Petro Matad Regulatory News (MATD)

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY PETRO MATAD LIMITED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014 AS IT FORMS PART OF UNITED KINGDOM DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR"). ON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

25 February 2022

Petro Matad Limited

('Petro Matad' or the 'Company')

Operational Update

LONDON, 25 February 2022: Petro Matad Limited ("Petro Matad" or "the Company"), the AIM quoted Mongolian oil company, provides the following operational update.

Block XX Exploitation Area

The Company has advanced negotiations with operational service providers for the 2022 work programme and has secured some price reductions compared to the 2019 drilling programme. Contracts are being prepared in advance of discussions at the annual budget meetings with the industry regulator, the Mineral Resources and Petroleum Authority of Mongolia (MRPAM). Petro Matad is pushing for operational activity to start after the winter hiatus in Q2 with the re-entry, stimulation, and completion for production of Heron 1. The equipment and personnel required for this work are largely already in Mongolia.

Currently the timing of the availability of drilling equipment and crews for the drilling of additional Heron wells has not been confirmed by the contractors. The most active Chinese drilling contractor along with the other, mainly Chinese, service providers have been impacted by Covid-related travel restrictions. These are due mainly to the restrictions imposed by China, which has maintained tight control on movement within and across its borders in response to the Omicron variant of the virus. Meanwhile, Mongolia has recently re-opened its borders to all vaccinated travellers in order to reinvigorate the business and investment environment.

Petro Matad continues to push the service providers to confirm the timeframe for its work programme in the 2022 drilling season. 

At the same time, efforts are continuing apace to get the government to remedy the legal contradictions related to land access and usage issues that have previously impacted the work of Petro Matad and other operators in Mongolia. We are advised that proposed legal changes confirming land use rights, including input Petro Matad has provided, are working their way through the approvals processes within the central government.

At the local level, provincial and district authorities have been unwilling to discuss local land access applications pending direction from the central government. Petro Matad is working at both central and local levels and recently made a presentation to the local authorities that administer the entirety of the Block XX Exploitation Area. The presentation was well received, which is a positive step forward in securing the permits required. We continue to push at the central, provincial, and district levels to secure the permits required for the next phase of our activities.

Technical and operational cooperation, Block XX

DQE International, the major provider of drilling and other operational services in Mongolia, has made a proposal to Petro Matad for a technical and operational cooperation agreement whereby DQE International will provide a suite of services which could include expert geo-technical input, drilling, stimulation and completion services, production operations and oil export for Block XX operations. DQE International supplies these services to its parent company PetroChina, Mongolia's major oil producer, and has more than 15 years of expertise working in the Tamsag Basin. DQE International's suggested cooperation includes the possibility of payment from production revenue, partial payment in oil, and some risk sharing. This is an intriguing proposal from Mongolia's most experienced service provider, and the parties have set up a working group to determine urgently how such a cooperation could work and to try and reach a conclusion early in Q2 so that the 2022 drilling season is available for the implementation of any agreement reached.

In parallel, Petro Matad is still progressing discussions with potential farminees but the Company is funded for and plans to implement its operational programme in 2022 with or without a farm in deal.

Block V Exploration PSC

The environmental impact assessment to allow Petro Matad to operate in Block V in 2022 and beyond was completed, submitted and has been approved by the Ministry of Environment. The Company is now working with the local authorities to try to secure land access and usage permits for the high graded Raptor trend. We are also investigating cost effective drilling solutions for the relatively shallow, very high impact prospectivity identified in the area.

Annual General Meeting

Petro Matad will be holding its Annual General Meeting at 8.00 a.m. local time (4.00 p.m. ULAT/SST) on 3 March 2022 at FTI Consulting, 200 Aldersgate, Aldersgate Street, London EC1A 4HD with a satellite meeting held at Blue Sky Tower, Sukhbaatar District, Ulaanbaatar, Mongolia.

The Company will be providing dial-in audio for the Annual General Meeting and the details will be provided via RNS nearer the date of the Annual General Meeting.

Further operational updates will be provided in due course.

- Ends -

Further information please contact:

About Petro Matad

Petro Matad is the parent company of a group focussed on oil exploration, as well as future development and production in Mongolia. At the current time, Petro Matad holds 100% working interest and the operatorship of two Production Sharing Contracts with the Government of Mongolia. Block XX has an area of 218 square kilometres in the far eastern part of the country and Block V has an area of 7,937 square kilometres in the central western part of the country.

Petro Matad Limited is incorporated in the Isle of Man under company number 1483V. Its registered office is at Victory House, Prospect Hill, Douglas, Isle of Man, IM1 1EQ.