REG - Petro Matad Ltd - Operational Update

Petro MatadAnnouncement

14/02/2023 07:00

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RNS Number : 7581P  Petro Matad Limited  14 February 2023

 

For immediate release

 

14 February 2023

Petro Matad Limited

("Petro Matad" or the "Company")

Operational Update

 

Petro Matad (AIM: MATD), the AIM quoted Mongolian oil company, provides the
following operational update.

Key Company Updates

·    Progress being made to register Block XX Exploitation Area as special
purpose land

·    High impact exploration drilling on the Velociraptor prospect
scheduled for Q2 2023

·    Application submitted for a new block in Mongolia's 2023 Exploration
Tender Round with plans for more during the year

·    Joint venture established with an active and successful renewable
energy project developer to pursue opportunities in Mongolia's high potential
renewables sector

·    Successfully closed a recent equity capital fundraise round totalling
$6.6 million

Block XX Exploitation Licence

The Mongolian government's process to certify Petro Matad's Block XX
Exploitation Licence area as special purpose land is progressing although more
slowly than the Company was initially advised. We continue to press for rapid
action at all levels and this remains our number one priority. Formal
correspondence from central, provincial and district authorities has been sent
to the relevant agencies as required by the legally prescribed process ahead
of submission of the certification to cabinet for approval.

Contracts with the in-country well testing and completion contractors are in
place for the completion work required on Heron 1. Discussions with Petro
China on oil processing, export and sales are ongoing with the facilitation of
industry regulator, the Mineral Resources and Petroleum Authority of Mongolia
("MRPAM").

Negotiations with DQE Drilling ("DQE"), the main provider of drilling services
in Mongolia, have been completed and the contract for a multi-well development
drilling programme is with DQE's head office for review and approval after
which we plan to seek the approval of MRPAM. We have also been approached by
other service providers looking to enter the oil sector in Mongolia and we are
reviewing their credentials and equipment to see if they may offer a
competitive solution for our needs now or in the future.

Block V Exploration

With the conclusion of our recent equity raise we are now preparing to drill
the Velociraptor 1 well. With mean prospective resource potential of 200
million barrels recoverable and 380 million barrels recoverable of follow up
potential in adjacent structures, the well will have a transformational impact
for Mongolia as well as for the Company in the event of success.

We expect the well will be closely watched by the global E&P community as
it has significance not only for the Company's Block V but also for the many
lightly explored or unexplored basins of southern and western Mongolia that
constitute one of the largest remaining unexplored onshore exploration
frontiers on the planet.

The rig contract has been signed with Major Drilling, an internationally
active Canadian company that has been operating in Mongolia for over 20 years.
Discussions with the contractor are underway to confirm a spud date during the
second quarter of 2023. The well has a proposed total depth (TD) of 1500m and
is expected to take c.30 days to drill. The well will be within the
prospective target section from c.600m until TD and will have a suite of
conventional wireline logs run. In the event of encouragement, an appraisal
well will be planned and testing operations will then be conducted. With a
domestic oil refinery under construction and with domestic oil production
forecast to fall short of meeting the refinery's needs, Petro Matad is seeing
strong government support for its exploration efforts.

In addition, the Company is stepping up its community interaction in Block V
to capitalise on the existing goodwill and to ensure that we continue to be
accepted as a cooperative, constructive and trustworthy partner.

2023 Exploration Licencing Round

MRPAM's Exploration Licencing round offering 14 blocks in prospective fairways
across the southern half of Mongolia is in progress. Petro Matad has submitted
an application for one of the blocks offered in Phase 1 of the process and
hopes to be called to negotiate commercial terms and work programme in due
course. The Company has identified three other blocks that are scheduled for
release in phases 2 and 3 of the round during 2023 and will be doing the
necessary technical work to determine if these blocks merit applications being
submitted. Petro Matad has a significant competitive advantage as the
country's leading explorer with a skilled and experienced team and an
extensive database built up over many years of activity.

Renewable Energy Opportunities in Mongolia

Following the Company's review of the renewable energy sector in Mongolia and
the recent changes in government strategy, the Company sees significant
opportunity for a nimble and entrepreneurial operator to be successful in the
country. The government's energy strategy calls for an increase in the
contribution of renewable energy to its overall electricity supply from c.10%
now to 30% by 2030, to be fully self-sufficient and to be exporting power to
its neighbours and potentially beyond by the end of the decade.

Petro Matad is forming a joint venture with a very active and successful
Mongolian renewable energy project developer called SunSteppe Energy
("Sunsteppe"). The combination of SunSteppe's expertise, contacts and track
record with Petro Matad's project execution experience and in-country support
functions will give the joint venture an excellent capability to compete in
the country's growing renewables sector and to benefit from the early entrant
advantages that the Company sees are on offer. Mongolia has huge renewable
energy generation potential from solar and wind projects. The country has
large areas of very lightly inhabited land and a firm commitment from the
government to improve the environment and the wellbeing of its population, to
reduce its emissions and to become an exporter of clean energy.

The joint venture being established will be called SunSteppe Renewable Energy
and it is looking to develop multiple projects to construction ready status
within the next 24 months. Priority projects have already been identified in
solar supplied battery storage to help improve Mongolian grid efficiency and
in clean energy supply to mining projects in the South Gobi region. Projects
identified range in size from a few tens of megawatts to hundreds of
megawatts.

Mike Buck, CEO of Petro Matad, said:

"Whilst we are pleased to see the process for special purpose certification of
Block XX moving forward, we are disappointed with the pace and have made this
abundantly clear to the authorities. Our recent interactions with the local
authorities have given us renewed hope that we may be able to secure local
land use approvals and we are pursuing these in parallel with the
certification process.

We are very excited about the prospectivity in Block V and are looking forward
to drilling Velociraptor 1 during the second quarter. This low cost well is
targeting big resource potential and will have a huge financial impact for
Petro Matad if it comes in.

We are also enthusiastic to get involved in the renewable energy sector in
Mongolia through the SunSteppe Renewable Energy joint venture. Our Mongolian
partners in this endeavour bring a wealth of experience and we have high hopes
that it will generate attractive opportunities in the near term.

Our recent equity raise has given the Company the financial firepower it needs
to maintain the Company's operational capability, to execute a high impact
exploration programme, to start production from our existing discovery once
permits are secured, to pursue new acreage and to expand activities into
renewables. We look forward to a busy and rewarding 2023."

- 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
 Zeus Capital Limited (Joint Broker)

 Simon Johnson                                                +44 (0) 20 7614 5900

 Louisa Waddell

 FTI Consulting (Communications Advisory Firm)
 Ben Brewerton                                                +44 (0) 20 3727 1000

 Christopher Laing

All Reserves and Resources definitions and estimates shown in this report are
based on the 2018 SPE/AAPG/WPC/SPEE Petroleum Resource Management System
("PRMS").

Technical information in this news release has been reviewed by the Company's
Technical Manager, Mr. Jerry Smart. He has over 40 years of industry
experience in oil and gas exploration and production with LASMO, Eni,
Salamander Energy and Ophir Energy. He holds a B.Sc. in Geology from King's
College, London.

Glossary

 Mean                    The arithmetic mean of quantities of petroleum estimated, as of a given date,

                       to be potentially recoverable from undiscovered accumulation by application of
 Prospective Resources   a future development project

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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