Petro Matad Ltd on Monday celebrated progress towards registering its Block XX Exploitation Area as special purpose land, following a year of delays over access issues.
Petro Matad is the Isle of Man-based, Mongolia-focused parent company of a group focussed on oil exploration. It owns and operates two production sharing contracts with the Mongolian government: Block XX, located in the far eastern part of the country; and Block V in the central-west.
For the past year, the company has struggled to certify its flagship licence in the east, due to local opposition. Most recently, meetings held on a provincial level in the Matad district saw citizens committees vote against the central government’s certification proposal.
However, Petro Matad on Monday said that the Mineral Resources & Petroleum Authority of Mongolia had written to the Ministry of Mining & Heavy Industry in spite of local views, recommending certification of the Block XX Exploitation Licence.
Its focus is now to support the ministry in progressing the matter through to a cabinet resolution as quickly as possible.
Given the delays, Petro Matad is unlikely to be in a position to operate on the Heron development until the spring of 2023, once its land access rights have been re-established.
In the meantime, the company has continued its preparations, in order to have the Heron 1 well onstream as soon as the land issue is resolved by the government.
Pumping, downhole completion and power generation equipment is now all in the country, while production tanks and other related surface equipment have been sourced from Petro China, offering a cost-effective solution to achieve rapid production start up, it said.
Discussions with Petro China on oil processing, export and sales have also begun with the facilitation and participation of MRPAM.
Negotiations with DQE Drilling, the main provider of drilling services in Mongolia, have also continued, whilst a contract for a multi-well development drilling programme is in the final stages of discussion.
The contract envisages a reduction in drilling costs and deferral of some costs to allow a portion of the drilling expenditure to be settled from future production revenue.
‘It has been a frustrating year for Petro Matad and our shareholders given the lack of progress on the land access issue in Block XX. We are hopeful that we are now reaching a new phase in the process with central government recognising that it needs to bring this access issue to an end through direct action,’ said Chief Executive Officer Mike Buck.
‘Meanwhile, we are pleased with our progress on negotiations with DQE drilling and with the cost reductions that can make a real difference to project cash flows and asset value. Similar positive progress has been made on the Block V Exploration PSC area and we are excited about the potential to drill a high impact exploration well on the Raptor Trend in 2023.’
Petro Matad shares were trading 19% higher at 2.20 pence each in London on Monday afternoon.
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