REG - Petro Matad Ltd - Operational Update

Petro MatadAnnouncement

30/05/2025 07:00

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RNS Number : 7676K  Petro Matad Limited  30 May 2025

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY PETRO MATAD
LIMITED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF
THE MARKET ABUSE REGULATION (EU) NO. 596/2014 AS IT FORMS PART OF UNITED
KINGDOM DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018
("UK MAR"). ON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY
INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.

Petro Matad Limited

('Petro Matad' or the 'Company' or the 'Group')

Operational Update

LONDON, 30 May 2025: Petro Matad Limited, the AIM quoted Mongolian oil company
is pleased to provide the following operational update.

Key Company Updates

·    The invoices for Block XX Heron 1 production from October 2024 to end
April 2025 have been processed by PetroChina and are ready for payment. Prior
to making payment, PetroChina has asked Petro Matad to get confirmation from
the authorities that there will be no customs, VAT or tax charges levied
resulting from the Oil Sales Agreement. That engagement is underway and if the
response is slow in coming, Petro Matad and PetroChina are discussing payment
of the majority of the amount due with a percentage withheld pending
confirmation.

·    Pumping at Heron 1 is now in operation to lift oil to surface with
the well delivering c. 160 barrels of oil per day (bopd) with very low water
cut below 6 %.

·    Evaluating the merits of converting Heron 2 into an injection well to
provide reservoir pressure support to Heron 1 to enhance productivity and
recovery.

·    Tenders for connection of Heron 1 to the local electricity grid to
offset diesel usage are under evaluation.

·    Gazelle 1 well test planning is ongoing with potential to put the
well on production immediately if the test is successful.

·    Gobi Bear 1 geochemistry study has confirmed the presence of migrated
oil in the reservoir section.

·    Block VII Environmental Baseline Study completed, 2025 budget
approved and technical evaluation ongoing and attractive exploration targets
identified.

·    Discussions with potential partners on Block XX are ongoing.

Operational Update

Block XX

Oil sales

Invoices for payment for production from the October 2024 start-up of Heron 1
to the end of April 2025 have been processed for payment. Prior to making
payment, PetroChina has asked Petro Matad to get confirmation from the
authorities that there will be no customs, VAT or tax charges levied resulting
from the Oil Sales Agreement. The engagement with the authorities is underway.
The Company's tax experts have been of the view throughout the negotiations of
the agreement that no such charges are applicable under law and by precedent
but if confirmation from the authorities is slow in coming, Petro Matad and
PetroChina are discussing payment of the majority of the amount due with a
percentage withheld pending confirmation.

Heron 1

After several months of production from Heron 1 on natural flow, the reservoir
pressure has declined in line with the trend seen in Block XIX production
wells and the originally installed beam pump to lift oil to surface is now in
operation. The pumped production rate of the well is averaging circa 160 bopd
with low water cut below 6%. Based on the results of successful reservoir
pressure support programmes applied in Block XIX, we are reviewing the merits
of converting the Heron 2 well into a water injector. Pressure support can
enhance daily production and overall recovery.

The project to tie-in the Heron 1 wellsite to the nearby and recently upgraded
electricity grid, to offset diesel use for power generation and so reduce
operating costs, has reached the tender evaluation stage. If the commercial
bids are attractive, we anticipate completing the connection during the summer
months.

Potential to add more production in 2025

The planning for a well test on the Gazelle 1 oil discovery is ongoing. With a
successful test, production via the nearby Heron 1 facilities would follow
while the necessary certification work is completed to allow a full
development of the accumulation. Meanwhile, a geochemistry study on cuttings
samples from the Gobi Bear 1 well has concluded that migrated oil is present
in the reservoir section. Whilst not a conclusive indicator of moveable oil in
the well, this is a positive result and the petrophysical evaluation of the
Gobi Bear 1 logs is being revisited to determine the zones with the best
potential for oil pay and the optimal intervals for well testing. Success in a
test at Gobi Bear 1 could add significant reserves in Block XX and the well
could also be put on production through the Heron 1 facilities in short order.

Sequential well intervention activities on Heron 2, Gazelle 1 and Gobi Bear 1
offer a highly cost-effective way to further evaluate these wells. All three
are cased to bottom and suspended so the cost to re-enter and perform well
tests is low given that a small workover rig can execute the programme.

Block VII

An Environmental Baseline Study for the newly signed Block VII has been
completed and this and additional documentation have been sent to the relevant
ministries for approval after which the formal Exploration Licence will be
issued. The 2025 work programme and budget comprising studies and fieldwork
have also been approved by the Mongolian regulator, the Mineral Resources and
Petroleum Authority of Mongolia (MRPAM).

In parallel with these legal requirements, Petro Matad has been working on the
existing data. Examination of the data available on the well drilled by the
previous operator confirms that it did not reach its target depth before it
was abandoned. Drilling conditions appear to have been benign, as they
generally are in southern Mongolia, and the abandonment seems to have been the
result of equipment related and financial issues. The existing 2D seismic data
is under review with indications of a large structure in the northeastern part
of the block and this will be the subject of further work.

Mike Buck, CEO of Petro Matad, said:

"We are pleased to have agreed the amounts payable for Heron-1 production. We
are working hard with PetroChina and the Mongolian authorities to get the
first payment made and we look forward to a smooth monthly payment process
thereafter. Meanwhile, our production operations continue and, as anticipated,
after a period on natural flow, Heron 1 is now behaving more like the offset
wells in the basin and artificial lift is now in operation. Although the
pumped rate is lower than the rate on natural flow, we are pleased that the
well is continuing to deliver and is doing so at a very low water cut.

We continue preparations for some low-cost well work for 2025 to support and
potentially enhance production and Block VII appears to have some exciting
potential. Our efforts to bring in partners are continuing in parallel."

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

 Harry Davies-Ball

 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

 

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. The Company 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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