The AIM-listed Mongolian oil explorer Petro Matad Limited ("Petro Matad" ) releases its audited final results for the fiscal year that ended on December 31, 2021. Unless otherwise noted, all dollar values are expressed in US dollars.
2021 Operational Highlights
- The Company secured approval for the Plan of Development for the Heron discovery and subsequently obtained the Exploitation Licence for Block XX.
- Contract negotiations commenced with infrastructure service providers and procurement of equipment for the Heron development that targets first oil from the completion of the Heron 1 well in 2022.
- Agreement was reached with the industry regulator, the Mineral Resources and Petroleum Authority of Mongolia (MRPAM), to pursue export of Heron crude through PetroChina's nearby processing and export facilities until Mongolia's new domestic oil refinery begins operations in the coming years. Meetings were subsequently held with PetroChina to commence commercial negotiations.
- The 2021 moratorium on Block V has extended the Exploration Period of the Production Sharing Contract (PSC) until July 2023. This allows the Company sufficient time to pursue further drilling opportunities on the acreage and, with success, time to secure an Exploitation Licence on any discovery made.
- During 2021 the Covid-19 pandemic continued to have a significant impact on the Company's ability to operate, but towards year end 2021 in-country travel restrictions eased. International travel remained problematic, and border restrictions imposed by China severely impacted the activities of other operators in Mongolia during 2021. Preparations are well advanced for operations in the 2022 drilling season to be executed once the border restrictions are eased or lifted and land access is resolved.
- The Covid-19 control restrictions imposed by China at its land border crossings with Mongolia have started to ease. On 20 June, the northerly of the two oil export border crossings at Bayankhoshuu was opened and oil export from the PetroChina operated fields has resumed. The southerly oil export crossing at Bichigt remains closed. China has not yet opened the border crossing to the passage of consumables and equipment, although the oil field contractors are hopeful that this will happen soon. Transfer of personnel across the land borders is not expected to be allowed by the Chinese authorities in the near future; therefore, service providers are looking at flying in their crews when internal travel restrictions within China allow.
- Following the Cabinet resolution in April on expediting a solution to the land access issues for oil exploration and production companies, draft amendments to the Land Law have been prepared by the relevant ministries for presentation to Parliament to resolve the existing conflicts within the legislation. At the same time, Petro Matad is in dialogue with MRPAM to obtain the special purpose land certification for its areas of operation which will secure long-term land access. Until this certification is issued, land use permits are required to be granted by the local authorities and to date, in the province in which Petro Matad's Block XX Exploitation Area is located, they have not done so. Petro Matad is not the only operator impacted in this way.
2021 Financial Highlights
- As of 31 December 2021, the Group's cash position was $8.2 million, including Term Deposits (Financial Assets) (31 December 2020: $1.0 million)
- A successful fund raise totalling $10.4 million was completed by early August 2021.
- The Group's net loss after tax for the twelve months ended 31 December 2021 was $2.1 million (31 December 2020: loss $3.2 million)
- No dividends have been paid or are proposed in respect of the year ended 31 December 2021 (2020: Nil).
Mike Buck, CEO of Petro Matad, said:
"2021 was a pivotal year for Petro Matad as we obtained the Exploitation Licence for Block XX, which will see the Company transition from explorer to active producer.
In the spring and summer months of this year, Covid-19 has continued to affect operations with China's zero Covid-19 policy slowing progress with contractors and all cross-border business. Similarly, the land access issue within Mongolia needs to be resolved before we mobilise to site and we are pursuing all avenues available to remedy this.
We continue the preparations for our 2022 work programme despite the bureaucratic delays, and our negotiations with infrastructure service providers are progressing. As we have said before, we are prioritising bringing Heron 1 into production and we are still targeting first oil this year.
Finally, I would again like to thank our loyal shareholders for their support during 2021 and into this year. I look forward to updating you in the coming months with our progress."