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.

05 May 2022

Petro Matad Limited

('Petro Matad' or the 'Company')

Operational Update

LONDON, 05 May 2022: Petro Matad Limited ("Petro Matad" or "the Company"), the AIM quoted Mongolian oil company, provides the following operational update.

Covid-19

The recent increase in Covid-19 related lockdowns and travel restrictions in China continue to impact Mongolia at a time when it was hoped there would have been significant relaxation. China is maintaining tight control on movement across its borders and there are currently no signs that these controls will be relaxed in the short term. This is impacting all businesses in Mongolia that rely on cross-border trade including the oil field service providers. PetroChina's export of Mongolian oil production across the border into China is also suspended because of the Covid-19 controls and there are no Chinese oil rigs operating in Mongolia at the moment.

Block XX Exploitation Area

Petro Matad has continued to engage with local and central Government to secure all necessary permits. Local officials remain reticent to discuss applications due to lobbying on social media by a vocal minority protesting against industrial activity. This included at a recent local meeting when allegations were made about the Company's Environmental Impact Assessment despite the fact it was prepared as per the regulations and has been approved by the Ministry of Environment.

For issues that cannot be resolved locally, Petro Matad has sought input from central government and this strategy has resulted in progress on the long-running land issue. In late April, the Cabinet of the Mongolian Government issued a resolution directing the certification of exploration and exploitation licences by the central Land Agency such that local approvals on land use are not required. We are advised by industry regulator, the Mineral Resources and Petroleum Authority of Mongolia (MRPAM), that this will allow work on all Production Sharing Contracts (PSCs) areas to progress without land access delays whilst the planned amendments to the land law that will remove the current legal ambiguities pass through parliament. We are pushing to secure the land certificates on Block XX and V as a matter of urgency. We will follow a similar strategy with the central Government if required to ensure there is no impact on our already completed environmental permitting.

With the Covid-19 situation in China causing operational delays in Mongolia, the Company continues to prioritise its efforts to get Heron 1 on stream. The contract with the chosen well completions contractor is in final form. We are seeking confirmation that equipment and crews for the completion and readying for production of Heron 1 are available as soon as we are ready to mobilise. It is our operational preference that as soon as the well is stimulated and completed it should immediately be put on production. The current suspension of all oil production and export from PetroChina's Blocks XIX and XXI and with all on site storage full means that we need oil export to restart in order to optimise the start-up sequencing on Heron 1.

In anticipation of the situation improving, Petro Matad has placed orders for surface production equipment for the Heron 1 well and discussions with PetroChina, on the use of its production facilities are progressing well. We are also in discussion to buy or rent equipment from PetroChina Mongolia to avoid the need for, and current uncertainty of, importation.

Discussions with MRPAM on oil processing, transport and sales options were concluded with their full support and we are now in discussion with PetroChina's Mongolian affiliate on the commercial details of sharing infrastructure and logistics.

Technical and operational cooperation, Block XX

In parallel with operational preparations for the 2022 programme, Petro Matad continues to work with DQE Drilling (DQE) on its proposal to enter into a cooperation agreement that could accelerate Heron Field development activities. Petro Matad has supplied a multi-year target work programme and this is under review in DQE's headquarters.

Block V Exploration PSC

The Cabinet resolution on land access will assist in securing the necessary permits to allow the Company to work on the Raptor Trend. Having identified an in-country drilling contractor with equipment and experience in drilling to the target depth required on the Velociraptor prospect, we are now in discussion on potential rig availability and well cost.

Mike Buck, CEO of Petro Matad, said:

"China's zero Covid-19 policy is having major impacts not only within China but also on Mongolia. Our preparations to operate are progressing well but, with uncertainty on when drilling operations in country will recommence, we are focusing as a priority on Heron 1 completion and production.

We are very pleased with the outcome of the Cabinet meeting held last week. The restoration of land use rights under the PSC is an important and necessary step, and we will continue to work with the local, district and provincial authorities to underline our intention to be a partner whose activities can continue to bring benefits to the communities in which we operate.

I would also like to personally thank our shareholders for their continued patience and support while we work to get Heron 1 on stream and implement our broader 2022 work programme."

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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.