REG - Petro Matad Ltd - Operational Update

Petro MatadAnnouncement

07/12/2021 07:00

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RNS Number : 7511U  Petro Matad Limited  07 December 2021

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7 December 2021

Petro Matad Limited

('Petro Matad' or the 'Company')

Operational Update

LONDON, 7 December 2021: Petro Matad Limited ("Petro Matad" or "the Company"),
the AIM quoted Mongolian oil company, provides the following operational
update.

Block XX Exploitation Area

The Mineral Resources and Petroleum Authority of Mongolia (MRPAM) and Petro
Matad held the first Exploitation Meeting at which it was agreed that the
technical details of the benchmarking and pricing of Heron crude should be
finalised between the Company and MRPAM by year-end. This will then allow for
contract negotiations with potential buyers to begin. Mongolian crudes have
been priced benchmarked to both Brent and Daqing crudes over the years. The
Heron 1 assay is Brent-like in its chemistry and so Petro Matad is pushing for
benchmarking to Brent in discussions with MRPAM and, once agreed, plans to do
so in the follow up negotiations with potential crude oil buyers early in the
New Year.

Contracting negotiations with drilling, well completion and infrastructure
services providers are at an advanced stage with contract awards anticipated
in good time for the start of the operational season in Q2 2022. Operations
will focus on the completion of the Heron-1 discovery as a production well and
the drilling of additional production wells within the current 3D seismic
footprint.

The Company received a good response to its invitation to tender for 3D
seismic and favourable terms were negotiated with the winning contractor.
However, current Covid-19 restrictions ruled out being able to mobilise
quickly for a winter 21/22 shoot. The winning bidder's tender is valid through
2022 and as such, depending on progress with the drilling programme, Petro
Matad will review the timing of 3D seismic operations in the second half of
the coming year. All development well locations short listed for Heron phase 1
development drilling are within the area covered by existing 3D seismic so the
timing of the acquisition of the new survey is not critical.

A number of administrational requirements to register the new Exploitation
Area have been completed with the cooperation of various government
ministries. Petro Matad has also led an industry effort in cooperation with
other operators in country to submit proposed changes to the laws and
regulations governing the petroleum sector with a view to improving the
investment climate. In addition, Petro Matad is working with Mongolia's
Professional Inspection Agency to revise the check lists used for signing off
on any new upstream oil and gas installations. Petro Matad has also made firm
proposals to central government on how best to resolve the conflicts within
Mongolian law on land access and usage. Whilst it is hoped these will generate
workable changes to the legislation, in parallel Petro Matad is working with
local government to guarantee access to all the sites that could possibly be
used by the Company in 2022.

Block V Exploration PSC

The Block V exploration PSC in central Mongolia remains a keen focus of the
Company with a number of very attractive, low cost, high impact prospects
identified. Petro Matad is in discussion with drilling contractors to
determine the potential timing and costs of drilling operations on the
Velociraptor trend. The Company is also progressing the final stage of its
environmental impact assessment in order to be able to operate on Block V in
2022 and beyond. This work had been held up due to Mongolia's restrictions on
meetings being held during the pandemic, but a pragmatic work around has been
agreed by all parties and the Company hopes to submit its documentation to the
Ministry of Environment before year end with the expectation of approval of
the environmental impact assessment in Q1 2022.

Portfolio Management

Petro Matad's efforts to partner with local and/or foreign companies on
development and exploration activities in Mongolia continue and the Company
has a virtual data room running at the moment. Whilst the Company is pushing
the receiving parties to act quickly in completing their evaluations, Petro
Matad continues to make 2022 operational preparations in parallel which will
be executed with or without partners.

Petro Matad is also pursuing a strategy to work up and sign new
exploration/appraisal areas in Mongolia and has high graded two areas of
interest to date for which the Company plans to submit acreage applications.

Covid-19

The covid pandemic continues to be a significant challenge globally. At Petro
Matad, several members of staff and their families have contracted the virus
but thankfully all have recovered and appear not to be suffering from any
severe side-effects. Whilst vaccination rates in Mongolia are high and
infection rates have fallen to the lowest levels in 8 months, the government
remains vigilant and the recent emergence of the omicron variant has resulted
in travel restrictions being imposed on arrivals from countries where the
strain has been identified. Border restrictions imposed by China have impacted
the activities of other operators in Mongolia during 2021 and the exact timing
and execution of Petro Matad's planned 2022 operations will be subject to
restrictions which may remain in place. However, in negotiations with service
providers, there is confidence that with the right preparations, operations in
the 2022 drilling season can be executed smoothly.

Sustainability opportunities

The Board of Petro Matad has taken the decision to seek to expand the
Company's activities in Mongolia into sustainable and renewable energy in
addition to its ongoing work in the oil and gas sector.

Work has been done this year to determine the status of the renewable energy
sector in country, as Mongolia has substantial potential for both wind and
solar power generation. A number of projects that have government support to
execute have been identified and are being evaluated for accessibility and
commercial potential.

In addition, Petro Matad is looking at renewable energy possibilities to
deploy in its Heron oilfield development. The area around Heron is well suited
to both wind and solar power generation. Petro Matad is also studying the
potential to use CO(2) injection as an enhanced oil recovery mechanism for the
Heron development. This technique has been widely used around the world for
many years and has proven particularly successful in some of the larger oil
field developments onshore in northern China. It has not been deployed in
Mongolia where water injection has traditionally been used for reservoir
pressure maintenance. Southern Mongolia is effectively covered by desert
steppe and water is an increasingly precious resource. As such, an alternative
to large scale water usage in oil production operations is considered a goal
worth pursuing. Technical studies are now underway to determine the potential
effectiveness of CO(2) injection into the reservoirs of the Tamsag Basin.

Mike Buck, CEO of Petro Matad, said:

"We are delighted to have concluded our first Exploitation Meeting and are
looking forward to beginning contract negotiations with potential buyers for
Heron production. Additionally our recent decision to expand our activities
into sustainable and renewable energy is an exciting new frontier for us that
we look forward to updating investors on in the coming months.

The Company is on target to be ready for an active operational programme in
2022 focused on achieving the start of production from the Heron discovery. A
lot of progress has been made over the last few months despite the challenges
of the ongoing pandemic and the efforts of our dedicated staff are very much
appreciated."

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 Joint Broker)
 Toby Gibbs                                                                  +44 (0) 20 7408 4090

 John More
 Arden Partners (Joint Broker)

 Paul Shackleton                                                             +44 (0) 20 7614 5900
 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.

 

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