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LONDON (Alliance News) - Petro Matad Ltd Friday said the decision by its partner in Mongolia to withdraw from the joint venture will lead to the company receiving compensation that will be "highly material" to the business.
Petro Matad was working with an "affiliate" of oil giant Royal Dutch Shell PLC under production sharing contracts covering blocks IV and V in western and central Mongolia, but Petro Matad's partner has informed the company it has exercised the exit option detailed in the farmout agreement signed between the two firms back in April 2015.
"The decision by Shell is based on optimisation of its own portfolio and it is not related to the technical prospects for the blocks. The exit is subject to Mongolian government consent," said Petro Matad.
"Petro Matad will continue to execute the work program as planned. Currently, our seismic contractor is mobilising to the field and will soon commence the second phase of the planned seismic acquisition programmes in blocks IV and V," the company added.
Significantly, Shell's affiliate will have to pay compensation to Petro Matad after deciding to exit the blocks, which Petro Matad said would be "highly material" to the company. Petro Matad's stake in the blocks will also soar to 100.0% from only 22.0% as a result.
Petro Matad shares were trading down 5.9% to 2.0 pence per share on Friday afternoon.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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