Petro Matad, the AIM quoted Mongolian oil company, has announced its unaudited interim results for the six months ended 30 June 2026 ('1H 2026').
Financial Highlights
- Petro Matad’s cash balance at 30 June 2026 was USD 2.76 million (USD 2.14 million in cash and USD 0.62 million in Financial Assets), comparing to USD 2.37 million (USD 1.7 million in cash and USD 0.67 million in Financial Assets) on 30 June 2025.
- The Group posted a loss of USD 0.59 million for the 6-month period ended 30 June 2026, which compares to a loss of USD 1.7 million for the comparable period in 2025.
- At end June 2026 the Group had an outstanding net receivable from 2026 oil production of USD 2.16 million based on the average oil price for the year to that date.
Operational Highlights
- Production from Heron-1 and Gazelle-1 wells continued throughout with a total of 41,941 barrels of sales crude oil offloaded at the Block XIX processing facility during the reporting period. Water-cut at Heron-1 remained very low while at Gazelle-1, where early water breakthrough had been observed, it stabilised at c.20%.
- Negotiations of the 2026 Oil Sales Agreement with Block XIX operator PetroChina Daqing Tamsag LLC (PetroChina) were completed in April but PetroChina HQ delayed implementation so no sales revenue payments were made during 1H 2026.
- Farm-in partner discussions for Block XX and Block VII were conducted with several international and Chinese entities and these were ongoing at the end of the reporting period.
- SunSteppe Renewable Energy (SRE), the Company’s renewable energy joint venture secured exclusivity on three new projects totalling 290MW and intends to participate in a tender for another 100MW project. Of the new projects, two have been prioritised by the Mongolian government and SRE has already received approval of the Feasibility Studies and Licences to Construct for both.
Financial Summary 1H 2026
Production from the Heron-1 and Gazelle-1 wells in Block XX, eastern Mongolia, during the first half of 2026 averaged a combined 241 barrels of oil per day (bopd) with a total volume of sales crude (after accounting for water-cut) of 41,941 barrels offloaded at the TA-1 processing facility in Block XIX operated by PetroChina. The 2026 Oil Sales Agreement which was very similar to the 2025 agreement under which Block XX crude was sold and paid for was drafted in October 2025 and finally agreed by PetroChina Mongolia in April 2026 after Petro Matad had brought in representatives of the industry regulator, the Mineral Resources and Petroleum Authority of Mongolia (MRPAM) and the General Tax Authority to allay all concerns raised. However, PetroChina’s Head Office legal and compliance departments raised and re-raised a number of issues and despite the Company rapidly addressing all of these, the agreement was still not executed and effective at the end of the reporting period. Notwithstanding this, PetroChina continued to accept crude from Block XX for storage in Block XIX but without an executed Oil Sales Agreement no 2026 oil revenues were received during 1H 2026.
In order to carefully manage its cash resources, the Company delayed operational activity on its oil assets other than the continuing production operations pending receipt of 2026 revenue. In early 2026, PetroChina paid the monies it had withheld from 2025 oil sales revenues.
The Group posted a loss of USD 0.59 million for 1H 2026, which compares to a loss of USD 1.70 million for the comparable period in 2025. The Company's cash balance at 30 June 2026 was USD 2.76 million (USD 2.14 million in cash and USD 0.62 million in Financial Assets), which compares to a cash balance of USD 2.37 million (USD 1.70 million in cash and USD 0.67 million in Financial Assets) on 30 June 2025.
The cash balance on 30 June 2026 included USD 0.9 million in cash that is payable to MRPAM for its production share and royalties per the PSC. Payments to MRPAM continue to be withheld pending resolution of all issues relating to the crude Oil Sales Agreement and receipt of revenue from PetroChina. At the end of June 2026 there was a net receivable owed to the Company of USD 2.16 million for oil delivered to Block XIX.
Operational Summary 1H 2026
Considerable effort was expended during the reporting period on finalising the 2026 Oil Sales Agreement. Implementation was still delayed at the end of June pending approval by PetroChina’s Head Office. In parallel with this long running delay, Petro Matad chose to continue to produce based on PetroChina’s advice that a positive resolution was coming soon.
Production from the Heron-1 and Gazelle-1 wells was continuous during the period with 265 loads of crude oil, totalling 41,941 barrels of sales crude, delivered and offloaded at the TA-1 processing facility. During the period there were no HSES incidents related to Petro Matad’s production operations.
Both wells were produced continuously throughout the period via artificial lift by means of surface beam pumps. Heron-1 achieved an operational uptime of over 99% with production performance as per the Company’s forecasts and averaging 123 bopd over the period. Water cut remained very low at less than 5%. At Gazelle-1 well performance continues to exceed expectation by some 46%. With the expected drawdown of reservoir pressure as oil is removed, the daily pumping hours at Gazelle were gradually reduced during the period to ensure that the fluid level in the well is always maintained above the pump inlet port to avoid damage to the pump. Even so, operational uptime was good at c.95% and the well averaged 118 bopd through the period. Early water breakthrough observed in Gazelle-1 was addressed with careful management of pumping hours and surface pressures and the water cut stabilised at c.20%.
The Company had plans to conduct some other operational activities in 2026 including the acquisition of a new 3D seismic survey covering the entire prospective area of Block XX. The most experienced contractor in country offered a very competitive and flexible commercial package but whilst payment for production remained outstanding this programme along with plans to return to the Heron-2 well for further reservoir stimulation operations and a well test at Gobi Bear-1 have been deferred. Meanwhile, low cost in-house work on Block VII continued throughout the period including analysis of drill cuttings recovered from the well drilled by the previous operator of the block.
The farm-out process for Block XX and Block VII continued with several international and Chinese parties reviewing data.
SRE, the Company’s renewable energy Joint Venture, made good progress during the reporting period. Changes at cabinet level within the Mongolian government saw the rapid development of a new and dynamic environment for renewable energy. SRE was able to secure exclusivity on three new projects, two of which have been sanctioned by the government to be prioritised for early commencement of construction. They are the Dundgobi and Uvurkhangai Solar Powered Battery Energy Storage System projects of 100MW capacity each. Proof of the government’s intentions to expedite these projects has been demonstrated in that SRE’s Feasibility Studies for both projects have already been approved by the Ministry of Energy as have the Licences to Construct.
The third new project was secured when an SRE consortium was ranked first in the tender for development of the 90MW Hunnu Solar Powered Battery Energy Storage System project. This project will provide power to Ulaanbaatar to strengthen the reliability and sustainability of the capital’s electricity supply.
Post Reporting Period
Post the reporting period, on Block XX PetroChina confirmed by letter in August that implementation of the 2026 Oil Sales Agreement had been sanctioned and that crude oil export would start and payments would begin in September but they did not live up to this commitment and PetroChina HQ is still reviewing the contract. In September, with storage tanks approaching capacity PetroChina instructed Block XX to shut in production. Petro Matad has raised the issue of the long delay to Oil Sales Agreement approval with all stakeholders and is receiving full support and assistance from MRPAM, the Minister of Industry and Mineral Resources and the Office of the Deputy Prime Minister to seek a rapid and positive resolution.
Production operations continued without incident up until the September shut down whilst other operational activities remained on hold pending receipt of revenue. Discussions with potential farminees continue.
On renewable energy, SRE’s high priority projects are progressing well. Tariff and power purchase agreements are under negotiation and based on preliminary figures are estimated to deliver an attractive double digit rate of return. SRE has agreed commercial terms with a major international renewable energy company giving them first right of refusal to join the projects once the power purchase agreements are finalised. This company is working with the SRE team to ensure all aspects of the projects are internationally bankable. The agreed terms set out the milestones and development premia payable should SRE exit but also gives SRE the chance to participate in construction and power production at a significant working interest if it so chooses. Such a decision will depend on funding availability at the time.
On the Hunnu project, the SRE consortium is waiting to be called by Ulaanbaatar Municipality to start negotiations and will target ready to build status on this project in 2027.
In addition to these three projects, SRE has agreed to join a consortium led by an internationally renowned renewables company that is participating in the tender for a 100MW wind project being managed by IFC. Meanwhile, wind data gathering continues at SRE’s 200MW Hybrid project.
SRE is well placed to crystallise value from the Mongolian renewables sector and the Company will make a presentation on Mongolian renewables and SRE’s ambitions on the Investor Meet Company platform in October. Details of this event will be circulated to shareholders in advance.
Mike Buck, CEO of Petro Matad, said:
'We are very pleased to have proven that Block XX is capable of reliable and commercial production, with both the Heron-1 and Gazelle-1 wells performing consistently and in line with or ahead of expectations. This strengthens our position as we continue discussions with potential farm-in partners to accelerate the development.
It is beyond frustrating that the delay on oil sales continues and we are working on resolving this as our top priority.
Our renewable energy initiative has made excellent progress, securing exclusivity on three new projects, two of which have already received government prioritisation. We are focused on crystallising value from this growing portfolio and look forward to sharing more details with investors in October.'
Source: Petro Matad
