To be honest I don't think MATD feel the need to hurry on this. The initial farmout was approved and signed off by the Mongolian Govt who at the time and in the words of MATD showed their commitment to oil and gas exploration in Mongolia. I think that if Shell are going to play bully boys in this then MATD will be granted an extension on the licence agreements to give them time to find another JV partner. This will give MATD a chance to analyse and advertise the data accumulated and open themselves up to the highest bidder. I think if MATD were a foreign company operating in Mongolia then their position would be far more tenuous but they're not and as far as I am concerned, they and us, as investors are in a strong position. I only wish I was in a position to invest some more. My opinion, speculative, dyor. Good luck everyone.
Seems to be a stable base for now until news arrives- however with the mentality of many of AIM investors this could become a case of follow the leader (in any direction) very easily. Shell will surely play tough- then again you would expect them to.
Certainly can't think of any other reason this has been held up other than MATD and PAM negotiating for suitable compensation. Other positives are MATD are very excited about the data results to date. The board are optimistic about the potential of the company. They are a Mongolian Company with 100% operating rights to blocks IV, V and XX. Mongolian Government will see an opportunity for all potential tax revenue remaining within the country and I am assuming will back MATD to be successful.
That said given that the contract was unconditional if Shell do delay paying compensation To MATD and it effects the agreed mylestone dates then Shell should be liable for damages for causing delays to the agreed programme.
Hi D1nger, The fact that the agreement had reached unconditional stage garanteed BG would proceed.They were dead keen to be part of joint venture with MTD. With Shell coming along and making a contractual change to that agreement by putting the brakes on and withdrawing from the joint venture leaves a question mark over what the value of the balance of the contract is? I'm sure Shell will have a legal team vetting the contract to work out a fair value to put to MATD. I would think that value would be less than the original unconditional figure but enough to tempt MATD and the Govt into accepting so MATD can progress the programme , a bit like how a variation is handled in any contract. When?? I hope its soon but I'm thinking Shell will only shell out when they legally have to?
Hi Hemi, morning Mannan. My views are purely based on the original contract with BG group.
MATD announced in June 2015 that the farm out had reached unconditional status. My belief, or it may be described as a naive assumption is that unconditional means exactly that. All parties agree to fulfill their terms of the contract ....unconditionally.
Now BG group agreed to finance the whole thing and Shell becoming the parent company after the takeover would be subject to the same terms of the contract, i.e. financing the terms of the production sharing.
I would like to think that this is what MATD and PAM are negotiating for, giving that $10m is insufficient to complete the agreed work plan.
Shell might argue that MATD's interests have reverted to 100% but if MATD are not financed to complete the contract then they have 100% of nothing. 22% of something is still 22% of something.
So yes I would like to think that they are looking for a lot more than they have been offered.
If any of you have read this far, could someone please take the time to clarify whether my view on the unconditional status of the contract is naive or has some merit. Thanks
Hi D1nger, It would be nice to think that Shell will part with more than 10million, lets hope this doesn't turn into a protracted argie bargie that goes on and on. The lawyers will be the winners in that case. Lets hope they stick to the mylestone dates they have indicated and that the negotiations are timely to achieve that.
Lack of news suggests to me that the $10m offered by Shell is not acceptable to MATD or the Mongolian Government. If it were this would have been settled a long time ago. I'm hoping the settlement, when it comes, is sufficient enough for MATD to take this project forward independently and we can share in their success.
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