(Alliance News) - Petro Matad Ltd on Monday said its loss widened significantly in 2018 largely due to more than doubling of exploration and evaluation expenditure on blocks IV and V in Mongolia.
Shares in the Mongolian oil explorer were up 3.6% at 7.69 pence on Monday.
The two blocks are located in central western Mongolia and, along with block XX, make up Petro Matad's three production sharing contracts with the Mongolian government, in which the company holds a 100% working interest and is operator.
Petro Matad's annual loss was USD18.4 million, widening from USD9.9 million in 2017. This was driven by exploration and evaluation expenditure, which rose to USD11.5 million from USD4.4 million. Of this, GBP11.3 million was from blocks IV and V in 2018 versus USD4.4 million in 2017.
Other factors included an increase in employee benefits expense to USD3.8 million from USD2.8 million and a rise in other expenses to USD3.4 million from USD2.6 million.
No revenue was recorded for the period, or for 2017, as Petro Matad is continuing is exploration efforts.
The company raised USD35 million in total in 2018 from two equity placings. As at December 31, Petro Matad's cash position was USD21.3 million, up from USD8.1 million the year before. Since then, preparations for a 2019 drill programme have begun and on Friday last week the company's cash position was USD16.6 million.
So far, Petro Matad has contracted two drilling rigs for its 2019 campaign, which is funded by the 2018 placings. The Heron 1 well in block XX is set to be spudded in early July and trilled to 3,050 metres. The drill rig will then proceed to Gazelle 1, also in block XX, to drill to 2,500 metres.
The second rig will drill Red Deer 1 in block XX, due to spud later in July before a decision is made on whether to drill another Red Deer well or move the rig to block V or focus on the north of block XX.
"Running two rigs, with a separate workover rig for any testing operations, should give the company sufficient time to complete its 2019 drilling campaign before the winter operational shutdown in late Q4 2019," Petro Matad said.
Petro Matad (MATD)