Petro Matad, the AIM quoted Mongolian oil company, has provided the following operational update.
Highlights
- The 2026 Oil Sales Agreement between Petro Matad and PetroChina for Block XX production has been implemented.
- Pending the receipt of revenue for 2026 oil production to date, Petro Matad has rescheduled the planned 3D seismic survey and well intervention activity.
- Five companies are currently active in the Company's farm out data room.
- SunSteppe Renewable Energy (SRE), the Company's renewable energy joint venture, has in the last few months, secured exclusivity on three projects totalling 290 MW and intends to participate in a tender for another 100 MW project. Of the new projects, two are being fast-tracked by the Mongolian government and SRE has received approval of the Feasibility Studies and Licences to Construct for both.
Oil Sales Agreement
Despite having approved the 2026 Oil Sales Agreement in June, PetroChina further delayed its implementation whilst internal discussions between its Mongolian and head offices continued. Confirmation has now been received that all the issues are resolved and the c. 48,000 barrel inventory of Block XX production in tanks at the Block XIX facilities will now be exported for sale. Invoices will be processed in September and PetroChina's Ulaanbaatar office has indicated that it will try and expedite payment ahead of the contractual terms, given its long delay in implementing the agreement.
2026 operations
Preparations and permitting for blockwide acquisition of 3D seismic have been completed but, until 2026 oil sales revenue is received, Petro Matad continues to manage its cash resources very carefully and therefore the planned 3D seismic survey has been rescheduled. Well work at Heron-2 and Gobi Bear-1 has also been rescheduled. This is deemed prudent from a financial management perspective. At the same time, the Company's renewable energy joint venture has two new projects under fast-track development that have the potential to reach ready-to-build (RTB) status and value crystallisation events in short order.
Farmout
Five companies are currently active in the Petro Matad data room reviewing the potential of Blocks XX and VII. The interest is from Asian, and particularly Chinese, companies and has been heightened by the disruption to world markets and oil supply to Asia that have resulted from events in the Gulf. Consummation of a deal during the year remains the Company's goal.
Renewable Energy
SRE has secured development rights to three utility-scale renewable energy projects with a combined capacity of 290 MW, significantly expanding its portfolio in Mongolia.
The three new projects are:
- Ulaanbaatar 90 MW Solar Powered Battery Energy Storage System Project, where SRE leads the consortium selected after a competitive tender to develop the project under a public-private partnership. The project will provide renewable energy powered battery storage to strengthen the reliability and sustainability of the capital's electricity supply. Having won the tender, the SRE consortium expects to start negotiations shortly and will target RTB status on this project in 2027.
- Dundgobi and Uvurkhangai 100MW each Solar Powered Battery Energy Storage System Projects. These projects are being fast-tracked by the government with an RTB deadline before end 2026. Proof of the government's intentions has been demonstrated in that SRE's Feasibility Studies for both projects have already been approved as have the Licences to Construct. Negotiations on the power purchase agreements have started with target completion in Q3 this year. SRE is in discussion with large international investors who are keen to partner on these projects.
- The Company is also preparing to join a consortium led by a world-leading renewable energy investor to prequalify for bidding on a 100 MW wind power project that is being managed by the International Finance Corporation.
With projects totalling c. 600 MW of capacity in its exclusively held portfolio and with the government supporting rapid development, SRE is well placed to crystallise value from the Mongolian renewables sector. The Company plans to make a presentation on Mongolian renewables and SRE's ambitions on the Investor Meet Company platform during Q3 2026.
Mike Buck, CEO of Petro Matad, said:
'We finally have an agreed and now implemented 2026 Oil Sales Agreement after seven months of effort and delay. We expect this to be honoured in full through to year end by which time we are already pushing to have an approved agreement for 2027 in hand and ready to implement.
Cash management has been a primary focus for the Company through the year and continues to be so. The rescheduling of in-field operations until revenue is received is prudent and we also need to make sure that we meet the government's year-end deadline for RTB status on our two new fast-track 100 MW renewable energy projects.
Shareholders' continued patience during the unfathomably long delay in getting the 2026 Oil Sales Agreement implemented is much appreciated'.
Source: Petro Matad
