* Slashes FY production forecast 20 pct to 32,000-36,000 bpd
* Shares down as much as 9 pct, hit lowest since late 2011
(Adds analyst comment, clarifies unauthorised payments made)
By Abhiram Nandakumar and Karolin Schaps
BANGALORE/LONDON, Aug 29 Oil explorer Afren
slashed its full-year production forecast by 20 percent
on Friday after counting its losses from the shutdown of
operations in Iraqi Kurdistan, dragging its shares to their
lowest level in more than 2-1/2 years.
The forecast cut came a day after the company suspended two
senior employees as part of an investigation into the alleged
receipt of unauthorised payments that had already led to the
temporary suspension of its chief executive and chief operating
The explorer, which operates in Nigeria and Iraqi Kurdistan,
cut its 2014 production outlook to between 32,000 and 36,000
barrels of oil per day (bpd), from an initial forecast of 40,000
Afren shut production at its Barda Rash oil field in
Kurdistan on Aug. 8 and started evacuating staff due to
escalating security risks in the area.
"I'm not going to risk anybody's life for anything. Not one
drop of blood for a million barrels," said Egbert Imomoh,
Afren's executive chairman, during the presentation of the
company's half-year results.
Shares in Afren dropped as much as 9 percent, making them
the second-biggest losers in London's FTSE 250 index of
mid-sized companies. They traded as low as 90.35 pence, their
lowest level since late 2011.
British law firm Willkie Farr & Gallagher is expected to
conclude a review next month relating to alleged unauthorised
payments linked to three transactions.
Announcing the temporary suspension of the CEO and COO last
month, Afren had said the payments were not made by the company.
The current value of the transactions made in 2012 and 2013
is around $135 million, including $93.3 million for an agreement
on field extensions related to the Okoro field in Nigeria, Afren
said on Friday.
The review also includes $298 million in deferred tax assets
related to its Ebok oil field in Nigeria, its main producing
asset in which Afren holds a 50 percent stake.
The company gave no further comment on the investigation.
The suspension of the CEO and COO prompted ratings agency
Fitch to put Afren on its negative watch list earlier this month
until the company concludes the investigation.
Afren said it would restart operations at Barda Rash, which
produced an average of 536 bpd over the first half of the year,
"as soon as is prudent to do so".
Imomoh added that before production can resume the company
will have to go through a lengthy process of re-mobilising some
of the rigs at the field.
Afren also said on Friday its net production fell 25 percent
to 33,488 bpd over the first half of the year, halving the
company's pretax profit to $133 million.
"Weakness in the underlying business is likely to be of
secondary concern given the ongoing issues around corporate
governance," said Lucas Herrmann, analyst at Deutsche Bank.
(Editing by David Holmes and Pravin Char)