Petro Matad, the AIM quoted Mongolian oil company, has announced its unaudited interim results for the six months ended 30 June 2025.
Financial Highlights
- Petro Matad's cash balance at 30 June 2025 was USD 2.37 million (USD 1.7 million in cash and USD 0.67 million in Financial Assets), comparing to USD 1.93 million (USD 0.77 million in cash and USD 1.16 million in Financial Assets) on 30 June 2024.
- The Group posted a loss of USD 1.7 million for the 6-month period ended 30 June 2025, which compares to a loss of USD 2.56 million for the comparable period in 2024.
Operational Highlights
- Production began from Heron-1 well in October 2024, with Petro Matad receiving the first oil revenues in its history, with average production for 1H 2025 of 165 barrels of oil per day (bopd) and a 3% water cut.
- An oil sales agreement was negotiated with Block XIX operator, PetroChina, and signed in late April 2025 after which sales revenue payments began in mid-June 2025. After delays and continued pressure from Petro Matad, PetroChina has now advised that they will begin payment of 100% of the invoiced payments once the oil sales agreement has been amended. This amendment is now being prepared.
- During 1H 2025, Petro Matad re-vitalised farm-in partner discussions for Block XX and the Company has now reached the stage of detailed technical and commercial negotiations with one party.
- The Company also signed a new Exploration and Production Sharing Contract (PSC) for Block VII and expanded its renewable energy initiative, signing an exclusive agreement to develop a 200MW hybrid wind and solar project.
Financial Summary 1H 2025
Petro Matad began production from the Heron-1 well in Block XX, eastern Mongolia, in October 2024. During the first half of 2025 production averaged 165bopd and the Company received the first oil revenues in its history. Net revenue that Petro Matad received during the reporting period for production from start up to the end of April 2025 was USD 0.81MM with an average realised oil price of USD 62.9 per barrel (bbl). As announced previously, 30% of total sales revenue was withheld by PetroChina pending confirmation that there would be no tax impact on them resulting from the oil sales agreement signed between Petro Matad and PetroChina. Post the reporting period, payment for 70% of the invoiced amounts was received in August for production in the months of May and June, and in September for July's production totaling USD 0.33MM net to Petro Matad. The realised oil price for May was USD 60.7/bbl, USD 65.2/bbl for June and USD 64.4/bbl for July.
The Group posted a loss of USD 1.70 million for 1H 2025, which compares to a loss of USD 2.56 million for the comparable period in 2024. The Company's cash balance at 30 June 2025 was USD 2.37 million (USD 1.70 million in cash and USD 0.67 million in Financial Assets), which compares to a cash balance of USD 1.93 million (USD 0.77 million in cash and USD 1.16 million in Financial Assets) on 30 June 2024.
As previously announced, the Company raised gross proceeds of GBP 3 million (c. USD 4.2 million) through the Placing of 323,250,000 new Ordinary Shares, Subscriptions for 32,169,117 new Ordinary Shares by each of a director and shareholder of the Company, and completion of a Retail Offer totaling 19,497,678 Ordinary Shares. All shares were issued at a price of 0.8 pence. The net proceeds of the capital raising will primarily be used to reduce oil production operating expenditure at Heron-1 through a switch from diesel fired power to lower cost grid electricity, to investigate the potential to increase Block XX production in 2025 by re-testing the Heron-2 well, testing of the Gazelle-1 oil discovery and of the Gobi-Bear 1 exploration well, the development of renewable energy projects, and to work-up exploration opportunities in Block VII.
Operational Summary 1H 2025 and look ahead
Having resolved the longstanding land issue that had delayed production start up on the Heron oil discovery in Block XX in eastern Mongolia, production start up was finally achieved in October 2024 with oil being transported to the neighbouring TA-1 facilities in Block XIX for processing, storage and export to China. After an initial period of natural flow from Heron-1 of in excess of 200 bopd, the well was put on artificial lift and the pumped production stabilised in the range of 150 to 160 bopd.
An oil sales agreement was negotiated with Block XIX operator, PetroChina, and finally signed in late April 2025 after which sales revenue payments began in mid June 2025 with the receipt of proceeds for production from the start up to the end of April 2025. Payments were subject to PetroChina's 30% withholding.
Post the reporting period, payments were received for the months of May, June and July with the withholding still applied. In September Petro Matad provided PetroChina with feedback received from the Mongolian tax authorities and further comfort that there were no tax implications from the oil sales agreement. PetroChina has now advised that they will begin payment of 100% of the invoiced amounts once the oil sales agreement has been amended to incorporate wording on the comfort the Company has provided. This amendment is now being prepared.
During 1H 2025 the Company announced a re-vitalised initiative to find a farm-in partner for Block XX and has been in discussion with several potential counterparties. The interaction with one of these companies has reached the stage of detailed technical and commercial negotiations.
In January 2025 the Company announced the signing of a new Exploration and Production Sharing Contract (PSC) for Block VII in the southern central part of Mongolia. This large block is adjacent to producing fields across the border in China and was signed for a very low initial financial commitment to ensure that the exploration dollars spent here will be based on the results of technical evaluation rather than being an upfront financial obligation. The Company is actively engaged in a farmout process for Block VII seeking a technically and financially competent partner to share the risk and reward on this exciting new area.
The Company's renewable energy initiative conducted by its Sunsteppe Renewable Energy Joint Venture continued to expand its portfolio and signed an exclusive agreement to develop a 200MW hybrid wind and solar project to supply the Mongolian national grid.
Looking ahead to the second half of 2025, after the successful equity raise in July, the Company has embarked on a low cost well testing programme in Block XX seeking to add production in the near term. A re-test of the Heron-2 well following acidisation of the reservoir to improve near well bore permeability is ongoing. The small workover rig has now moved to perform a well test on the oil zones interpreted from logs to be present in the Gazelle-1 well and this will be followed by a test of the Gobi Bear-1 exploration well which has a zone of interest identified on logs and supported by extraction of migrated oil from drill cuttings. In addition, the Heron-1 well site is being connected to the national electricity grid. The provincial power station has recently been upgraded and, by means of a short transmission line extension, can now supply Block XX with lower cost electricity to replace the more expensive diesel fired power currently in use. A 15% reduction in operating expense is targeted from this project.
Some of the proceeds of the mid-year equity raise are directed at development of Sunsteppe's new 200MW Hybrid project as, with a power purchase agreement already in place and only in need of amendment, this project could be brought to ready-to-build status rapidly. Work is also planned to start on land acquisition and data gathering for Sunsteppe's 1.5GW firm (plus 1.5GW contingent) project in cooperation with the large Chinese utility company SPIC. Sunsteppe is also engaged in discussions with other companies looking at entering and investing in the renewable energy sector in Mongolia.
Mike Buck, CEO of Petro Matad, said:
'The start up of production in Block XX in 2024 took far too long but we are delighted to have finally achieved it and now to be receiving oil sales revenue for the first time in the Company's history. Over the last few months we have prioritised our efforts to remove PetroChina's withholding of 30% of our sales revenue and after the recent meeting with PetroChina we are hopeful that this matter will soon be resolved.
In the field we are working hard to complete our 2025 well test programme and at the same time, our renewables joint venture is growing into a potentially very valuable part of our business.
I would like to thank the entire Petro Matad and Sunsteppe teams for their continued efforts. We are particularly pleased to see our oil production crew working so well at Heron-1. All members of the team are Mongolian and most were hired from the communities in the area of our operations.'
Source: Petro Matad
