REG - Petro Matad Ltd - Operational Update

Petro MatadAnnouncement

26/08/2025 07:00

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RNS Number : 6508W  Petro Matad Limited  26 August 2025

Petro Matad Limited

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

Operational Update

LONDON, 26 August 2025: Petro Matad Limited, the AIM quoted Mongolian oil
company is pleased to provide the following update.

 

Key updates

·    Block XX well testing operations are underway at Heron-2.

·    Oil sales payments for the months of May and June have been received
and the July payment is being processed by PetroChina.

·    Block XX Exploitation Licence extended by three years along with
customs duty payment holiday.

·    Application for a new PSC has been withdrawn as coordinates have not
been confirmed.

·    Block XX farm out discussions ongoing.

 

Production Operations

Mobilisation of equipment and crew for well test operations on the Heron-2
well has been completed and downhole work commenced on 25 August. The planned
activities include an acid wash over the reservoir interval and a retest of
the well. Work is being carried out by DQE International under the Company's
close supervision. The first phase is expected to take c. 20 days to complete.
If a commercial rate of oil production is achieved during the test, then the
well will be completed as a producer and production facilities will be
installed with the aim to have the well on stream before year-end. If a
commercial rate of oil production is not achieved, then a water injectivity
test will follow to assess the potential to use Heron-2 as a water injector to
provide reservoir pressure support to enhance production at Heron-1.

Upon completion of well operations at Heron-2, equipment will move to the
Gazelle-1 location for well test operations there during the second half of
September. A well test at Gobi Bear-1 will then follow.

Oil Sales

Payment for oil sales for the months of May and June have been made by
PetroChina with c. $320,000 received. Once again, PetroChina has withheld 30%
of the invoiced amount pending progress with the Mongolia tax authorities on
its tax concerns related to the oil sales agreement. The July oil sales
invoice was submitted as per the signed agreement in early August and we are
pushing for payment on this too. In parallel, the Company's discussions with
the Mongolian tax authorities have progressed well and we are advised that
they are preparing a letter addressing the concerns raised by PetroChina. A
number of meetings have been held with the PetroChina finance team during the
month and will reconvene as soon as we have the letter from the tax
authorities in hand.

Extension of Block XX Exploitation Licence

The Company has been in discussions with both the industry regulator, the
Mineral Resources and Petroleum Authority of Mongolia (MRPAM), and with the
Ministry of Industry and Mineral Resources (MIMR) for some time regarding the
long delays suffered on Block XX after the July 2021 award of the Block XX
Exploitation Licence until the granting of land access in May 2024. We have
now secured from MIMR a three-year extension to the duration of the
Exploitation Licence in recognition of the time lost. The immediate
significance of this is that the five-year payment holiday period for customs
duties on imported goods and equipment is also extended by three years which
will result in savings in future operations.

Withdrawal of Application for new acreage in the Mongolian exploration
licencing round

As reported in December 2023, Petro Matad was chosen by the government as the
selected contractor for the award of two new Production Sharing Contracts
(PSCs) and we subsequently signed the Block VII PSC in January of this year.
On the other block, the Company set a condition precedent in its application
that the coordinates of a culturally protected area in one of the larger
sedimentary basins within the acreage needed to be confirmed by the government
before the Company would sign the contract. The coordinates have still not
been confirmed and so Petro Matad has withdrawn its application for the
acreage. As and when coordinates are confirmed, Petro Matad will review the
acreage again as part of its ongoing evaluation of prospective open areas in
the country.

Block XX Farm out

As previously reported, one counterparty in our Block XX farm out process
requested and was sent a draft farmout agreement and other pertinent
documentation. Further discussions have taken place and a draft Letter of
Intent is in circulation for acceptance and signature covering the completion
of mutual due diligence and negotiations. Discussions continue.

Mike Buck, CEO of Petro Matad, said:

"We look forward to a busy period with the well test operations planned in
Block XX.

We are pleased to have received another payment from PetroChina but we are
focused on removing the withholding and getting paid in full and on time as
per the signed agreement. Cooperation at site between our production team and
PetroChina's Block XIX field staff continues to run smoothly.

The approval of a three-year extension to the Block XX Exploitation Licence
shows that MIMR recognises just causes and remains focused on improving the
business environment in the upstream sector in Mongolia. The approval was
secured through the persuasion and persistence of our government relations
team.

The withdrawal of our application for a second new PSC is prudent given that
access to explore prospective areas remains in doubt whilst coordinates are
unconfirmed. Our new Block VII PSC has no such uncertainties and the support
of central and local authorities in the area has already been demonstrated
during the first phase of our activities."

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

 

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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