REG - Petro Matad Ltd - Operational Update

Petro MatadAnnouncement

05/05/2022 07:00

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RNS Number : 3772K  Petro Matad Limited  05 May 2022

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IN THE PUBLIC DOMAIN.

 

05 May 2022

Petro Matad Limited

('Petro Matad' or the 'Company')

Operational Update

 

LONDON, 05 May 2022: Petro Matad Limited ("Petro Matad" or "the Company"), the
AIM quoted Mongolian oil company, provides the following operational update.

Covid-19

The recent increase in Covid-19 related lockdowns and travel restrictions in
China continue to impact Mongolia at a time when it was hoped there would have
been significant relaxation. China is maintaining tight control on movement
across its borders and there are currently no signs that these controls will
be relaxed in the short term. This is impacting all businesses in Mongolia
that rely on cross-border trade including the oil field service providers.
PetroChina's export of Mongolian oil production across the border into China
is also suspended because of the Covid-19 controls and there are no Chinese
oil rigs operating in Mongolia at the moment.

Block XX Exploitation Area

Petro Matad has continued to engage with local and central Government to
secure all necessary permits. Local officials remain reticent to discuss
applications due to lobbying on social media by a vocal minority protesting
against industrial activity. This included at a recent local meeting when
allegations were made about the Company's Environmental Impact Assessment
despite the fact it was prepared as per the regulations and has been approved
by the Ministry of Environment.

For issues that cannot be resolved locally, Petro Matad has sought input from
central government and this strategy has resulted in progress on the
long-running land issue. In late April, the Cabinet of the Mongolian
Government issued a resolution directing the certification of exploration and
exploitation licences by the central Land Agency such that local approvals on
land use are not required. We are advised by industry regulator, the Mineral
Resources and Petroleum Authority of Mongolia (MRPAM), that this will allow
work on all Production Sharing Contracts (PSCs) areas to progress without land
access delays whilst the planned amendments to the land law that will remove
the current legal ambiguities pass through parliament. We are pushing to
secure the land certificates on Block XX and V as a matter of urgency. We will
follow a similar strategy with the central Government if required to ensure
there is no impact on our already completed environmental permitting.

With the Covid-19 situation in China causing operational delays in Mongolia,
the Company continues to prioritise its efforts to get Heron 1 on stream. The
contract with the chosen well completions contractor is in final form. We are
seeking confirmation that equipment and crews for the completion and readying
for production of Heron 1 are available as soon as we are ready to mobilise.
It is our operational preference that as soon as the well is stimulated and
completed it should immediately be put on production. The current suspension
of all oil production and export from PetroChina's Blocks XIX and XXI and with
all on site storage full means that we need oil export to restart in order to
optimise the start-up sequencing on Heron 1.

In anticipation of the situation improving, Petro Matad has placed orders for
surface production equipment for the Heron 1 well and discussions with
PetroChina, on the use of its production facilities are progressing well. We
are also in discussion to buy or rent equipment from PetroChina Mongolia to
avoid the need for, and current uncertainty of, importation.

Discussions with MRPAM on oil processing, transport and sales options were
concluded with their full support and we are now in discussion with
PetroChina's Mongolian affiliate on the commercial details of sharing
infrastructure and logistics.

Technical and operational cooperation, Block XX

In parallel with operational preparations for the 2022 programme, Petro Matad
continues to work with DQE Drilling (DQE) on its proposal to enter into a
cooperation agreement that could accelerate Heron Field development
activities. Petro Matad has supplied a multi-year target work programme and
this is under review in DQE's headquarters.

Block V Exploration PSC

The Cabinet resolution on land access will assist in securing the necessary
permits to allow the Company to work on the Raptor Trend. Having identified an
in-country drilling contractor with equipment and experience in drilling to
the target depth required on the Velociraptor prospect, we are now in
discussion on potential rig availability and well cost.

Mike Buck, CEO of Petro Matad, said:

"China's zero Covid-19 policy is having major impacts not only within China
but also on Mongolia. Our preparations to operate are progressing well but,
with uncertainty on when drilling operations in country will recommence, we
are focusing as a priority on Heron 1 completion and production.

We are very pleased with the outcome of the Cabinet meeting held last week.
The restoration of land use rights under the PSC is an important and necessary
step, and we will continue to work with the local, district and provincial
authorities to underline our intention to be a partner whose activities can
continue to bring benefits to the communities in which we operate.

I would also like to personally thank our shareholders for their continued
patience and support while we work to get Heron 1 on stream and implement our
broader 2022 work programme."

 

- 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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