REG - Petro Matad Ltd - Interim results and Operational Update
28/09/2023 07:00
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RNS Number : 9055N Petro Matad Limited 28 September 2023
Petro Matad Limited
('Petro Matad' or the 'Company' or the 'Group')
Interim results for the six months ended 30 June 2023 and Operational Update
LONDON, 28 September 2023: Petro Matad Limited, the AIM quoted Mongolian oil
company, announces its unaudited interim results for the six months ended 30
June 2023 and provides an operational update.
Key Company Updates
· The Company continues to push the Government to complete the
regulatory formalities to allow completion operations at Heron 1 to commence.
The Provincial Government has been very slow to respond which is putting the
plan to complete the well before winter at risk.
· The local district authorities have however indicated that they are
open to the Company operating in parallel with the slow-moving bureaucracy if
Central Government supports the Company in doing so. This option is now being
pursued as a priority.
· The 2022/23 Mongolian Exploration Tender Round continues with Petro
Matad submitting two applications for new blocks and actively looking at one
more area to determine if a third application is merited.
· Our renewable energy JV, SunSteppe Renewable Energy, is actively
pursuing two projects, a battery energy storage facility and a green hydrogen
project as it continues to push into the Mongolian renewable energy sector.
Both projects have the potential to generate revenue in the near term.
Financial Summary 1H 2023
The Group posted a loss of USD 1.90 million for the 6-month period ended 30
June 2023, which compares to a loss of USD 1.62 million for the comparable
period in 2022. The Company's cash balance at 30 June 2023 was USD 8.39
million (USD 0.82 million in cash and USD 7.57 million in Financial Assets -
which are term deposits with a term of 3 months or more), which compares to a
cash balance of USD 6.62 million (USD 3.10 million in cash and USD 3.52
million in Financial Assets) on 30 June 2022.
As previously announced, a successful fundraise totalling USD 6.6 million of
gross proceeds was completed in February 2023, primarily to fund exploration
drilling in the Company's operated Block V and to advance renewable energy
opportunities through a newly established joint venture. Despite the
continuing frustration with the delays in progressing the development of the
Heron discovery it was very encouraging that both the placing and retail offer
were over-subscribed.
Operational Summary 1H 2023
On the Company's Block XX where the Heron discovery is ready for the first
phase of development to begin, the land access issue, and thus commencement of
production operations, remained delayed through the first half of 2023 subject
to registration of the Exploitation Area as Special Purpose Land in accordance
with Mongolia's Land Law. Significant progress was made to secure the
certification and all ministries in the Mongolian Government confirmed their
support. The documentation for the certification was completed by end June for
submission to Cabinet in July 2023.
In parallel, the Company finalised negotiations with DQE Drilling on a
long-term drilling contract which will be submitted to industry regulator the
Mineral Resources and Petroleum Authority of Mongolia (MRPAM) for discussion
and approval. Commercial negotiations advanced with PetroChina for the use of
its production infrastructure on neighbouring Block XIX.
On the Company's Block V exploration PSC in central Mongolia, the Velociraptor
1 well was drilled on a high impact prospect in June/July with the full
support of the local communities. The well was drilled on schedule and within
budget but as has been reported previously, despite encountering more than 350
metres of good quality reservoir sections, the well was dry and it has been
plugged and abandoned.
MRPAM's 2022/23 Exploration Tender Round continued through the first half of
the year and the Company has made applications for two blocks. Negotiations of
the contractual terms are ongoing.
In early 2023, Petro Matad completed the formation of a joint venture company,
SunSteppe Renewable Energy (SRE), to develop renewable energy projects in
Mongolia with the goal of reaching construction ready status on its first
projects within 24 months. Priority projects included a battery energy storage
system project designed to help improve the stability of Mongolia's
electricity grid and so reduce coal consumption for power generation and allow
the dispatch of more renewable energy from projects already in operation. The
joint venture is also pursuing off-grid projects to supply renewable energy to
mining projects where operators are keen to decarbonise their operations.
Operational Update and look ahead
Block XX: The Cabinet approved the special purpose certification of the Block
XX Exploitation Area in early July, following which the Company has been
pushing hard for the Government to complete the regulatory formalities and so
allow completion operations at Heron 1 to commence. Whilst good progress has
been made with Central Government agencies, the Tripartite Agreement between
the Land Agency, the Ministry of Mining and Heavy Industry (MMHI) and the
Provincial Government which regulates the management of special purpose land
has yet to be finalized. The Land Agency issued the draft in July and MMHI
quickly responded positively but the Provincial Government wants to complete
herder compensation first and this further bureaucratic delay may jeopardise
the chance to put Heron 1 on production before the winter operational shut
down. In response, the Company is urging central and provincial authorities to
speed up the remainder of the process and, with the special purpose
certification now approved, Petro Matad has asked the district authorities to
allow Heron 1 operations to go ahead in parallel with the slow-moving
bureaucracy at central and provincial levels. The district representatives
have signaled their willingness to consider this so long as the Central
Government supports the initiative and MRPAM has confirmed its support and is
preparing a letter to that effect. The Company continues to direct all its
efforts at getting Heron 1 on stream before the oilfield contractors shut down
for the winter.
Block V: The post-well evaluation of Velociraptor 1 is progressing.
New acreage: In addition to the two applications lodged for new blocks earlier
in the year, Petro Matad is looking at one more area in the 2022/23
exploration tender round to determine if a third application is merited.
Renewables: Post the period end, the Company's renewable energy vehicle, SRE,
has made very good progress. In consultation with the Ministry of Energy, the
need for a 50MW/150MWh battery energy storage facility in central Mongolia was
defined. SRE's team has completed the required feasibility studies and the
grid connection study for the project has been approved by the National
Dispatching Centre. All required documentation has been submitted to and
accepted by the Technology Committee of the Ministry of Energy. Once the
committee's approval is in hand, the License for Construction of the facility
will be requested. SRE expects that this project can be brought to
construction ready status with a power purchase agreement and tariffs in place
by mid-2024. SRE has access to land already under lease for the facilities
within two kilometres of the tie in point and the footprint is small. The
development costs of this project are low and the project is expected to offer
a double-digit rate of return and could be online and generating revenue by
2025.
A second project involving a utility scale wind farm to supply renewable
energy to generate green hydrogen for use at a mine operation in the South
Gobi is also progressing with a forecast timescale similar to SRE's battery
storage project. The project is designed to demonstrate the viability of green
hydrogen as a fuel for use in the mining industry in Mongolia and SRE is very
excited to be involved. This initiative has the strong support of the
Mongolian Government and a memorandum of understanding has been signed with
the Ministry of Energy.
SRE and Petro Matad will determine, once these two projects reach construction
ready status, how best to fund them. Debt funding for similar projects is
already established in Mongolia, leaving open the possibility that SRE can
aspire to stay involved in the construction phase and establish itself as a
key renewable power producer in the country.
The potential for renewable energy in Mongolia is huge with solar and wind
power set to make up an increasing part of the country's energy mix in the
coming decades. This has been embraced by lawmakers, with Mongolia ratifying
international conventions including the Paris Agreement. SRE has made good
progress so far and has identified several other projects for consideration.
We look forward to progressing this exciting new venture that has the
potential to generate revenue in the near term.
Mike Buck, CEO of Petro Matad, said:
"The slow pace of the completion of the regulatory process that will allow us
to commence the Heron development is extremely frustrating. Whilst we are
pushing hard with all agencies, and we have equipment and contractors ready to
mobilise, unless the pace suddenly quickens it is now unlikely that we will
get the Tripartite Agreement signed in time. However, we are working on a
limited access agreement at district level and leaving no stone unturned to
give us the chance to achieve our goal of getting Heron 1 onstream before
winter.
Meanwhile, it is pleasing to see that our renewable energy initiative is
moving ahead. The battery storage project has considerable follow-on potential
since the Ministry of Energy has identified a significant need for energy
storage in various locations throughout the country. The Government is very
keen to see if green hydrogen can be used effectively, whilst the mine
operators are looking to decarbonise their operations and SRE's project
targets these goals whilst also providing the potential for an excellent
commercial return for the developer.
As ever we appreciate our shareholders' patience as we work through the final
stages of getting Heron 1 on stream and in particular, those shareholders that
have been with us on this journey since the Heron discovery and before. I look
forward to updating you further on our renewable energy initiative and our
other ventures."
Further operational updates will be provided in due course.
- Ends -
Further information please contact:
Petro Matad Limited
Mike Buck, CEO +976 7014 1099 / +976 7575 1099
Shore Capital (Nominated Adviser and Broker)
Toby Gibbs +44 (0) 20 7408 4090
Zeus (Joint Broker) +44 (0) 20 3829 5000
Simon Johnson, Louisa Waddell
FTI Consulting (Communications Advisory Firm)
Ben Brewerton +44 (0) 20 3727 1000
Christopher Laing
About Petro Matad
Petro Matad is the parent company of a group focussed on oil exploration, as
well as future development and production in Mongolia. At the current time,
Petro Matad holds 100% working interest and the operatorship of two Production
Sharing Contracts with the Government of Mongolia. Block XX has an area of 218
square kilometres in the far eastern part of the country and Block V has an
area of 7,937 square kilometres in the central western part of the country.
Petro Matad Limited is incorporated in the Isle of Man under company number
1483V. Its registered office is at Victory House, Prospect Hill, Douglas, Isle
of Man, IM1 1EQ.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED 30 JUNE 2023
Consolidated
30 Jun 2023 30 Jun 2022
$'000 $'000
Continuing Operations
Revenue
Consulting service revenue 100 -
Interest Income 11 20
Other Income 30 -
141 20
Expenditure
Consultancy fees (62) (79)
Depreciation and amortisation (89) (73)
Employee benefits expenses (892) (874)
Exploration expenditure (52) (75)
Other expenses (948) (542)
Profit/(Loss) from continuing operations before income tax (1,902) (1,623)
Income tax expense - -
Profit/(Loss) from continuing operations after income tax (1,902) (1,623)
Net Loss (1,902) (1,623)
Other comprehensive income/(loss)
Exchange rate differences on translating foreign operations 5 (82)
Other comprehensive income/(loss), net of income tax 5 (82)
Total comprehensive loss (1,897) (1,705)
Profit/(Loss) attributable to owners of the parent (1,902) (1,623)
Total comprehensive income/(loss) attributable to owners of the parent (1,897) (1,705)
Earnings/(loss) per share (cents per share)
- Basic and diluted earnings/(loss) per share (0.18) (0.18)
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Consolidated
30 Jun 2023 31 Dec 2022 30 Jun 2022
$'000 $'000 $'000
ASSETS
Current Assets
Cash and cash equivalents 815 1,476 3,096
Trade and other receivables 346 2,607 9
Prepayments 215 138 183
Financial assets 7,572 1,017 3,524
Inventory 218 215 218
Total Current Assets 9,166 5,453 7,030
Non-Current Assets
Exploration and evaluation 15,275 15,275 15,275
Investment in SunSteppe Power LLC 468 - -
Property, plant and equipment 266 261 90
Right-of-Use asset 38 92 30
Total Non-Current assets 16,047 15,628 15,395
TOTAL ASSETS 25,213 21,081 22,425
LIABILITIES
Current liabilities
Trade and other payables 317 456 392
Lease liability - - -
Total Current Liabilities 317 456 392
TOTAL LIABILITIES 317 456 392
NET ASSETS 24,896 20,625 22,033
EQUITY
Issued capital 160,177 154,057 154,057
Reserves 61 8 93
Accumulated losses (135,342) (133,440) (132,117)
TOTAL EQUITY 24,896 20,625 22,033
CONDENSED CASH FLOW STATEMENT
FOR THE HALF-YEAR ENDED 30 JUNE 2023
Consolidated
30 Jun 2023 30 Jun 2022
$'000 $'000
Cash flows from operating activities
Payments to suppliers and employees 166 (1,509)
Consulting service revenue 100 -
Interest received 11 20
Net cash flows from/(used in) operating activities 277 (1,489)
Cash flows from investing activities
Purchase of property, plant and equipment (26) (16)
Purchase of financial assets (6,555) 3,521
Investment in SunSteppe Power LLC (468) -
Proceeds from the disposal of plant and equipment - -
Net cash flows from/(used in) investing activities (7,049) 3,505
Cash flows from financing activities
Proceeds from issue of shares 6,523 -
Capital raising costs (403) -
Payments of lease liability principal (13) -
Net cash flows from/(used in) financing activities 6,107 -
Net increase/(decrease) in cash and cash equivalents (665) 2,016
Net foreign exchange differences 4 (82)
Cash and cash equivalents at beginning of period 1,476 1,162
Cash and cash equivalents at end of period 815 3,096
STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 30 JUNE 2023
Consolidated
Attributable to equity holders of the parent
Issued Capital Accumulated Losses Other
$'000 $'000 Reserves $'000 Total
$'000
As at 1 January 2022 154,057 (130,524) 182 23,715
Income/(Loss) for the period - (1,623) - (1,623)
Other comprehensive income - - (82) (82)
Total comprehensive income/(loss) for the period 154,057 (132,147) 100 22,010
Transactions with owners in their capacity as owners
Issue of share capital - - - -
Cost of capital raising - - 23 23
Share based payments - 30 (30) -
As at 30 June 2022 154,057 (132,117) 93 22,033
As at 1 January 2023 154,057 (133,440) 8 20,625
Income/(Loss) for the period - (1,902) - (1,902)
Other comprehensive income - - 5 5
Total comprehensive income/(loss) for the period 154,057 (135,342) 13 18,728
Transactions with owners in their capacity as owners
Issue of share capital 6,523 - - 6,523
Cost of capital raising (403) - - (403)
Share based payments - - 48 48
As at 30 June 2023 160,177 (135,342) 61 24,896
1. CORPORATE INFORMATION
The financial report covers the consolidated entity of Petro Matad Limited and
its controlled entities.
Petro Matad Limited, a company incorporated in the Isle of Man on 30 August
2007, has six wholly owned subsidiaries: Capcorp Mongolia LLC and Petro Matad
LLC (both incorporated in Mongolia), Central Asian Petroleum Corporation
Limited ("Capcorp"), Petromatad Invest Limited and Petro Matad Energy Limited
(all incorporated in the Cayman Islands), Petro Matad Energy Limited
(incorporated in the Isle of Man) and Petro Matad Singapore Pte Ltd
(incorporated in Singapore). The Company has also entered into a joint venture
with SunSteppe Power LLC (a renewables energy company focused on generation of
clean energy in Mongolia), which is incorporated in Mongolia and is a 50%
owned subsidiary of Petro Matad LLC.
Petro Matad Limited trades on the Alternative Investment Market (AIM), which
is a sub-market of the London Stock Exchange, under the symbol MATD. Its major
shareholder is Petrovis Matad Inc.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The half-year financial report does not include all of the notes of the type
normally included within the annual financial report and therefore cannot be
expected to provide as full an understanding of the financial performance,
financial position and financing and investing activities of the consolidated
entity as the full financial report.
The half-year financial report should be read in conjunction with the annual
Financial Report of Petro Matad Limited as at 31 December 2022. The half-year
consolidated financial statements have been prepared using the same accounting
policies as used in the annual financial statements for the year ended 31
December 2022.
It is also recommended that the half-year financial report is considered
together with any public announcements made by Petro Matad Limited and its
controlled entities during the half-year ended 30 June 2023.
(a) Basis of Preparation
The half-year consolidated financial report is a general purpose financial
report, which has been prepared in accordance with the requirements of
International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ('IASB'). The half-year financial
report has been prepared on a historical cost basis, except where stated.
The financial report is presented in US dollars and all values are rounded to
the nearest thousand dollars ($'000).
For the purpose of preparing the half-year financial report, the half-year has
been treated as a discrete reporting period.
(b) Basis of consolidation
The consolidated financial statements comprise the financial statements of the
Group as at 31 December each year.
Subsidiaries are entities controlled by the Group. Control exists when the
Group has the power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. In assessing control,
potential voting rights that presently are exercisable or convertible are
taken into account. The financial statements of the subsidiaries are included
in the consolidated financial statements from the date that control commences
until the date that control ceases.
The financial statements of subsidiaries are prepared for the same reporting
period as the parent company, using consistent accounting policies.
Adjustments are made to bring into line any dissimilar accounting policies
that may exist.
A change in the ownership interest of a subsidiary that does not result in a
loss of control is accounted for as an equity transaction.
All intercompany balances and transactions, including unrealised profits
arising from intra-group transactions, have been eliminated in full.
Unrealised losses are eliminated unless costs cannot be recovered.
3. CONTRIBUTED EQUITY
CONSOLIDATED
30 Jun 2023 31 Dec 2022
$'000 $'000
Ordinary shares (i) 160,177 154,057
1,113,883,601 shares issued and fully paid.
(31 Dec 2022: 898,761,649)
160,177 154,057
(i) Ordinary shares
Full paid ordinary shares carry one vote per share and carry the right to
dividends.
Movement in ordinary shares on issue Number of Shares Issue Price$ $'000
At 1 January 2023 898,761,649 154,057
Issue of shares through direct subscriptions on 10 Feb 2023 33,333,332 $0.031 1,025
5,340
Issue of shares through its broker, Shore Capital on 10 Feb 2023 94,787,994 $0.030 2,866
2023
Issue of shares through its broker, Zeus on 10 Feb 2023 67,000,626 $0.030 2,027
Open Offer shares on 10 Feb 2023 20,000,000 $0.030 605
Cost of capital raising (403)
Share based payment -
At 30 June 2023 1,113,883,601 160,177
4. RESERVES
A detailed breakdown of the reserves of the Group is as follows:
Equity benefits reserve Foreign currency translation Total
Merger reserve
Consolidated $'000 $'000 $'000 $'000
As at 1 July 2022 831 563 (1,301) 93
Currency translation differences - - (67) (67)
Expiry of Options - (3) - (3)
Share based payments - (15) - (15)
As at 31 December 2022 831 545 (1,368) 8
Currency translation differences - - 5 5
Share based payments - 48 - 48
As at 30 June 2023 831 593 (1,363) 61
EARNINGS/(LOSS) PER SHARE
The following reflects the income and share data used in the total operations
basic and diluted earnings/(loss) per share computations:
CONSOLIDATED
30 Jun 30 Jun
2023 2022
Basic earnings/(loss) per share
Total basic earnings/(loss) per share (US$ cents per share) (note a) (0.18) (0.18)
Diluted earnings/(loss) per share
Total diluted earnings/(loss) per share (US$ cents per share) (note b) (0.18) (0.18)
(a) Basic earnings/(loss) per share
The profit/(loss) and weighted average number of ordinary shares used in the
calculation of basic loss per share are as follows:
Net profit/(loss) attributable to ordinary shareholders (US$'000) (1,902) (1,623)
Weighted average number of ordinary shares for the purposes of basic earnings 1,067,531 898,762
per share ('000)
(b) Diluted earnings/(loss) per share
The profit/(loss) and weighted average number of ordinary shares used in the
calculation of diluted earnings per share are as follows:
Net profit/(loss) attributable to ordinary shareholders (US$'000) (1,902) (1,623)
Weighted average number of ordinary shares for the purposes of basic earnings 1,067,531 898,762
per share ('000)
Share Options and Conditional Share Awards could potentially dilute basic loss
per share in the future, however they have been excluded from the calculation
of diluted loss per share because they are anti-dilutive for both years
presented.
5. EVENTS AFTER THE REPORTING DATE
None.
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