The Petro Matad Limited (LON: MATD) share price plunged 11.3% after releasing an update about its operations in Mongolia. While the company expressed optimism about its various oil projects in the country, it explained its frustration at the slow pace at which its exploration blocks are certified.
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The Mongolian oil company revealed that it was progressing in registering the Block XX Exploitation Area as a special purpose land, although at a much slower pace than expected. However, the firm expressed confidence that the process would speed up after its latest interactions with local authorities.
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Petro Matad also noted that its recent capital raise left it with enough cash reserves to start drilling the Velociraptor 1 well in its Block V license area. The well has a mean prospective resource potential of 200 million barrels, with an additional potential of 380 million barrels in the adjacent structures.
The well could transform Mongolia’s economy, given the significant oil potential and would also have a massive impact on the company’s finances and future performance. The company has signed a rig contract with Major Drilling, a Canadian company that operates internationally and has been operating in Mongolia for over 20 years.
Petro Matad expects to start drilling the Velociraptor well in Q2 2023, with the well having a proposed total depth (TD) of 1,500 metres. The drilling is expected to be completed within 30 days if no adverse events occur.
Petro Matad is also exploring renewable energy opportunities in Mongolia via a joint venture with SunSteppe Energy, a successful renewable energy project developer in the country. The firm wants to take advantage of favourable government policies.
Mike Buck, CEO of Petro Matad, said:
“Whilst we are pleased to see the process for special purpose certification of Block XX moving forward, we are disappointed with the pace and have made this abundantly clear to the authorities. Our recent interactions with the local authorities have given us renewed hope that we may be able to secure local land use approvals, and we are pursuing these in parallel with the certification process.”
*This is not investment advice.
The Petro Matad share price plunged 11.29% to trade at 2.75p, from Monday’s closing price of 3.10p.
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