REG - Petro Matad Ltd - Operational Update

Petro MatadAnnouncement

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RNS Number : 2853L  Petro Matad Limited  12 December 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, 12 December 2025: Petro Matad Limited, the AIM quoted Mongolian oil
company, is pleased to provide the following operational update.

Key updates

·    Heron-1 and Gazelle-1 have produced well through November making it
Petro Matad's most productive month to date.

·    Heron-2 re-test shut in for the winter.

·    The rewording of the Oil Sales Agreement is being finalised with
PetroChina in order to remove its partial withholding and secure payment of
the withheld amount. Only the matter of tax on processing fees remains to be
resolved and this is relatively minor. The 2026 Oil Sales Agreement is being
prepared incorporating the amendments to the 2025 contract.

·    A proposal to farm-in to Block XX has been received and is under
discussion.

·    SunSteppe Renewable Energy is progressing three projects and is
focusing efforts to expedite its 200MW hybrid project to ready-to build-status
during 2026.

 

Block XX production

Heron-1 continues to deliver stable production in line with the Company's
forecasts, with no free water detected. Meanwhile, Gazelle-1 started up in
early November and, after a few initial teething problems were overcome, has
made November 2025 Petro Matad's most productive month to date.

Gazelle-1 was brought onstream at 200 barrels per day and the surface
facilities have run well. The well tests on Gazelle-1 saw no free water but
some water during production has been seen along with a higher wax content
than we see in the Heron-1 oil. Rate tests are in hand to determine how best
to optimise oil production and minimise water encroachment and an assay of the
Gazelle oil is planned to investigate any differences in its chemistry from
other Block XX and Block XIX oils. Meanwhile, the oil is being accepted into
the Block XIX facilities and exported, with Gazelle-1 now delivering a welcome
revenue increase in short order.

The Heron-2 re-test continued through the month using the beam pump and the
temporary surface facilities installed. Pump outs have been efficient in
recovering the fluid previously injected into the well and the oil content of
the recovered fluid has been increasing as expected. However, the refill of
the well which determines how frequently the pump outs can be conducted has
been slow indicating either some down hole obstruction or low formation
deliverability. The operation of the temporary facilities is impacted by low
temperature and with winter conditions having now set in, the well has been
suspended until the spring without delivering a definitive result on the
well's potential performance. Work on the data recovered during the operation
will be evaluated in the next months to determine next steps.

Oil Sales Agreement

Good progress has been made over the last few weeks on the rewording of the
Oil Sales Agreement with PetroChina and this is now being finalised. Once
complete this will remove the withholding of revenue applied and secure
payment of the amount withheld to date. Only the relatively minor matter of
tax payable on processing fees remains to be agreed and we have presented
various options to PetroChina to resolve this and we are hopeful it will soon
be agreed. The Oil Sales Agreement for 2026 is being prepared incorporating
the amendments to the 2025 contract.

Block XX farm-out

We have received a proposal from one of our counterparties to farm-in to Block
XX. We have hosted their due diligence visit to Mongolia and to the Block XX
facilities, and discussions are continuing, focused on bringing this potential
cooperation to a mutually agreeable conclusion. Meanwhile we continue to
follow up on leads with two other potentially interested parties.

Block VII

In house studies continue and field work was conducted which included the
recovery of cuttings samples from the only well drilled so far in the block.
Our efforts to find a farm-in partner for Block VII continue, and we are
focused on operators active in northern China immediately over the border from
Block VII where the shared basins are already producing oil.

SunSteppe Renewable Energy

SunSteppe Renewable Energy (SRE) has made progress through the year on its
portfolio of large-scale renewable energy projects that we believe have high
value potential and can have a significant impact on Mongolia's energy
transition goals.

200MW Hybrid Renewable Energy Project

SRE is developing a Hybrid Energy Project in Tuv Province under an exclusive
MoU signed in late 2024 with Tsetsens Mining and Energy LLC (TME), the owner
of a 600MW independent power project. 300MW of coal fired power has already
been commissioned by TME and, in partnership with SRE, a renewable energy
project for 200MW of solar, wind and battery storage is being developed in two
phases:

·    Phase 1: 100MW Solar PV. Approvals, the revision of the existing
power purchase agreement and ready-to-build status are targeted by 3Q 2026.
With funding being pursued in parallel, construction completion could be
achievable in late 2027.

·    Phase 2: 100MW Wind Power will follow with construction completion
possible by late 2028.

The project is designed to supply clean energy to TME's planned "Green City"
and its adjacent mining processing complex, to provide power to Mongolia's
national transmission network and to advance the country's long-term
decarbonisation target. Key aspects of the development work have already been
completed, including the technical and commercial feasibility study and the
necessary environmental study. A required grid-connection study is being
conducted, as regulations require, by Mongolia's National Dispatching Centre.
Land for Phase 1 has been secured on TME's existing licensed area. For Phase
2, a wind resource assessment has identified priority areas and land
applications are being prepared. Meanwhile, a 120 metre wind mast will be
erected during December to commence gathering wind data which will be
required in order to secure equity investors and debt providers for the
project.

SRE has already engaged with multilateral financial institutions which have
expressed interest in providing up to 70% project finance debt as well as
with international investors who are showing interest in the equity component.
Upon obtaining the construction license (targeted in 2Q 2026) SRE will move
into formal EPC and financing negotiations.

Mongolia's First Green Hydrogen Project

SRE is leading Mongolia's first green hydrogen initiative with the huge Oyu
Tolgoi copper mine. The pilot system includes a first phase with 3MW of
electrolyser capacity generating c.160 tonnes of green hydrogen annually. The
second phase increases the project to 24MW of hybrid wind-solar power supply.
This pioneering development could facilitate the introduction of fuel-cell
transportation and will reduce the carbon footprint of the mine's operations
and improve sustainability.

SRE has brought together a strong partnership on the project including MoUs
with Mongolia's Ministry of Energy and Japan's Overseas Environmental
Cooperation Centre (OECC), an exclusive arrangement with Oyu Tolgoi and a $4
million grant from the Japanese government. A further grant application is
planned. SRE and OECC have also organised high-level missions to Japan for key
government leaders, including Mongolia's Deputy Prime Minister, to visit green
hydrogen projects already in operation.

The project has moved more slowly than originally hoped but recently Oyu
Tolgoi leadership and Mongolia's Deputy Prime Minister met and reaffirmed
their commitment to advance the pilot project.

Utility-Scale Battery Energy Storage System (BESS)

SRE has been pursuing a 50MW BESS project at Choir, a key location on the
Mongolian national grid which is critical for improving grid resiliency and
supporting the deployment of renewable energy. After some delays within the
Ministry of Energy, they have now announced an auction-based procedure for
licensing large-scale government led battery storage with two 100MW BESS
projects scheduled to be offered, one at Choir, expanding on the 50MW project
SRE proposed, and the other at Mandalgovi in 2026.

To strengthen SRE's competitive readiness, an MoU has been signed with ZTT
International, one of the top Chinese EPC contractors and the one that built
Mongolia's first utility-scale BESS financed by the Asian Development Bank.
With SRE having the only approved feasibility study for Choir and ZTT having a
proven track record of project delivery in Mongolia, the partnership is well
placed to be highly competitive in this process.

Export to China

SRE is also playing a central role in Mongolia's emerging renewable energy
export strategy. The 1.5GW Cooperation Agreement with China's State Power
Investment Corporation (SPIC) - one of China's largest state-owned utilities
with over 100GW of operational capacity - sets SPIC as the long-term
investor and SRE as its local developer.

SRE has also collaborated with ACWA Power (of Saudi Arabia) on a
multi-gigawatt renewable export study which has confirmed Mongolia's strong
competitiveness as a future clean-energy exporter to regional markets,
including China. Transmission and grid-integration work as part of this study
is continuing.

These partnerships place SRE at the forefront of Mongolia's ambition to become
a regional clean-energy supplier, accelerating alignment with the
country's Vision 2050 agenda and recognising the rising demand from
neighbouring industrial centres.

In 2025, Mongolia intensified its government-to-government engagement with
China on cross-border electricity trade. High-level diplomatic meetings in
September and November underscored both countries' commitment to expanding
cooperation in infrastructure, trade, and renewable energy. These developments
have created a strong policy foundation for launching formal negotiations on
clean-power exports beginning in 2026.

Mike Buck, CEO of Petro Matad, said:

"We have had Petro Matad's most productive month to date as a result of
Gazelle-1, our second producer, coming onstream and we are delighted to have
established reliable operations and export of this production before the onset
of winter. We are also pleased to have seen tangible progress in resolving the
issue of the revenue withholding with PetroChina.

On the project to farm out Block XX, we are encouraged by the progress and by
the proposal we have received. We are working hard to secure a good deal for
Petro Matad and in parallel we continue to work on engaging counterparties
that may be interested in Block VII and will update shareholders as we
progress.

SRE is making quite an impact on the Mongolian renewables scene and whilst
some of the projects have moved more slowly than we had hoped, we are very
hopeful that the 200MW Hybrid project with TME can be brought quickly to
ready-to-build status during the coming year."

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. The Company also has a 50% holding in the SunSteppe Renewable Energy
joint venture pursuing utility scale renewable energy projects in 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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