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(Sharecast News) - Petro Matad confirmed in an update on Friday that invoices covering oil production from the Heron 1 well in Mongolia's Block XX, from October 2024 to April 2025, had been processed by PetroChina and were awaiting payment.
However, it said disbursement was contingent on confirmation from authorities that no customs, VAT or other taxes would be applicable under the terms of the Oil Sales Agreement.
It said discussions were ongoing, with PetroChina considering partial payment in the meantime.
Heron 1 is currently producing around 160 barrels of oil per day via beam pumping, with water cut below 6%.
The company said it was assessing the conversion of the nearby Heron 2 well into a water injector to provide reservoir pressure support and enhance production.
Tenders were also being evaluated for connecting Heron 1 to the local electricity grid, which would reduce diesel use and operating costs.
Petro Matad said it was also preparing to test the Gazelle 1 discovery, which could be rapidly tied into Heron 1 facilities if successful.
A geochemistry study at Gobi Bear 1 confirmed the presence of migrated oil, prompting a reassessment of well logs to identify testing intervals.
All three wells - Heron 2, Gazelle 1, and Gobi Bear 1 - are suspended and cased, allowing for low-cost re-entry using a workover rig.
In Block VII, the AIM-traded firm said it had completed an environmental baseline study and submitted documentation for exploration licence approval.
The 2025 budget and work programme had been cleared by the Mongolian regulator.
Petro Matad said it was also reviewing legacy 2D seismic data, which suggested a potentially significant structure in the block's northeastern sector.
Partner discussions for further development of Block XX remained ongoing.
"We are pleased to have agreed the amounts payable for Heron-1 production," said chief executive officer Mike Buck.
"We are working hard with PetroChina and the Mongolian authorities to get the first payment made and we look forward to a smooth monthly payment process thereafter.
"Meanwhile, our production operations continue and, as anticipated, after a period of natural flow, Heron 1 is now behaving more like the offset wells in the basin and artificial lift is now in operation."
Buck said that, although the pumped rate was lower than the rate on natural flow, the company was "pleased" that the well was continuing to deliver and is doing so at a very low water cut.
"We continue preparations for some low-cost well work for 2025 to support and potentially enhance production and Block VII appears to have some exciting potential.
"Our efforts to bring in partners are continuing in parallel."
At 1553 BST, shares in Petro Matad were down 28,99% at 1.65p.
Reporting by Josh White for Sharecast.com.