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LONDON (Alliance News) - Petro Matad Ltd Tuesday said its pretax loss narrowed in the first half of 2015 as it continues to progress its farm-out deal with BG Group PLC in Mongolia.
The Mongolian oil explorer reported a USD1.7 million pretax loss in the first six months of 2015, slightly narrower than the USD1.9 million loss reported a year earlier, after its employee benefit expense more than halved to USD645,000 from USD1.5 million.
That employee benefit expense dropped following the company's decision to reduce its headcount compared to 2014, but was partially offset by some other costs increasing.
Consultancy fees rose to USD455,000 from only USD25,000 a year ago, whilst exploration expenditure increased to USD160,000 from USD34,000 and other costs totalled USD431,000 from USD355,000.
The main activity in the first half was the company's farm-out deal for its Block IV and V production sharing contracts in Mongolia to FTSE 100 oil and gas company BG Group. That deal became unconditional in June.
That agreement was for BG to earn up to a 78% interest in Blocks IV and V by paying for the first USD28 million of gross expenditure and a cash payment of USD4.6 million.
Originally, the pair planned on drilling the first exploration well of a two-well programme under the deal in 2015, but in June, Petro Matad said that first well had been pushed back to 2016.
By the time that well is drilled in 2016, the USD47 billion mega-merger between Royal Dutch Shell PLC and BG Group should be completed.
In anticipation of the successful conclusion of the farm-out, Petro Matad issued tenders for three major work programmes, namely the airborne full tensor gradiometer and high resolution aeromagnetics; 2D seismic acquisition programme; and core hole drilling.
Contracts for the first two have been awarded but the core hole drilling tender was suspended as the technical rationale for drilling the core holes is under review. The airborne full tensor gradiometer is nearing completion, and the 2D seismic acquisition programme will continue over a "number of months".
Petro Matad shares were down 0.7% to 3.85 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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