REG - Petro Matad Ltd - Operational Update

Petro MatadAnnouncement

16/01/2025 07:00

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RNS Number : 5777T  Petro Matad Limited  16 January 2025

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LIMITED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF
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INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.

 

16 January 2025

 

Petro Matad Limited

("Petro Matad" or the "Company")

 

Operational Update: Heron-1 production

and the signing of a new Production Sharing Contract

 

Petro Matad Limited (AIM: MATD), the AIM quoted Mongolian oil company,
provides the following update on production operations at the Heron-1 well in
its Block XX Production Sharing Contract area in eastern Mongolia and on the
signing of a new Production Sharing Contract.

Highlights

·   Heron-1 continues to flow oil to surface without the need for pumping.

·   Produced oil is being transported and stored in the neighbouring Block
XIX TA-1 facilities and to date 15,750 barrels have been delivered.

·   Negotiations on the Cooperation Agreement are complete and it is now
awaiting signature.

·   Petro Matad has signed a new Production Sharing Contract (PSC) in
Mongolia.

Heron-1 production

Production of oil from Heron-1 continues with the well on natural flow without
the need for pumping. Stable production of over 200 barrels of oil per day is
being maintained. At higher rates, reservoir sands are produced along with the
oil and the installation of sand screens offers a cheap solution to this and
will be programmed for the spring if the well continues to perform in this
way. Surface modifications are also being reviewed with a view to capturing
and using the associated gas that is produced along with the oil. The current
inventory of Block XX oil in the TA-1 facilities in Block XIX stands at 15,750
barrels.

The terms of the Cooperation Agreement have been agreed by the parties
involved and it is now awaiting signature by the operator of Block XIX. This
is expected in February after which sales revenue will commence.

Under the Cooperation Agreement and applying the very favourable fiscal terms
of the Block XX Production Sharing Contract, after payment of processing costs
and transportation, and after the government's royalty and production share
are deducted, Petro Matad will receive a net back of more than $40 per barrel
based on a sales price of $70 per barrel. Block XX crude will be sold at the
same price as Block XIX crude which is Daqing 33 minus $1/barrel. Daqing 33 is
usually priced at a small discount to Brent, presently a 3.3% discount. At
current oil prices the Block XX crude already in storage will generate revenue
net to Petro Matad of circa $600,000.

 

Signing of Borzon Block VII, a new Production Sharing Contract in Mongolia

As previously reported, Petro Matad was selected as the contractor for two new
exploration areas in Mongolia and the PSC for one of these, Borzon Block VII,
has now been signed. The Company holds this acreage through its Isle of Man
registered subsidiary Petro Matad Energy Ltd. which was established
specifically for this purpose. Signing of the second PSC is awaiting Cabinet
approval of the coordinates of a small, reserved area within the block.

The map below shows the location of Block VII.

Block VII comprises a very large area of some 41,141 square kilometres and is
located in the south of Mongolia adjacent to the Yin'e and other basins across
the border in northern China where oil and gas have been found in several
plays. Importantly, in addition to the Jurassic/Cretaceous play already well
known in Mongolia, oil has been found in older Triassic and Permian reservoirs
that so far have not been explored in Mongolia. It is the extension of these
oil prone basins into Block VII that make this block technically very
attractive. Block VII has previously been lightly explored by other operators
and has some 2D seismic coverage and limited well data. Geological outcrop
information is plentiful.

Contractual and fiscal terms are very attractive compared to most other
international jurisdictions. The financial commitment on Block VII is very low
as Petro Matad has been able to incorporate into the eight-year exploration
term a phasing of the work programme and the spend with the option to continue
or relinquish in part or in full at the end of each phase. This keeps the
commitment spend low until prospectivity is determined and further expenditure
is then supported. In the first two-year phase on Block VII, the agreed work
programme comprises field mapping and related studies designed to mature areas
for future seismic acquisition and/or drilling at the Company's discretion in
the following phases of the exploration term. The commitment spend for the
first two-year phase including all PSC fees is $980,000 and overall
expenditure under the contract for the full eight-year exploration period is
$14.9 million.

The attractive risk profile, cheap operating environment and very low
financial commitment make this block a good candidate for farmout and Petro
Matad is prioritising the search for partners in parallel with the low cost
exploration activities in phase 1 of the work programme. In-house technical
work on Block VII has already commenced ahead of field work planned in Q2
2025.

Mike Buck, CEO of Petro Matad, said:

"We are very pleased to see Heron-1 maintaining production and showing
potential to increase its flow rate with some low cost modifications. It is
also good to see a sizeable inventory of Block XX oil accumulating at TA-1 and
we are pushing for sign off on the Cooperation Agreement to trigger the start
of sales revenue.

The signing of Block VII adds some high quality exploration acreage to our
portfolio. The reward potential and risk profile that Block VII offers are
very attractive and we hope to be able to bring in partners to join us in
exploring this exciting new area. We are also hopeful that the signing of our
next new PSC will follow shortly and I look forward to updating shareholders".

 

Further operational updates will be provided in due course.

 

- Ends -

For 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

 Harry Davies-Ball
 Zeus Capital Limited (Joint Broker)

 Simon Johnson                                                +44 (0) 20 3829 5000

 Louisa Waddell

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

 Christopher Laing

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.

 

About Petro Matad

Petro Matad is the parent company of a group focused on oil exploration,
development and production in Mongolia. Currently, Petro Matad holds a 100%
working interest and the operatorship of the Matad Block XX Production Sharing
Contract with the government of Mongolia. Block XX has an area of 214 square
kilometres in the far eastern part of the country. As a result of the contract
award referenced herein, the Company now also holds a 100% working interest
and operatorship of the Borzon Block VII Production Sharing Contract with an
area of 41,141 square kilometres in southern central Mongolia.

 

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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