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LONDON (Alliance News) - Petro Matad Ltd Thursday said that the Government of Mongolia has formally approved the farm-out of a portion of Petro Matad's participating interests in Blocks IV and V in Central Mongolia to BG Group PLC.
Petro Matad entered into an agreement with FTSE-100 listed BG Group in April, under which BG Group will acquire a 78% stake in Blocks IV and V, and in return will pay Petro Matad's share of a mutually agreed USD28 million work programme as well as pay it USD4.5 million in cash.
On Thursday, Petro Matad said that a tripartite protocol of assignment has been signed by an authorised representative of the Mongolian government, which had already been signed by both Petro Matad and BG Group.
Petro Matad said that the transaction remains subject to one further BG Group condition and that it will issue a further announcement on preparations for the commencement of work programme activities upon satisfaction of the condition.
The company added that while its current cash reserves are low, it is "highly confident" that the remaining condition to the farm-out will be resolved before the reserves are depleted. However, in the event that the farm-out does not complete within the next few weeks, Petro Matad said it is in talks with a potential provider of short-term funding to ensure it has access to the necessary cash resources needed to continue operations until the farm-out is completed.
Shares in Petro Matad were trading up 2.0% at 6.50 pence Thursday morning, while BG Group shares were trading up 0.8% at 1,113.50p.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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