TIDMMATD
RNS Number : 1518V
Petro Matad Limited
12 April 2021
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
PETRO MATAD LIMITED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED
UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014 ("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.
12 April 2021
Petro Matad Limited
('Petro Matad' or the 'Company')
Replacement - Block XX Exploitation Licence Update and
Short-Term Funding Secured
Petro Matad Limited, the AIM quoted Mongolian oil company,
provides the following operational update.
Block XX Exploitation Licence
Progress has been made on the two remaining steps of the
Exploitation Licence application that need to be completed prior to
submitting the formal request for the Block XX Exploitation Licence
to be awarded.
Plan of Development: Mongolia's upstream industry regulator, the
Mineral Resources and Petroleum Authority of Mongolia (MRPAM),
convened a meeting of the Technical Committee on 16 March and
provided its recommendations on Petro Matad's Heron oilfield Plan
of Development. These have been incorporated into the documentation
which is now ready for final review by the Mineral Resources
Professional Council (MRPC) as required under the Mongolian
government's Exploitation Licence application procedure. The MRPC
has been asked to convene the meeting as soon as possible. If
required, the meeting can be conducted virtually as was the MRPC
review of Heron reserves.
Exploitation Area: The Company and MRPAM have agreed the area of
Block XX that will be retained under the Exploitation Licence when
awarded. The Exploitation Area includes the entire extension into
Block XX of the proven and producing Toson Uul Basin. This basin
contains an estimated 2 billion barrels of in place oil in the
Petro China operated areas in Block XXI and XIX immediately to the
north of Block XX. The agreed Block XX Exploitation Area contains
all of the prospectivity identified within the proven basin. Petro
Matad will look to undertake near field exploration drilling in
this area, in parallel with the development of the Heron
oilfield.
Formal application for Exploitation Licence: We have requested
that MRPC reviews and approves the Plan of Development as soon as
possible and once confirmed by ministerial resolution, we will have
all the documents required to submit the formal application to the
Minister to grant the Block XX Exploitation Licence.
Timing: Mongolia has been suffering from localised lockdowns in
response to the Covid-19 pandemic in recent weeks and another two
week lockdown has just been imposed in Ulaan Baatar in response to
a rise in cases. We are hopeful that the lockdown will not impact
the MRPC meeting. MRPC met virtually to review and approve the
Heron field reserves during Mongolia's December 2020 lockdown. We
are focused on successfully completing the Exploitation Licence
application procedure and submitting the application to the
Minister for award of the Licence early in Q2 2021.
Short-Term Funding Considerations
As the Company reported in 2020, cash conservation initiatives
were implemented to extend the life of the Company's existing cash
resources through to mid-2021, a period deemed long enough at that
time to secure the Exploitation Licence and the funding necessary
for the next phase of the Company's development. Given the progress
made in recent weeks, we remain hopeful that the Exploitation
Licence will still be granted within this period however, in order
to secure the financial standing of the Company beyond mid-2021,
the Board has procured an unsecured loan facility from its major
and founding shareholder, Petrovis.
Petrovis has agreed to make available to Petro Matad a line of
credit of up to US$1.5 million, to be drawn when needed to maintain
the Company's operating capability, to see it through to the award
of the Exploitation Licence and the establishment of funding for
development operations. Interest on the loan will be paid at
effectively the same rate that Petrovis secures US dollar financing
from its banks (currently 10%). The loan will be repaid by one or
more of the following:
-- From production revenue with repayment starting no earlier than 2023;
-- The amount drawn plus interest will be rolled into Petrovis's
contribution to any future equity fund raising that may be
undertaken; or
-- From the proceeds (payment of back-costs) of a successful farm-out.
The loan will only be drawn if required and based on current and
forecast operating costs could fund the Company at its current
level of staffing and activity through to Q3 2022 if necessary.
With this funding mechanism available, Petro Matad will have the
finances it needs to complete the Exploitation Licence application
process and to secure the funding required for development
operations on the Heron oilfield.
In the event that the Company does draw on the US$1.5m line of
credit, the loan would constitute a related party transaction. The
independent directors of Petro Matad (being for this purpose Mike
Buck and Tim Bushell) consider, having consulted with the Company's
nominated adviser, that the terms of the US$1.5m line of credit are
fair and reasonable insofar as the Company's shareholders are
concerned.
Mike Buck, CEO of Petro Matad said :
"We are very pleased to have agreed with MRPAM the Exploitation
Area which contains the entirety of the Heron and Gazelle
structures and the full extent into Block XX of the prolific oil
producing Toson Uul basin. We are evaluating the near field
potential in the area that could see reserves increase
significantly through low cost, high chance of success, exploration
drilling conducted in parallel with production and development
activities at Heron over the next few years.
On the Plan of Development, we are appreciative of the time and
dedication shown by MMHI and MRPAM in providing their expertise and
recommendations to improve the plan. MMHI has also said it will
expedite the MRPC review which is the final, formal meeting
required in the Exploitation Licence application procedure.
Finally, we are extremely grateful to Petrovis for their
continued support and their firm belief that Petro Matad can
successfully move to being an exploration and production company in
the near-term. Their ongoing support underlines their confidence in
the potential of Petro Matad and of the country for sustained
development."
Further updates will be provided in due course.
- Ends -
Further information please contact:
Petro Matad Limited
+97 670 141 099 / +97 675 751
Mike Buck, CEO 099
Shore Capital (Nominated Adviser and Broker)
Toby Gibbs
Jerry Keen
John More +44 (0) 20 7408 4090
FTI Consulting (Communications
Advisory Firm)
Sara Powell
Ben Brewerton +44 (0) 20 3727 1000
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 100% working
interest and the operatorship of three Production Sharing Contracts
with the Government of Mongolia. Block XX has an area of 10,367
square kilometres in the far eastern part of the country and Blocks
IV and V have an area of 29,062 square kilometres and 21,143 square
kilometres, respectively, in the central western 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.
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