TIDMMATD
RNS Number : 9055N
Petro Matad Limited
28 September 2023
Petro Matad Limited
('Petro Matad' or the 'Company' or the 'Group')
Interim results for the six months ended 30 June 2023 and
Operational Update
LONDON, 28 September 2023: Petro Matad Limited, the AIM quoted
Mongolian oil company, announces its unaudited interim results for
the six months ended 30 June 2023 and provides an operational
update.
Key Company Updates
-- The Company continues to push the Government to complete the
regulatory formalities to allow completion operations at Heron 1 to
commence. The Provincial Government has been very slow to respond
which is putting the plan to complete the well before winter at
risk.
-- The local district authorities have however indicated that
they are open to the Company operating in parallel with the
slow-moving bureaucracy if Central Government supports the Company
in doing so. This option is now being pursued as a priority.
-- The 2022/23 Mongolian Exploration Tender Round continues with
Petro Matad submitting two applications for new blocks and actively
looking at one more area to determine if a third application is
merited.
-- Our renewable energy JV, SunSteppe Renewable Energy, is
actively pursuing two projects, a battery energy storage facility
and a green hydrogen project as it continues to push into the
Mongolian renewable energy sector. Both projects have the potential
to generate revenue in the near term.
Financial Summary 1H 2023
The Group posted a loss of USD 1.90 million for the 6-month
period ended 30 June 2023, which compares to a loss of USD 1.62
million for the comparable period in 2022. The Company's cash
balance at 30 June 2023 was USD 8.39 million (USD 0.82 million in
cash and USD 7.57 million in Financial Assets - which are term
deposits with a term of 3 months or more), which compares to a cash
balance of USD 6.62 million (USD 3.10 million in cash and USD 3.52
million in Financial Assets) on 30 June 2022.
As previously announced, a successful fundraise totalling USD
6.6 million of gross proceeds was completed in February 2023,
primarily to fund exploration drilling in the Company's operated
Block V and to advance renewable energy opportunities through a
newly established joint venture. Despite the continuing frustration
with the delays in progressing the development of the Heron
discovery it was very encouraging that both the placing and retail
offer were over-subscribed.
Operational Summary 1H 2023
On the Company's Block XX where the Heron discovery is ready for
the first phase of development to begin, the land access issue, and
thus commencement of production operations, remained delayed
through the first half of 2023 subject to registration of the
Exploitation Area as Special Purpose Land in accordance with
Mongolia's Land Law. Significant progress was made to secure the
certification and all ministries in the Mongolian Government
confirmed their support. The documentation for the certification
was completed by end June for submission to Cabinet in July
2023.
In parallel, the Company finalised negotiations with DQE
Drilling on a long-term drilling contract which will be submitted
to industry regulator the Mineral Resources and Petroleum Authority
of Mongolia (MRPAM) for discussion and approval. Commercial
negotiations advanced with PetroChina for the use of its production
infrastructure on neighbouring Block XIX.
On the Company's Block V exploration PSC in central Mongolia,
the Velociraptor 1 well was drilled on a high impact prospect in
June/July with the full support of the local communities. The well
was drilled on schedule and within budget but as has been reported
previously, despite encountering more than 350 metres of good
quality reservoir sections, the well was dry and it has been
plugged and abandoned.
MRPAM's 2022/23 Exploration Tender Round continued through the
first half of the year and the Company has made applications for
two blocks. Negotiations of the contractual terms are ongoing.
In early 2023, Petro Matad completed the formation of a joint
venture company, SunSteppe Renewable Energy (SRE), to develop
renewable energy projects in Mongolia with the goal of reaching
construction ready status on its first projects within 24 months.
Priority projects included a battery energy storage system project
designed to help improve the stability of Mongolia's electricity
grid and so reduce coal consumption for power generation and allow
the dispatch of more renewable energy from projects already in
operation. The joint venture is also pursuing off-grid projects to
supply renewable energy to mining projects where operators are keen
to decarbonise their operations.
Operational Update and look ahead
Block XX: The Cabinet approved the special purpose certification
of the Block XX Exploitation Area in early July, following which
the Company has been pushing hard for the Government to complete
the regulatory formalities and so allow completion operations at
Heron 1 to commence. Whilst good progress has been made with
Central Government agencies, the Tripartite Agreement between the
Land Agency, the Ministry of Mining and Heavy Industry (MMHI) and
the Provincial Government which regulates the management of special
purpose land has yet to be finalized. The Land Agency issued the
draft in July and MMHI quickly responded positively but the
Provincial Government wants to complete herder compensation first
and this further bureaucratic delay may jeopardise the chance to
put Heron 1 on production before the winter operational shut down.
In response, the Company is urging central and provincial
authorities to speed up the remainder of the process and, with the
special purpose certification now approved, Petro Matad has asked
the district authorities to allow Heron 1 operations to go ahead in
parallel with the slow-moving bureaucracy at central and provincial
levels. The district representatives have signaled their
willingness to consider this so long as the Central Government
supports the initiative and MRPAM has confirmed its support and is
preparing a letter to that effect. The Company continues to direct
all its efforts at getting Heron 1 on stream before the oilfield
contractors shut down for the winter.
Block V: The post-well evaluation of Velociraptor 1 is
progressing.
New acreage: In addition to the two applications lodged for new
blocks earlier in the year, Petro Matad is looking at one more area
in the 2022/23 exploration tender round to determine if a third
application is merited.
Renewables: Post the period end, the Company's renewable energy
vehicle, SRE, has made very good progress. In consultation with the
Ministry of Energy, the need for a 50MW/150MWh battery energy
storage facility in central Mongolia was defined. SRE's team has
completed the required feasibility studies and the grid connection
study for the project has been approved by the National Dispatching
Centre. All required documentation has been submitted to and
accepted by the Technology Committee of the Ministry of Energy.
Once the committee's approval is in hand, the License for
Construction of the facility will be requested. SRE expects that
this project can be brought to construction ready status with a
power purchase agreement and tariffs in place by mid-2024. SRE has
access to land already under lease for the facilities within two
kilometres of the tie in point and the footprint is small. The
development costs of this project are low and the project is
expected to offer a double-digit rate of return and could be online
and generating revenue by 2025.
A second project involving a utility scale wind farm to supply
renewable energy to generate green hydrogen for use at a mine
operation in the South Gobi is also progressing with a forecast
timescale similar to SRE's battery storage project. The project is
designed to demonstrate the viability of green hydrogen as a fuel
for use in the mining industry in Mongolia and SRE is very excited
to be involved. This initiative has the strong support of the
Mongolian Government and a memorandum of understanding has been
signed with the Ministry of Energy.
SRE and Petro Matad will determine, once these two projects
reach construction ready status, how best to fund them. Debt
funding for similar projects is already established in Mongolia,
leaving open the possibility that SRE can aspire to stay involved
in the construction phase and establish itself as a key renewable
power producer in the country.
The potential for renewable energy in Mongolia is huge with
solar and wind power set to make up an increasing part of the
country's energy mix in the coming decades. This has been embraced
by lawmakers, with Mongolia ratifying international conventions
including the Paris Agreement. SRE has made good progress so far
and has identified several other projects for consideration. We
look forward to progressing this exciting new venture that has the
potential to generate revenue in the near term.
Mike Buck, CEO of Petro Matad, said:
"The slow pace of the completion of the regulatory process that
will allow us to commence the Heron development is extremely
frustrating. Whilst we are pushing hard with all agencies, and we
have equipment and contractors ready to mobilise, unless the pace
suddenly quickens it is now unlikely that we will get the
Tripartite Agreement signed in time. However, we are working on a
limited access agreement at district level and leaving no stone
unturned to give us the chance to achieve our goal of getting Heron
1 onstream before winter.
Meanwhile, it is pleasing to see that our renewable energy
initiative is moving ahead. The battery storage project has
considerable follow-on potential since the Ministry of Energy has
identified a significant need for energy storage in various
locations throughout the country. The Government is very keen to
see if green hydrogen can be used effectively, whilst the mine
operators are looking to decarbonise their operations and SRE's
project targets these goals whilst also providing the potential for
an excellent commercial return for the developer.
As ever we appreciate our shareholders' patience as we work
through the final stages of getting Heron 1 on stream and in
particular, those shareholders that have been with us on this
journey since the Heron discovery and before. I look forward to
updating you further on our renewable energy initiative and our
other ventures."
Further operational updates will be provided in due course.
- Ends -
Further information please contact:
Petro Matad Limited
+976 7014 1099 / +976 7575
Mike Buck, CEO 1099
Shore Capital (Nominated Adviser and Broker)
Toby Gibbs +44 (0) 20 7408 4090
Zeus (Joint Broker)
Simon Johnson, Louisa Waddell +44 (0) 20 3829 5000
FTI Consulting (Communications
Advisory Firm)
Ben Brewerton
Christopher Laing +44 (0) 20 3727 1000
About Petro Matad
Petro Matad is the parent company of a group focussed on oil
exploration, as well as future development and production in
Mongolia. At the current time, Petro Matad holds 100% working
interest and the operatorship of two Production Sharing Contracts
with the Government of Mongolia. Block XX has an area of 218 square
kilometres in the far eastern part of the country and Block V has
an area of 7,937 square kilometres in the central western part of
the country.
Petro Matad Limited is incorporated in the Isle of Man under
company number 1483V. Its registered office is at Victory House,
Prospect Hill, Douglas, Isle of Man, IM1 1EQ.
STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF-YEARED 30 JUNE 2023
Consolidated
30 Jun
2023 30 Jun 2022
$'000 $'000
---------------------------------------------------- ----------- ---------------
Continuing Operations
Revenue
Consulting service revenue 100 -
Interest Income 11 20
Other Income 30 -
----------- ---------------
141 20
Expenditure
Consultancy fees (62) (79)
Depreciation and amortisation (89) (73)
Employee benefits expenses (892) (874)
Exploration expenditure (52) (75)
Other expenses (948) (542)
Profit/(Loss) from continuing operations
before income tax (1,902) (1,623)
Income tax expense - -
----------- ---------------
Profit/(Loss) from continuing operations
after income tax (1,902) (1,623)
----------- ---------------
Net Loss (1,902) (1,623)
----------- ---------------
Other comprehensive income/(loss)
Exchange rate differences on translating
foreign operations 5 (82)
----------- ---------------
Other comprehensive income/(loss), net
of income tax 5 (82)
----------- ---------------
(1, 897
Total comprehensive loss ) (1,705)
=========== ===============
Profit/(Loss) attributable to owners
of the parent (1,902) (1,623)
=========== ===============
Total comprehensive income/(loss) attributable (1, 897
to owners of the parent ) (1,705)
=========== ===============
Earnings/(loss) per share (cents per
share)
* Basic and diluted earnings/(loss) per share (0.18) (0.18)
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
Consolidated
31 Dec 30 Jun
30 Jun 2023 2022 2022
$'000 $'000 $'000
------------------------------- ----------------- -------------- -------------
ASSETS
Current Assets
Cash and cash equivalents 815 1,476 3,096
Trade and other receivables 346 2,607 9
Prepayments 215 138 183
Financial assets 7,572 1,017 3,524
Inventory 218 215 218
----------------- -------------- -------------
Total Current Assets 9,166 5,453 7,030
----------------- -------------- -------------
Non-Current Assets
Exploration and evaluation 15,275 15,275 15,275
Investment in SunSteppe Power
LLC 468 - -
Property, plant and equipment 266 261 90
Right-of-Use asset 38 92 30
----------------- -------------- -------------
Total Non-Current assets 16,047 15,628 15,395
----------------- -------------- -------------
TOTAL ASSETS 25,213 21,081 22,425
----------------- -------------- -------------
LIABILITIES
Current liabilities
Trade and other payables 317 456 392
Lease liability - - -
Total Current Liabilities 317 456 392
----------------- -------------- -------------
TOTAL LIABILITIES 317 456 392
----------------- -------------- -------------
NET ASSETS 24,896 20,625 22,033
================= ============== =============
EQUITY
Issued capital 160,17 7 154,057 154,057
Reserves 61 8 93
Accumulated losses (135,342) (133,440) (132,117)
----------------- -------------- -------------
TOTAL EQUITY 24,896 20,625 22,033
================= ============== =============
CONDENSED CASH FLOW STATEMENT
FOR THE HALF-YEARED 30 JUNE 2023
Consolidated
30 Jun 2023 30 Jun 2022
$'000 $'000
------------------------------------------- ------------ ------------
Cash flows from operating activities
Payments to suppliers and employees 166 (1,509)
Consulting service revenue 100 -
Interest received 11 20
Net cash flows from/(used in) operating
activities 277 (1,489)
------------ ------------
Cash flows from investing activities
Purchase of property, plant and equipment (26) (16)
Purchase of financial assets (6,555) 3,521
Investment in SunSteppe Power LLC (468) -
Proceeds from the disposal of plant
and equipment - -
Net cash flows from/(used in) investing
activities (7,049) 3,505
------------ ------------
Cash flows from financing activities
Proceeds from issue of shares 6,523 -
Capital raising costs (403) -
Payments of lease liability principal (13) -
Net cash flows from/(used in) financing
activities 6,107 -
------------ ------------
Net increase/(decrease) in cash and
cash equivalents (665) 2,016
Net foreign exchange differences 4 (82)
Cash and cash equivalents at beginning
of period 1,476 1,162
------------ ------------
Cash and cash equivalents at end
of period 815 3,096
============ ============
STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEARED 30 JUNE 2023
Consolidated
Attributable to equity holders of the parent
Issued Capital Accumulated Losses Other
$'000 $'000 Reserves $'000 Total
$'000
As at 1 January 2022 154,057 (130,524) 182 23,715
Income/(Loss) for the period - (1,623) - (1,623)
Other comprehensive income - - (82) (82)
----------------- --------------------- ----------------- --------
Total comprehensive income/(loss) for the
period 154,057 (132,147) 100 22,010
Transactions with owners in their capacity as
owners
Issue of share capital - - - -
Cost of capital raising - - 23 23
Share based payments - 30 (30) -
----------------- --------------------- ----------------- --------
As at 30 June 2022 154,057 (132,117) 93 22,033
----------------- --------------------- ----------------- --------
As at 1 January 2023 154,057 (133,440) 8 20,625
Income/(Loss) for the period - (1,902) - (1,902)
Other comprehensive income - - 5 5
----------------- --------------------- ----------------- --------
Total comprehensive income/(loss) for the
period 154,057 (135,342) 13 18,72 8
Transactions with owners in their capacity as
owners
Issue of share capital 6,52 3 - - 6,52 3
Cost of capital raising (40 3 ) - - (40 3 )
Share based payments - - 48 48
As at 30 June 2023 160,17 7 (135,3 4 2) 61 24,896
----------------- --------------------- ----------------- --------
1. CORPORATE INFORMATION
The financial report covers the consolidated entity of Petro
Matad Limited and its controlled entities.
Petro Matad Limited, a company incorporated in the Isle of Man
on 30 August 2007, has six wholly owned subsidiaries: Capcorp
Mongolia LLC and Petro Matad LLC (both incorporated in Mongolia),
Central Asian Petroleum Corporation Limited ("Capcorp"), Petromatad
Invest Limited and Petro Matad Energy Limited (all incorporated in
the Cayman Islands), Petro Matad Energy Limited (incorporated in
the Isle of Man) and Petro Matad Singapore Pte Ltd (incorporated in
Singapore). The Company has also entered into a joint venture with
SunSteppe Power LLC (a renewables energy company focused on
generation of clean energy in Mongolia), which is incorporated in
Mongolia and is a 50% owned subsidiary of Petro Matad LLC.
Petro Matad Limited trades on the Alternative Investment Market
(AIM), which is a sub-market of the London Stock Exchange, under
the symbol MATD. Its major shareholder is Petrovis Matad Inc.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The half-year financial report does not include all of the notes
of the type normally included within the annual financial report
and therefore cannot be expected to provide as full an
understanding of the financial performance, financial position and
financing and investing activities of the consolidated entity as
the full financial report.
The half-year financial report should be read in conjunction
with the annual Financial Report of Petro Matad Limited as at 31
December 2022. The half-year consolidated financial statements have
been prepared using the same accounting policies as used in the
annual financial statements for the year ended 31 December
2022.
It is also recommended that the half-year financial report is
considered together with any public announcements made by Petro
Matad Limited and its controlled entities during the half-year
ended 30 June 2023.
(a) Basis of Preparation
The half-year consolidated financial report is a general purpose
financial report, which has been prepared in accordance with the
requirements of International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
('IASB'). The half-year financial report has been prepared on a
historical cost basis, except where stated.
The financial report is presented in US dollars and all values
are rounded to the nearest thousand dollars ($'000).
For the purpose of preparing the half-year financial report, the
half-year has been treated as a discrete reporting period.
(b) Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Group as at 31 December each year.
Subsidiaries are entities controlled by the Group. Control
exists when the Group has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that
presently are exercisable or convertible are taken into account.
The financial statements of the subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
The financial statements of subsidiaries are prepared for the
same reporting period as the parent company, using consistent
accounting policies. Adjustments are made to bring into line any
dissimilar accounting policies that may exist.
A change in the ownership interest of a subsidiary that does not
result in a loss of control is accounted for as an equity
transaction.
All intercompany balances and transactions, including unrealised
profits arising from intra-group transactions, have been eliminated
in full. Unrealised losses are eliminated unless costs cannot be
recovered.
3. CONTRIBUTED EQUITY
CONSOLIDATED
30 Jun 31 Dec
2023 2022
$'000 $'000
---------- ----------------
Ordinary shares (i)
1,113,883,601 shares issued and
fully paid.
(31 Dec 2022: 898,761,649) 160,177 154,057
160,177 154,057
============= ==========
(i) Ordinary shares
Full paid ordinary shares carry one vote per share and carry the
right to dividends.
Movement in ordinary shares on issue Number Issue $'000
of Shares Price$
At 1 January 2023 898,761,649 154 ,057
Issue of shares through direct subscriptions
on 10 Feb 2023 1,025
33,333,332 $0.031 5,340
Issue of shares through its broker, Shore
Capital on 10 Feb 2023
2023 94,787,994 $0.030 2,866
Issue of shares through its broker, Zeus
on 10 Feb 2023 67,000,626 $0.030 2,027
Open Offer shares on 10 Feb 2023 20,000,000 $0.030 605
Cost of capital raising (403)
Share based payment -
At 30 June 2023 1,113,883,601 160,177
4. RESERVES
A detailed breakdown of the reserves of the Group is as
follows:
Equity Foreign
Merger benefits currency
reserve reserve translation Total
Consolidated $'000 $'000 $'000 $'000
---------- ---------- ------------- ------
As at 1 July 2022 831 563 (1,301) 93
Currency translation differences - - (67) (67)
Expiry of Options - (3) - (3)
Share based payments - (15) - (15)
---------- ---------- ------------- ------
As at 31 December 2022 831 545 (1,368) 8
Currency translation differences - - 5 5
Share based payments - 48 - 48
As at 30 June 2023 831 593 (1,363) 61
========== ========== ============= ======
EARNINGS/(LOSS) PER SHARE
The following reflects the income and share data used in the
total operations basic and diluted earnings/(loss) per share
computations:
CONSOLIDATED
30 Jun 30 Jun
2023 2022
Basic earnings/(loss) per share
Total basic earnings/(loss) per share (US$
cents per share) (note a) (0.18) (0.18)
---------- --------
Diluted earnings/(loss) per share
Total diluted earnings/(loss) per share (US$
cents per share) (note b) (0.18) (0.18)
---------- --------
(a) Basic earnings/(loss) per share
The profit/(loss) and weighted average number
of ordinary shares used in the calculation
of basic loss per share are as follows:
Net profit/(loss) attributable to ordinary
shareholders (US$'000) (1,902) (1,623)
---------- --------
Weighted average number of ordinary shares
for the purposes of basic earnings per share
('000) 1,067,531 898,762
(b) Diluted earnings/(loss) per share
The profit/(loss) and weighted average number
of ordinary shares used in the calculation
of diluted earnings per share are as follows:
Net profit/(loss) attributable to ordinary
shareholders (US$'000) (1,902) (1,623)
---------- --------
Weighted average number of ordinary shares
for the purposes of basic earnings per share
('000) 1,067,531 898,762
---------- --------
Share Options and Conditional Share Awards could potentially
dilute basic loss per share in the future, however they have been
excluded from the calculation of diluted loss per share because
they are anti-dilutive for both years presented.
5. EVENTS AFTER THE REPORTING DATE
None.
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