(Alliance News) - Mongolian oil explorer Petro Matad Ltd on Monday said it narrowed its losses in 2019 and halved costs due to the Covid-19 pandemic.
Although Petro Matad generated no revenue in 2019, interest income rose 30% to USD769,000 from USD591,000. Its pretax loss slimmed to USD16.8 million from USD18.4 million.
Petro Matad is focused on the development of its Block XX asset in Mongolia and during 2019, three wells at the project were drilled.
"Heron-1 and Gazelle-1 were drilled in the northern part of the block and Red Deer-1 was drilled in the southern area," the company said.
"All three wells found oil shows although Red Deer-1 was plugged and abandoned with no oil pay zones detected. Heron-1 was declared a discovery after testing and is a significant milestone for the company. Gazelle-1 found two thin oil pay zones however due to the onset of winter weather the well was suspended as a potential oil discovery without being tested and so will be fully evaluated in the future."
The Covid-19 pandemic has been one of the bigger stories of 2020, Petro Matad said the Mongolian government was "very quick" to close schools and introduce curbs on public gatherings.
"These measures have obviously impacted the Mongolian economy and these restrictions in addition to a drop in demand for oil has seen a reduction in the country's oil production and development activity in the first half of 2020," Petro Matad said.
"The impact of the pandemic on Petro Matad's activities in the same period has been limited as the company's focus has been on working with the Mongolian authorities to secure approvals and permits."
The contagion, as well as infighting between producers, has also weighed on oil prices.
The company said: "In order to ensure that the company's current financial resources can sustain the organisation through the processing of its Block XX exploitation licence application and, at the same time, recognising the impact that the ongoing Covid-19 pandemic has had on global financial markets, Petro Matad's board of directors has implemented certain cost saving measures."
Effective April 1, salary cuts of 50% were introduced across its board and senior managers. Advisers also agreed to reduce fees by 45%.
"With these measures implemented, the overhead costs of the company have been halved whilst maintaining its operating capability. Further cost cutting measures have been identified and can be executed if market conditions make this necessary," the firm said.
Shares in Petro Matad were 2.5% lower at 3.76 pence each in London on Monday morning.
By Eric Cunha; ericcunha@alliancenews.com
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Petro Matad (MATD)