REG - Petro Matad Ltd - Operational Update

Petro MatadAnnouncement

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RNS Number : 0338G  Petro Matad Limited  28 May 2026

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, 28 May 2026: Petro Matad Limited, the AIM quoted Mongolian oil
company, is pleased to provide the following operational update.

 

Key updates

·    PetroChina has advised that the 2026 Oil Sales Agreement will be
approved imminently.

·    Production from Heron-1 and Gazelle-1 continues in line with
forecast.

·    A technically and commercially attractive proposal to acquire a 3D
seismic programme over the Block XX Exploitation Area during the coming months
is under review.

·    The recent rise in oil price has seen interest from potential
partners in Petro Matad's portfolio increase and farm-in discussions are
progressing.

·    Work is continuing on our 200MW Hybrid renewable energy project and
Sunsteppe Renewable Energy is pursuing three new, sizeable projects.

 

Oil Sales Agreement

As previously reported, all issues outstanding with the 2025 Oil Sales
Agreement were resolved and payments were made. In subsequent discussions with
industry regulator the Mineral Resources and Petroleum Authority of Mongolia
(MRPAM), with Block XIX operator PetroChina and with the General Tax Authority
of Mongolia, a common understanding was reached on the best way to word the
2026 Oil Sales Agreement to align it with the Petroleum Law and tax
legislation. Although PetroChina Mongolia approved the new agreement, approval
stalled in their headquarters as their Compliance Department sought an
amendment to PetroChina's contract with the refinery to incorporate wording
relating to Block XX crude. However, we are now informed that this issue has
been resolved and the approval process will be completed shortly.

With Block XX production accumulating in the Block XIX storage tanks and with
a rising oil price through 2026, Petro Matad was prepared to give PetroChina
time to resolve its issues as the delay in selling the year's production to
date, which totals c.35,000 barrels, gives the Company the chance to secure a
substantially higher price per barrel than had the oil already been sold month
by month through the year. In parallel, Petro Matad approached Chinese oil
traders to set up an independent route to market in case the delay continued.
Interest was shown and this remains an option, but with PetroChina's approval
now expected, the tried and trusted export operation remains our strong
preference.

Block XX production

Heron-1 continues to perform as forecast with average oil production from the
well of 126 barrels per day through the first quarter. The water cut remains
low and stable at c.3%. The gradual decline in the oil rate is in line with
the production characteristics of the basin. The approved plan of development
for Heron includes water injection wells later in the field life to support
reservoir pressure and improve recovery per well and increase the overall
recovery factor from the field.

Gazelle-1 production has been optimised and the water cut has stabilised at
c.20% with daily oil production averaging 123 barrels which is greater than
our initial forecast when water breakthrough was first detected.

Since Gazelle-1 came on stream in November 2025, we are pleased to report that
Block XX operating costs have not increased above the level they were at when
we had only Heron-1 in production. This has been achieved as a result of the
savings in power generation realised after connecting Heron-1 to the national
electrical power grid. With Gazelle-1 performing above expectation, we are
looking at the economics of connecting this well to the transmission line at
Heron-1.

Production operations are continuing to run smoothly with excellent
cooperation in the field between the Petro Matad and PetroChina teams. 2026
production to date totals c.35,000 barrels of crude and Block XX production
since start up now exceeds 110,000 barrels.

Farm-out

Discussions with the most advanced potential farminee have not yet reached a
conclusion. The counterparty chose to do some seismic reprocessing of Block XX
data. We await their feedback. We are disappointed that the evaluation is
moving so slowly but the current high oil price has led to a significant
uptick in interest from other potential partners for Block XX and Block VII
and we are following up.

2026 Work Programme

The Company has received a technically and commercially attractive offer from
the seismic acquisition contractor with the most experience in Mongolia to
conduct a high resolution 3D seismic survey over the Block XX exploitation
area. We are urgently evaluating the proposal as the crew is available to
begin in late June or early July. With existing 3D covering the northern
portions of both the Heron and Gazelle fields but not the southerly up dip
culminations of these traps, state of the art 3D seismic will provide the
structural definition required to drill future appraisal, development and
exploration wells. New data should also improve seismic resolution at the
reservoir level compared to that provided by the existing 2D and 3D surveys
which were all acquired more than 15 years ago.

On well work for 2026, whilst Heron-1 and Gazelle-1 are still performing at or
above forecast, we will not undertake any workover activities on these wells
at this time. Petro Matad is in discussion with a specialist company with the
capability to workover the Heron-2 well to see if it can improve the flow
potential of the reservoir at this location. We are also awaiting feedback
from the well test contractor to secure a cost effective proposal for the
testing of the Gobi Bear-1 well.

SunSteppe Renewable Energy

SunSteppe Renewable Energy (SRE)'s operational focus in 2026 remains on its
200MW hybrid wind, solar, and battery energy storage project in Tuv Province.
Changes at Cabinet level in the Mongolian government in recent months have
slowed the Ministry of Energy's evaluation of the feasibility study for the
project and its Science and Technology Committee has yet to meet to review and
approve it. Work at site to gather wind data continues.

Following the recent changes in leadership, the government has accelerated
renewable energy and battery storage projects to help address growing power
demand and grid stability requirements. This is expected to create a
supportive environment for SRE's ongoing and planned developments and 2026 has
seen an increase in new projects being offered or becoming available.

SRE is part of a short-listed consortium that has submitted a bid for a 90MW
solar/battery project for Ulaanbaatar city. SRE has also submitted an
expression of interest on a 100MW wind/battery project being managed on behalf
of the government by the International Finance Corporation.

In addition to these two projects, SRE is assessing the potential of another
100MW utility scale solar/battery project under the government's broader
efforts to improve winter power supply reliability. With Ulaanbaatar having
suffered power outages last winter due to interruptions in service at its
ageing coal fired power plants, the government needs larger scale battery
storage projects online this winter and will expedite all necessary approvals
to achieve that goal. SRE has had positive discussions with potential
financing institutions, construction contractors and strategic partners
regarding possible participation.

Mike Buck, CEO of Petro Matad, said:

"The delay in approving the 2026 Oil Sales Agreement has been frustrating but
the rising oil price has given us the chance to benefit significantly from a
commercial standpoint so the news that the approval is coming soon is most
welcome. Interest from Chinese oil traders in our 2026 inventory also means we
have an independent export route in case we need it.

We are pleased to see the interest in our portfolio from several new potential
partners. Whilst the discussions with these entities are going on, the
availability of the crew for a 3D seismic shoot in Block XX presents us with a
value-additive opportunity which we are evaluating as a priority.

SRE's rising profile in-country has generated some new, sizeable renewable
energy opportunities which we are excited to pursue and which could deliver
substantial value in the near term if the deadlines can be met."

AGM Logistics

Petro Matad will host its Annual General Meeting ("AGM") of the Company today
(Thursday 28 May 2026) at 4.00 p.m. local time at Topaz Conference Hall, Blue
Sky Tower, Sukhbaatar District, Ulaanbaatar, Mongolia. Shareholders attending
in person need to provide proof of shareholding and other necessary
authorization as stipulated in the Company's Articles and the AGM Notice.

Shareholders that wish to attend the AGM remotely should register for the
event in advance by using the following link:

https://www.investormeetcompany.com/petro-matad-limited/register
(https://protect.checkpoint.com/v2/r02/___https:/www.investormeetcompany.com/petro-matad-limited/register___.YXAxZTpzaG9yZWNhcDpjOm9mZmljZTM2NV9lbWFpbHNfYXR0YWNobWVudDo0ZWI1Yjk1NzY4NjdiYTdiZGRjYmM2NGI5NmVlN2FlNDo3OmFkZDk6ZDg2ZDAxM2Y3MTU2ZTVhMTMyYjViYzVlOTQzMGRkYjkwZmY5MDcxM2U3YjBlN2NkNjk3YTJkZjlhMjE2NDU5MTpwOlQ6Tg)

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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