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Oil company Afren warns on production; shares halted

(Recasts, adds comments, background)

By Mamidipudi Soumithri

July 15 (Reuters) - Shares (Frankfurt: DI6.F - news) in Afren Plc (LSE: AFR.L - news) were suspended on Wednesday after the Nigeria-focused oil producer warned of lower-than-expected output and its need for further funding from bondholders.

Afren secured $255 million from bondholders in April but still needs approval for a wider restructuring which shareholders are scheduled to vote on July 24.

The London-listed company was forced to take nearly $2 billion in 2014 impairment charges and write-offs hurt by a fall in oil prices and the wiping out of reserves at an oilfield in Iraqi Kurdistan.

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On Wednesday it warned that its near-term production would likely be materially lower than expected and said it would seek a further $30 million from its bondholders.

Dragan Trajkov, an analyst at investment bank Stifel, said the lowered production outlook could put more pressure on shareholders to back the restructuring plan as any sale of Afren would result in "zero value" for them.

First Energy analyst Stephane Foucaud said that if bondholders force Afren to default on its debt, its oilfield licences in Nigeria could go to its partners or back to the government.

He said that could cause problems regarding its ownership status.

"If the company is owned completely by the bondholders, it loses its connection with Nigeria and Nigerian shareholders."

Nigerian law requires at least some Nigerian ownership in any oil and gas company operating in the west African nation.

Afren's suspended shares last closed at 1.785 pence on Tuesday. (Additional reporting by Abhiram Nandakumar in Bengaluru and Chijioke Ohuocha in Lagos; editing by Gopakumar Warrier and Jason Neely)