8,385 33,137
Income tax expense      – – –
Loss for the year      24,752 8,385 33,137
Attributable to:
Equity holders of the Company     22,994 6,708 29,702
Minority interests      1,758 1,677 3,435
      24,752 8,385 33,137
Loss per share for loss attributable to the equity holders of the  
 Company during the year
– Basic and diluted (US cents)     7.5 2.2 9.7
Notes to the Financial Statements/continued
For the year ended 31 March 2008 73
Max Petroleum Plc 
Annual Report & Accounts 2008
36. Explanation of transition to IFRS/continued
Consolidated balance sheet 
As at 31 March 2007
 Group
     UK GAAP Discontinuance 
     (as previously of full cost  Restated 
     reported) accounting Prepayments – IFRS 
     US$000 US$000 US$000 US$000
Notes      (a) (g) 
Assets
Non-current assets
Intangible assets – exploration and appraisal expenditure  239,282 (8,385) – 230,897
Oil and gas properties     – – – –
Property, plant and equipment    1,478 – – 1,478
Deferred income tax assets    – – – –
Prepayments     – – 1,338 1,338
     240,760 (8,385) 1,338 233,713
Current assets
Inventories     7,512 – – 7,512
Trade and other receivables    13,578 – (1,338) 12,240
Cash and cash equivalents    28,772 – – 28,772
     49,862 – (1,338) 48,524
Total assets     290,622 (8,385) – 282,237
Liabilities
Non-current liabilities
Borrowings     62,253 – – 62,253
Deferred income tax liabilities    – – – –
Provision for liabilities and other charges   1,619 – – 1,619
     63,872 – – 63,872
Current liabilities
Trade and other payables    13,204 – – 13,204
Current income tax liabilities    – – – –
Borrowings     – – – –
Provision for liabilities and other charges   – – – –
     13,204 – – 13,204
Total liabilities     77,076 – – 77,076
Net assets     213,546 (8,385) – 205,161
Capital and reserves 
Share capital     7,919 – – 7,919
Share premium     196,636 – – 196,636
Other reserves     57,409 – – 57,409
Retained loss     (46,299) (6,708) – (53,007)
Equity attributable to equity holders of the parent  215,665 (6,708) – 208,957
Minority interests in equity    (2,119) (1,677) – (3,796)
Total equity     213,546 (8,385) – 205,161
ii) Reconciliation of consolidated equity from UK GAAP (as previously reported) to IFRS, as at 1 April 2006
        Group 
        1 April 2006 
        US$000
Total equity, as previously reported under UK GAAP     213,638
Adjustments to retained losses       –
Total equity, as restated under IFRS       213,638
Attributable to: 
Equity holders of the Company       213,999
Minority interests in equity       (361)
        213,638 74
Max Petroleum Plc 
Annual Report & Accounts 2008
36. Explanation of transition to IFRS/continued
iii)  Reconciliation of Company income statement and equity from UK GAAP (as previously reported)  
to IFRS
Company income statement
For the year ended 31 March 2007
 Company
      UK GAAP 
      (as previously IFRIC 11 Restated 
      reported) restatement – IFRS 
      US$000 US$000 US$000
Notes       (h) 
Revenue      5,034 – 5,034
Cost of sales      (4,653) – (4,653)
Gross profit      381 – 381
Administrative expenses      (17,302) 9,460 (7,842)
Operating loss      (16,921) 9,460 (7,461)
Finance income      1,727 – 1,727
Finance costs      (4,138) – (4,138)
Loss before taxation      (19,332) 9,460 (9,872)
Income tax expense      – – –
Loss for the year      (19,332) 9,460 (9,872)
Company balance sheet 
As at 31 March 2007
 Company
      UK GAAP 
      (as previously IFRIC 11 Restated 
      reported) restatement – IFRS 
      US$000 US$000 US$000
Notes       (h) 
Assets
Non-current assets
Investments      163,162 13,414 176,576
Property, plant and equipment     138 – 138
      163,300 13,414 176,714
Current assets
Trade and other receivables     95,066 – 95,066
Cash and cash equivalents     26,473 – 26,473
      121,539 – 121,539
Total assets      284,839 13,414 298,253
Liabilities
Non-current liabilities
Borrowings      62,253 – 62,253
      62,253 – 62,253
Current liabilities
Trade and other payables     1,432 – 1,432
      1,432 – 1,432
Total liabilities      63,685 – 63,685
Net assets      221,154 13,414 234,568
Capital and reserves
Share capital      7,919 – 7,919
Share premium      196,636 – 196,636
Other reserves      57,409 – 57,409
Retained loss      (40,810) 13,414 (27,396)
Total equity      221,154 13,414 234,568
Notes to the Financial Statements/continued
For the year ended 31 March 2008 75
Max Petroleum Plc 
Annual Report & Accounts 2008
36. Explanation of transition to IFRS/continued
iv) Reconciliation of equity of the Company as at 31 March 2007 and 1 April 2006
 Company
       31 March 1 April 
       2007 2006 
      Note  US$000 US$000
Total equity, as previously reported under UK GAAP    221,154 215,826
IFRS adjustments to retained losses     (h) 13,414 3,954
Total equity, as restated under IFRS      234,568 219,780
v) Explanation of reconciling items between UK GAAP and IFRS
(a) On the discontinuance of full cost accounting, US$8.4 million of drilling expenditures associated with 
unsuccessful wells were expensed in the financial year ended 31 March 2007.
(b) On adoption of the modified successful efforts method, there was no depletion or amortisation charge  
in relation to intangible – exploration and appraisal expenditures, and oil and gas properties, as 
commercial production commenced on 1 August 2007.
(c) The general principle in IFRS 1 requires a first-time adopter to apply IAS 32 Financial Instruments: 
Disclosure and Presentation, IFRS 7 Financial Instruments: Disclosures and IAS 39 Financial instruments: 
Recognition and Measurement retrospectively and separate all compound financial instruments into a 
debt and equity portion. The Group completed its US$75 million convertible bond offering in September 
2006 which was accounted for under UK GAAP FRS 26 Financial Instruments: Recognition and Measurement. 
There were no material differences between IFRS and UK GAAP in this area and hence no impact to the 
Group on transition to IFRS.
(d) The Group had adopted UK GAAP FRS 20 for all periods which it has reported in the accounting for share 
based payments. This standard is very similar to that of IFRS 2. As such there were no material differences.
(e) The Group does not have a foreign currency translation reserve as required by IAS 21 The Effects of 
Changes in Foreign Exchange as the Group and its subsidiaries have the same functional currency.
(f) Under IAS 19 Employee Benefits, the monetary value of any unused vacation carried forward by 
employees at the year end must be accrued for. The Group has been accounting for its employees’ 
holiday accrual, hence there is nil impact arising from the transition to IFRS.
(g) Under UK GAAP, prepayments greater than one year of US$1.3 million were included within the total of 
current assets with a caption on the face of the balance sheet noting the amount of the prepayment 
greater than one year. Under IFRS, this amount has been reclassed to non-current assets.
(h) On adoption of IFRS, the Company has implemented IFRIC 11: IFRS 2 – Group and Treasury Share 
Transactions. Under IFRIC 11, the share based payment expense of the Company’s share options granted 
to employees of its subsidiaries are treated as a capital contribution of the parent in the subsidiary’s 
books, and accordingly, as an increase in the cost of the parent’s investment in the subsidiary. The 
amount of share based payment expense previously recognised in relation to share options issued to 
employees of its subsidiaries was US$9.4 million during the year ended 31 March 2007, and cumulatively, 
US$3.9 million as at 31 March 2006.
vi) Major elections made under IFRS 1 First-time Adoption of International Financial Reporting Standards
(a) The Group has elected not to apply IFRS 3 Business Combinations retrospectively to past business 
combinations as they occurred prior to the date of transitioning to IFRS.
(b) As permitted under IAS 23 Borrowing costs, the Group re-affirms its policy to capitalise interest on 
intangible – exploration and appraisal expenditures, and oil and gas properties.
(c) The Group has elected not to measure individual items of property, plant and equipment at fair value  
at the date of transition to IFRS. The Group assumes UK GAAP costs of property, plant and equipment as 
being equal to IFRS deemed costs. 76
Max Petroleum Plc 
Annual Report & Accounts 2008
36. Explanation of transition to IFRS/continued
vii) Explanation of material adjustments to the cash flow statement 
Group
Apart from the successful efforts charge of US$8.4 million for the year ended 31 March 2007, related to the 
discontinuance of full cost accounting (refer to (a) above), there were no other material differences between 
the cash flow statement presented under UK GAAP and IFRS.
Company
Apart from the IFRIC 11 restatements of US$9 million and US$4 million for the years ended 31 March 2007  
and 2006 respectively (refer to (i) above), there were no other material differences between the cash flow 
statement presented under UK GAAP and IFRS.
37. Post balance sheet events
Macquarie Facility drawdowns
Subsequent to 31 March 2008, the Company has borrowed a further US$9 million under the Macquarie 
Facility (note 22).
Closing of Exchange Agreement
As more fully disclosed in note 21, in July 2008 the Company acquired the remaining 20% interest in Blocks  
A&E in exchange for its 80% interest in East Alibek plus 37 million of the Company’s ordinary shares. Subsequent 
to the acquisition, the Company owns a 100% interest in Samek International LLP, the 100% owner of Blocks A&E 
and has fully divested its 80% interest in Samek Development Enterprise LLP, the 100% owner of East Alibek.
Incorporation of US subsidiary
Max Exploration Services, Inc., a United States corporation registered in the state of Delaware, was 
incorporated as a wholly owned subsidiary of the Company on 1 April 2008.
Notes to the Financial Statements/continued
For the year ended 31 March 2008 77
Max Petroleum Plc 
Annual Report & Accounts 2008
The Group’s estimates of proved and probable reserve quantities are taken from the Group’s Competent 
Person’s evaluation report for the Zhana Makat field as of 31 March 2008. Proved reserves are estimated 
reserves that geological and engineering data demonstrate with reasonable certainty to be recoverable  
in future years under existing economic and operating conditions, while probable reserves are estimated 
reserves determined to be more likely than not to be recoverable in future years under existing economic 
and operating conditions. 
All of the Group’s oil and gas assets are located in the Republic of Kazakhstan. 
      Oil Gas  
Group proved plus probable reserves     Mbbls Bcf Mboe
As at 1 April 2007      9,817 – 9,817
Revisions of previous estimates     (251) – (251)
Discoveries and extensions     – – –
Acquisitions      – – –
Divestitures      – – –
Production      (456) – (456)
      9,110 – 9,110
Minority interest      (1,822) – (1,822)
Balance as at 31 March 2008     7,288 – 7,288
      Oil Gas  
Group proved plus probable reserves     Mbbls Bcf Mboe
As at 1 April 2006      – – –
Revisions of previous estimates     – – –
Discoveries and extensions     9,877 – 9,877
Acquisitions      – – –
Divestitures      – – –
Production      (60) – (60)
      9,817 – 9,817
Minority interest      (1,963) – (1,963)
Balance as at 31 March 2007     7,854 – 7,854
Supplemental Disclosure – Oil and Gas Reserves 
and Resources (unaudited) 78
Max Petroleum Plc 
Annual Report & Accounts 2008
Glossary/Technical Terms
The following expressions contained in this 
document have the following meanings unless  
the context otherwise requires or unless it is 
otherwise provided:
2D seismic
seismic recorded in two dimensions
3D seismic
seismology that uses a grid of numerous cables, 
rather than just a few lines stretched in one direction
barrel
a unit of volume measurement used for petroleum 
and its products (7.3 barrels = 1 ton 6.29 barrels = 1 
cubic metre)
block
term commonly used to describe contract area or 
tract, as in ‘block of land’
boe
barrels of oil equivalent
bopd
barrels of oil production per day
condensate
hydrocarbons which are in the gaseous state under  
reservoir conditions and which become liquid when 
temperature or pressure is reduced. A mixture of  
pentanes and higher hydrocarbons
crude oil
liquid petroleum as it comes out of the ground, as 
distinguished from refined oils manufactured out of it
discovery
an exploration well which has encountered 
hydrocarbons
exploration
activities associated with ascertaining the existence, 
location, extent or quality of mineralised material, 
including economic and technical evaluations of 
mineralised material
exploration drilling
drilling carried out to determine whether 
hydrocarbons are present in a particular area  
or structure
exploration well
a well in an unproven area or prospect, may also be 
known as a ‘wildcat well’
field
a geographical area under which an oil or gas 
reservoir lies
G&G
geological and geophysical
gas field
a field containing natural gas but no oil
geophysical
prospecting techniques which measure the physical 
properties (magnetism, conductivity, density, etc) of 
rocks and define anomalies for further testing and 
the measurement of the earth’s physical properties  
to explore and delineate hydrocarbons, including 
electrical, seismic, gravity, magnetics, but not 
including drilling
hydrocarbon
a compound containing only the elements hydrogen 
and carbon. May exist as a solid, a liquid or a gas. 
The term is mainly used in a catch-all sense for oil, 
gas and condensate
licence
an exclusive right to search and bore for and  
get petroleum, usually granted by a national 
governing body
mean
the mean is also known as the expectation or 
expected value.  It is the average over the entire 
probability range, weighted with the probability  
of occurrence 
mm
millions
natural gas 
gas, occurring naturally, and often found in 
association with crude petroleum
oil
a mixture of liquid hydrocarbons of different  
molecular weights
oil field 
a geographic area under which one or more oil 
reservoirs lie
operator
the company which has legal authority to drill wells 
and undertake production of hydrocarbons. The 
operator is often part of a consortium and acts on 
behalf of this consortium 79
Max Petroleum Plc 
Annual Report & Accounts 2008
petroleum
a generic name for hydrocarbons, including  
crude oil, natural gas liquids, natural gas and  
their products
Pre-Caspian Basin
the sedimentary basin at the North end of the 
Caspian extending from Astrakhan in Russia to 
Aktubinsk in West Kazakhstan. Sometimes called  
Pri-Caspian, and Peri-Caspian
probable reserves
probable reserves are those unproved reserves 
which analysis of geological and engineering data 
suggest are more likely than not to be recoverable. 
In this context, when probabilistic methods are used, 
there should be at least a 50% probability that the 
quantities actually recovered will equal or exceed 
the sum of estimated proved plus probable reserves
prospect
a defined geological or geophysical feature or 
anomaly that has been surveyed and defined, 
usually by seismic data, to a degree that its 
configuration is fairly well established and that  
is considered potentially to have a hydrocarbon 
accumulation
prospective resources
prospective resources are those quantities of 
petroleum which are estimated, on a given date,  
to be potentially recoverable from undiscovered 
accumulations
proved reserves
proved reserves are those quantities of petroleum, 
which by analysis of geological and engineering 
data, can be estimated with reasonable certainty  
to be commercially recoverable, from a given date 
forward, from known reservoirs and under current 
economic conditions, operating methods, and 
government regulations. If deterministic methods  
are used, the term reasonable certainty is intended 
to express a high degree of confidence that the 
quantities will be recovered. If probabilistic methods 
are used, there should be at least a 90% probability 
that the quantities actually recovered will equal or 
exceed the estimate
reserves
generally the amount of economically recoverable 
oil or gas in a particular reservoir that is available 
for production
reservoir
the underground formation where oil and gas has 
accumulated consisting of a porous and permeable 
rock to hold the oil or gas, and a cap rock that 
prevents its escape
risk 
risk is defined as the probability of loss or failure.  
In the oil and gas industry, risk is commonly applied 
to the estimation of prospective (undiscovered) 
resources to account for the possibility that the 
outcome of drilling a well may not be successful.  
Risk is defined through the term geological chance 
of success which considers the geological factors 
that will result in the formation of a hydrocarbon 
reservoir with sufficient quality to allow for sustained 
flow rates of oil or gas
risked resources
risked prospective resource volumes are commonly 
categorised as Risked Mean Resources and are 
calculated by multiplying the unrisked mean 
resources by the geological chance of success  
to account for the risk of drilling an unsuccessful 
exploration well
salt dome
a thickening, up-welling, or doming of ductile salt 
after burial caused by variation in density and 
overburden pressure
seismic
recording of sound waves
sub-salt
lying below the Permian Salt (in the case of the  
Pre-Caspian Basin), including the Carboniferous  
and Devonian rocks
super-giant
super-giant fields have ultimately recoverable 
reserves greater than 5 billion boe as, usually, giant 
fields have ultimately recoverable reserves greater 
than 500 million boe
supra-salt
lying above the Permain salt (in the case of the  
Pre-Caspian Basin), including the Triassic, Jurassic 
and Cretaceous rocks
TD
total depth of a well, when drilling has finished
unrisked resources
unrisked prospective resource volumes are 
commonly categorised as Unrisked P90, P50, P10  
or Mean Resources and are estimated before 
multiplying by the geological chance of success 
which assumes that the drilling of an exploration 
well is successful
well log data
measurements of the physical properties in  
the borehole 80
Max Petroleum Plc 
Annual Report & Accounts 2008
Corporate Directory
Broker
JPMorgan Cazenove Ltd
20 Moorgate 
London
EC2R 6DA
Nominated Advisor
W H Ireland 
24 Martin Lane 
London
EC4R 0DR 
Corporate Communications/PR
Merlin Financial Communications Ltd
128 Queen Victoria Street
London 
EC4V 4BJ 
Registrars
Capita Registrars
The Registrars
34 Beckenham Road
Beckenham
Kent 
BR3 4TU
Corporate Lawyer
Akin Gump Strauss Hauer & Feld LLP
1111 Louisiana Street
44th Floor
Houston
Texas
TX 77002-5200
United States of America
Auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Registered Office
2nd Floor
81 Piccadilly
London
WIJ 8HY
Company Secretary
A W Harvey FCCA
Company Number 
05419021 Kazakhstan
Blocks A&E
Astrakhanskiy
Astana
Almaty
Max Petroleum is  
an independent oil  
and gas exploration,  
development  
and production  
company , with a  
focus on Kazakhstan.
Maps created by Platform 
of potential
Max Petroleum Plc
Annual Report & Accounts 2008
Max Petroleum Plc
London Office
2nd Floor 
81 Piccadilly
London W1J 8HY
Tel: +44 20 7355 9590
Fax: +44 20 7355 9591
Almaty Office
4th Floor 
32A Manas Street  
Almaty 050008 
Republic of Kazakhstan
Tel: +7 7272 378 382
Fax: +7 7272 378 381
Houston Office
9 Greenway Plaza
Suite 550
Houston 
TX 77046
United States of America
Tel: +1 713 936 0600
Fax: +1 713 493 2245
info@maxpetroleum.com
Max Petroleum Plc Annual Report & Accounts 2008