AIM-quoted Mongolian oil company Petro Matad (LON: MATD) announced that Mongolia's Minister of Mining and Heavy Industry has approved the Block XX exploitation licence award, resulting in its share price rallying.
Under the Mongolian Petroleum Law and the Block XX production sharing contract, the exploitation licence will run for 25 years, until 1 July 2046, with the option to extend for two periods of five years each.
The company's approved plan of development will concentrate initially on the area of the proven reserves around the Heron 1 well, expanding in phases to target an estimated 194 million barrels of the total in place resource potential.
The agreed exploitation area totals 218km² which includes the full extension into Block XX of the proven and producing Toson Uul Basin.
Following the licence award, the company will now resume discussions with potential farm-in partners and review funding options to complete the next activity stage.
Petro Matad is also focused on preparing for its 2022 programme, including the start-up of oil production from the Heron discovery.
Mike Buck, CEO of Petro Matad, said: “Securing the Block XX Exploitation Licence has been a lengthy process but Petro Matad very much appreciates the patient and professional way in which the government has dealt with the matter. We are delighted and honoured to have been awarded what is only the third such licence ever granted in Mongolia.”
Petro Matad's share price has surged 25.78% to 8.06p following today's announcement.
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