Financial and Operational Update

RNS Number : 8642C

Petro Matad Limited

30 June 2016

 

30 June 2016

Petro Matad Limited

("Petro Matad" or the "Company")

Financial and Operational Update

Further to the announcement of 29 April 2016, the Company is pleased to provide a financial and operational update.

Financial

As a result of Shell's decision to exit the Block IV and V PSCs, Shell's affiliate company is required to pay a contractual exit fee to the Company's affiliate company (Central Asian Petroleum Corporation Limited - "CapCorp"). The exit fee, stipulated in the farmout agreement, is circa $10 million. Shell's affiliate company has not yet paid the exit fee but have stated their willingness to do so.

The Petroleum Authority of Mongolia (PAM) has stated that it will not submit documents providing for the reassignment of Shell's affiliate company's interest to CapCorp to the Mongolian Cabinet for approval until such time it is satisfied that all minimum work obligations required to be undertaken by Shell's affiliate company and CapCorp will be met. This specifically includes fulfilment of the three-year work program approved by PAM after passage of the new Petroleum law in 2014. Shell's affiliate company is responsible for funding 78% of this minimum work program. For CapCorp as operator to be able to complete this work program following Shell's exit, substantially more funds will be required over and above the exit fee. Shell's position to date is that it has no further obligation in respect of the minimum work obligations. If Shell does not fund its part of the minimum work obligations, this will put CapCorp in a financially difficult position and could lead to the Company eventually losing the acreage. Furthermore, a continued delay in receiving at least the exit fee will seriously jeopardize the Company's ability to continue as a going concern.

The Company is in continuous discussions with Shell in an effort to obtain a resolution. PAM is requiring Shell and CapCorp to come to a resolution on completion of minimum work obligation before it will consider the reassignment.

Operational

A 174 kms infill seismic acquisition in Block IV commenced and completed during the month of May. This programme was designed to better define previously identified leads and mature them to drillable prospects during the main Block IV seismic acquisition programme that was carried out in late 2015. Seismic processing is underway and the preliminary results are very exciting. There is no doubt that a number of viable and exciting drillable prospects will emerge as interpretation continues.

Seismic acquisition recently commenced in Block V. Depending on the results there will be further potential to acquire infill lines to de-risk the leads to drill-ready prospects at the end of the main programme. Although the programme in Block V is at an early stage, results so far already show high quality leads are present.

Further Information:

Petro Matad Limited

Ridvan Karpuz, CEO

[phone] / [phone]

NOMAD and Broker

Stockdale Securities Limited

Richard Johnson / Robert Finlay

[phone]

 

END

 

 

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