TIDMMATD
RNS Number : 1281R
Petro Matad Limited
19 September 2017
19 September 2017
Petro Matad Limited
("Petro Matad" or the "Company")
Operational Update and Board Change
Petro Matad, the AIM quoted Mongolian oil explorer is providing
an operational update:
Highlights
-- The Farmout process has advanced, and a number of potential
partners are going through internal approval processes, with
decisions expected in 4Q 2017 or 1Q 2018.
-- Management, as well as all potential farm out partners,
believes that a 3D seismic programme will enhance the farmout
process, while de-risking and growing our portfolio of drillable
prospects.
-- A comprehensive 3D seismic programme will now commence
shortly; defining and high grading drilling targets within the
Tugrug Basin, Block V. Additional 2D seismic data will also be
acquired
-- The Company has no plans to draw down further from its
current financing facility, as its 3D seismic programme is fully
funded
-- The contracted SINOPEC rig has been undergoing inspection and
certification, and while this process is still ongoing, the rig
will not achieve full certification in time to undertake the
planned drilling programme in 2017
-- An expected three-well exploration drilling programme is planned to commence in Spring 2018
-- The Board is re-structuring the executive management of the company
Funding / Farmout
The farmout process continues and a number of companies remain
in active dialogue with management. These potential partners appear
to be more willing to fund a strategy where additional seismic is
acquired before a drilling campaign is undertaken. Several
potential farminees have expressed a clear preference to de-risk
certain prospects in the Tugrug basin using 3D seismic and better
defining a number of stratigraphic 'leads' that have so far only
been identified on 2D seismic data. They may also be better
positioned to farm-in once their 2018 exploration budgets have been
established, which could occur as early 4Q 2017. The Company
remains optimistic with regards to bringing in a farm-in partner,
as without exception, every company that has reviewed the
opportunity has responded with very enthusiastic comments regarding
the hydrocarbon potential of the licences.
As the Company is fully funded for its current seismic work
program, it has no plans to make further drawdowns from its finance
facility.
Seismic Campaign
The 3D seismic campaign will be focused on the Tugrug basin, in
Block V and high graded drilling targets within this basin. The 3D
seismic will also, help identify stratigraphic traps which have
significant potential in analogous basins such as the Vandana
discovery in the Barmer Basin, India and the Sea Lion field in the
North Falkland Basin; both having multi billion barrels of oil in
place.
Additional 2D seismic will be shot to high-grade several other
basins to add more drillable prospects to the Company's growing
prospect inventory. The decision to acquire 2D seismic data over
several new basins is again influenced by feedback from potential
farminees, who have expressed interest in these areas as potential
future exploration targets.
Drilling Campaign - Irves-1 (Snow Leopard)
Snow Leopard's target depth of 3150 meters will represent the
deepest well ever drilled in Mongolia. As such, considerable time
has been spent by Petro Matad to ensure that it has a rig capable
of delivering the defined drilling programme, conducting it safely
and in full compliance with international standards. The Sinopec
rig that was contracted to undertake the planned drilling programme
has been undergoing extensive inspection and certification at its
current location in Block 97, Mongolia. Under the contract the rig
was required to be fully certified, and the well spudded by 15
September 2017. Whilst Sinopec are still in the process of
obtaining certification, this work will not be completed before
October 2017, and as a consequence there will be insufficient time
to mobilise the rig and complete the drilling programme before
winter conditions set in. As Sinopec have been unable to fulfil
their contractual obligations, Petro Matad has served a notice of
default on Sinopec and has entered into discussions with Sinopec on
potential remedies. Depending on the outcome of these discussions,
the Company will either terminate the contract and issue a new
tender for a 3-well programme commencing in the first half of 2018,
or continue with Sinopec as drilling contractor, in the event the
rig is certified and adequate concessions are obtained.
While it was not the desired outcome, this postponement of the
drilling programme will, however, allow Petro Matad to enhance its
drilling portfolio via the acquisition of a 2D and 3D seismic
programme, which is set to begin shortly. While the reason for
delaying the drilling programme is related to the preparedness of
the rig, it does also serve to improve the position of the Company
with respect to a potential farmout. These potential partners have
expressed a preference to participate in a multi well drilling
program next year and to provide input into target selection and
the order of drilling. A back to back multi well program in one
season would also significantly reduce our drilling costs.
Management re-structuring
The Board of Petro Matad is implementing a strategy to
re-structure the company's executive management to bring onboard
senior executives with proven operational and commercial track
record. Petro Matad has significant milestones to deliver on
concluding the farm out, carrying out a multi well drilling
campaign in 2018 and executing a multi year exploration and
development work program. Mr Ridvan Karpuz, CEO will be stepping
down from his position in mid-October and continue thereafter as a
technical consultant. The search for a successor has already been
initiated and is progressing well.
The Company is pleased to announce the hiring of Nick Cousyn as
Chief Communications Officer, who will lead our Public and Investor
Relations effort. Mr. Cousyn brings with him 18 years of public
markets experience and has spent the last 5 years in Mongolia as
BDSec JSC's Chief Operating Officer. His focus over the last 5
years has been in Capital Markets, M&A and Corporate
Advisory.
Enkhmaa Davaanyam, Chairman of Petro Matad, commented:
"Good progress has been made on discussions with a number of
potential farm-in partners and it is very reassuring that all the
companies have responded favourably to the technical potential and
scale of our licences.
While we are disappointed not to be able to drill in 2017, the
opportunity to high grade additional drilling targets ahead of a
rescheduled 3-well drilling campaign in Spring 2018 is clearly
beneficial to the long-term value potential of the business and our
ability to secure a farm-in partner.
I would like to thank Ridvan for his hard work and significant
contribution to Petro Matad and wish him well in his future
endeavours. We have initiated a search process for a new CEO and we
are already progressing well and I look forward to updating the
market once the candidate is in place."
-Ends -
For more information, please contact:
Petro Matad Limited
Enkhmaa Davaanyam, Chairman +976 70141099
John Henriksen, CFO +976 70141099
NOMAD and Broker
Stockdale Securities Limited
Richard Johnson / David
Coaten +44 (0)20 7601 6100
Business Advisory Firm
FTI Consulting
Edward Westropp +44 (0)20 3727 1521
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014 (MAR).
About Petro Matad
Petro Matad is the parent company of a group focussed on oil
exploration, as well as future development and production in
Mongolia. At the current time, Petro Matad holds the sole
operatorship of three Production Sharing Contracts with the
Government of Mongolia. Block XX has an area of 10,340 km(2) in the
far eastern part of the country, and Blocks IV and V have an area
of 28,900 km2 and 21,100 km2, respectively, in the southwest part
of the country.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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