PETRO MATAD LIMITED

Quarterly Report • Sep 15, 2021

National Storage Mechanism | Additional information

RNS Number : 8329L

Petro Matad Limited

15 September 2021

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY PETRO MATAD LIMITED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014 AS IT FORMS PART OF UNITED KINGDOM DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR"). ON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

15 September 2021

Petro Matad Limited

('Petro Matad' or the 'Company')

Interim results for the six months ended 30 June 2021

LONDON, 15 September 2021: Petro Matad Limited, the AIM quoted Mongolian oil company, is pleased to announce its unaudited interim results for the six months ended 30 June 2021.

Financial Summary

The Group posted a loss of USD 1.02 million for the 6-month period ended 30 June 2021, which compares to a loss of USD 2.35 million for the same period in 2020. The Company's cash balance at 30 June 2021 was USD 0.40 million (USD 0.38 million in cash and USD 0.02 million in financial assets), which compares to a cash balance of USD 2.08 million (USD 2.07 million in cash and USD 0.01 million in financial assets) on 30 June 2020.

In mid-July the Company successfully raised approximately USD 10 million (net) from strategic placements, which will primarily be used to fund a development work programme designed to bring oil production on stream during the second half of 2022. Funds from the strategic placements will be invested in safe, high yield term deposits until work programme activities ramp up. Petro Matad plans to generate revenue from early production as soon as possible and is working to secure the necessary contracts that will allow this production to get to market.

The Company continues to manage its costs closely and will maintain a small, focused workforce retaining all of the operational capabilities and experience gained from many years of successful operations in Mongolia.

Operational Highlights during 2021

·    The Block XX Exploitation Licence for the development of the Heron oil discovery was granted on 5 July 2021 for a period of 25 years which is extendable up to a further 10 years.

·   The retained Exploitation Area totals 218 km2 which contains not only the entirety of the Heron structure but includes the entire extension into Block XX of the proven and producing Toson-Uul Basin and a number of defined prospects and leads defined therein. As a consequence, the area offers substantial follow-up potential on appraisal and near field exploration opportunities with high chance of success and low drilling costs.

·    Mongolia has adopted a Covid-19 mitigation strategy that ensures high vaccination rates are achieved and are combined with social distancing guidelines and other mitigation efforts. Strategic businesses (of which Petro Matad is one) continue to operate effectively and we believe this will continue to be the case moving forward.

·   Procurement processes for the 2022 operational programme are well underway. These are being conducted in cooperation with industry regulator the Mineral Resources and Petroleum Authority of Mongolia. The Company plans to be in a position to award key contracts well in advance of the start of the development drilling season in Q2 2022 and so enable operations to commence immediately thereafter.

·    The Company is also tendering for the acquisition of a 3D seismic survey to complete the 3D coverage across the entire Exploitation Area. The c.200km2 survey may be recorded this winter or next, depending on crew availability, ongoing cross border Covid-19 restrictions and pricing. The locations chosen for drilling in 2022 are within the footprint of the existing high quality 3D seismic over the northern portion of the Exploitation Area, so the exact timing on the new 3D survey is not critical.

Mike Buck, CEO of Petro Matad, said:

"With the Exploitation Licence successfully secured, we are focused on completing all financial and logistical arrangements to ensure an active operational programme in 2022 with the goal of getting the Heron discovery on stream.

As we enter the winter months in Mongolia, work will continue at pace to secure all the necessary services and contracts for our production to get to market. I am pleased with the progress we have made in the first half of 2021 and look forward to updating our shareholders further in the coming months."  

Further operational updates will be provided in due course.

- Ends -

Further information please contact:

Petro Matad Limited
Mike Buck, CEO	+976 7014 1099 / +976 7575 1099
Shore Capital (Nominated Adviser and Joint Broker)
Toby Gibbs Jerry Keen John More	+44 (0) 20 7408 4090
Arden Partners (Joint Broker) Paul Shackleton	+44 (0) 20 7614 5900
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-YEAR ENDED 30 JUNE 2021

		Consolidated
		30 Jun 2021	30 Jun 2020
		$'000	$'000
Continuing Operations
Revenue
Interest Income		1	15
Other Income		12	20
		13	35
Expenditure
Consultancy fees		(40)	(38)
Depreciation and amortisation		(102)	(63)
Employee benefits expenses		(331)	(1,323)
Exploration expenditure		(70)	(293)
Other expenses		(486)	(670)
Profit/(Loss) from continuing operations before income tax		(1,016)	(2,352)
Income tax expense		-	-
Profit/(Loss) from continuing operations after income tax		(1,016)	(2,352)
Net Loss		(1,016)	(2,352)
Other comprehensive income/(loss)
Exchange rate differences on translating foreign operations		-	(12)
Other comprehensive income/(loss), net of income tax		-	(12)
Total comprehensive loss		(1,016)	(2,364)
Profit/(Loss) attributable to owners of the parent		(1,016)	(2,352)
Total comprehensive income/(loss) attributable to owners of the parent		(1,016)	(2,364)
Earnings/(loss) per share (cents per share)
-       Basic and diluted earnings/(loss) per share		(0.15)	(0.35)

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2021

	Consolidated
	30 Jun 2021	31 Dec 2020	30 Jun 2020
	$'000	$'000	$'000
ASSETS
Current Assets
Cash and cash equivalents	376	939	2,069
Trade and other receivables	1	10	8
Prepayments	135	222	160
Financial assets	23	11	10
Inventory	225	224	225
Total Current Assets	760	1,406	2,472
Non-Current Assets
Exploration and evaluation	15,275	15,275	15,275
Property, plant and equipment	113	145	203
Right-of-Use asset	25	36	-
Total Non-Current assets	15,413	15,456	15,478
TOTAL ASSETS	16,173	16,862	17,950
LIABILITIES
Current liabilities
Trade and other payables	898	364	246
Lease liability	26	25	-
Total Current Liabilities	924	389	246
TOTAL LIABILITIES	924	389	246
NET ASSETS	15,249	16,473	17,704
EQUITY
Issued capital	144,011	144,011	143,721
Reserves	996	1,392	2,809
Accumulated losses	(129,758)	(128,930)	(128,826)
TOTAL EQUITY	15,249	16,473	17,704

CONDENSED CASH FLOW STATEMENT

FOR THE HALF-YEAR ENDED 30 JUNE 2021

	Consolidated
	30 Jun 2021	30 Jun 2020
	$'000	$'000
Cash flows from operating activities
Payments to suppliers and employees	(493)	(2,349)
Interest received	1	15
Net cash flows from/(used in) operating activities	(492)	(2,334)
Cash flows from operating activities
Purchase of property, plant and equipment	(9)	(10)
Proceeds of financial assets	(12)	1,500
Proceeds from the disposal of plant and equipment	-	-
Net cash flows from/(used in) investing activities	(21)	1,490
Cash flows from financing activities
Proceeds from issue of shares	-	110
Capital raising costs	-	-
Payments of lease liability principal	(50)
Net cash flows from/(used in) financing activities	(50)	110
Net increase/(decrease) in cash and cash equivalents	(563)	(734)
Net foreign exchange differences	-	(12)
Cash and cash equivalents at beginning of period	939	2,815
Cash and cash equivalents at end of period	376	2,069

STATEMENT OF CHANGES IN EQUITY

FOR THE HALF-YEAR ENDED 30 JUNE 2021

	Consolidated
	Attributable to equity holders of the parent
	Issued Capital $'000	Accumulated Losses $'000	Other Reserves $'000	Total $'000
As at 1 January 2020	143,174	(126,474)	3,062	19,762
Income/(Loss) for the period	-	(2,352)	-	(2,352)
Other comprehensive income	-	-	(12)	(12)
Total comprehensive income/(loss) for the period	143,174	(128,826)	3,050	17,398
Transactions with owners in their capacity as owners
Issue of share capital	121	-	-	121
Cost of capital raising	-	-	-	-
Share based payments	426	-	(241)	185
As at 30 June 2020	143,721	(128,826)	2,809	17,704
As at 1 January 2021	144,011	(128,930)	1,392	16,473
Income/(Loss) for the period	-	(1,016)	-	(1,016)
Other comprehensive income	-	-	-	-
Total comprehensive income/(loss) for the period	144,011	(129,946)	1,392	15,457
Transactions with owners in their capacity as owners
Issue of share capital	-	-	-	-
Cost of capital raising	-	-	-	-
Share based payments	-	188	(396)	(208)
As at 30 June 2021	144,011	(129,758)	996	15,249

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 five wholly owned subsidiaries, including Capcorp Mongolia LLC and Petro Matad LLC (both incorporated in Mongolia), Central Asian Petroleum Corporation Limited ("Capcorp") and Petromatad Invest Limited (both incorporated in the Cayman Islands) and Petro Matad Singapore Pte Ltd (incorporated in Singapore).  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 2020. 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 2020.

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 2021.

(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 2021		31 Dec 2020
					$'000		$'000
Ordinary shares (i)       681,422,306 shares issued and fully paid      (31 Dec 2020: 681,422,306)				144,011		143,721
				144,011		143,721

(i) Ordinary shares

Full paid ordinary shares carry one vote per share and carry the right to dividends.

4.   RESERVES

A detailed breakdown of the reserves of the Group is as follows:

	Merger reserve	Equity benefits reserve	Foreign currency translation	Total
Consolidated	$'000	$'000	$'000	$'000
As at 1 July 2020	831	3,193	(1,215)	2,809
Currency translation differences	-	-	(4)	(4)
Share based payments	-	(1,413)	-	(1,413)
As at 31 December 2020	831	1,780	(1,219)	1,392
Currency translation differences	-	-	-	-
Share based payments	-	(396)	-	(396)
As at 30 June 2021	831	1,384	(1,219)	996

5.   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 2021	30 Jun 2020
Basic earnings/(loss) per share
Total basic earnings/(loss) per share (US$ cents per share) (note a)	(0.15)	(0.35)
Diluted earnings/(loss) per share
Total diluted earnings/(loss) per share (US$ cents per share) (note b)	(0.15)	(0.35)
(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$'000)	(1,016)	(2,352)
Weighted average number of ordinary shares for the purposes of basic earnings per share ('000)	681,422	672,429
(b)  Diluted earnings/(loss) per share
The profit/(loss) and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:
Net profit/(loss) attributable to ordinary shareholders (US$'000)	(1,016)	(2,352)
Weighted average number of ordinary shares for the purposes of basic earnings per share ('000)	681,472	672,429

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.

6.   EVENTS AFTER THE REPORTING DATE

On 5 July 2021, the Company was granted Exploitation License over Block XX (for a 25-year period, extendable for up to 10 years).

On 22 July 2021, the Company concluded a placing by issuing 155,240,612 shares at a price of GBP0.035 per share arranged through its nominated adviser and joint book runner and broker for the purposes of the Placing, Shore Capital and joint book runner for the purposes of the Placing, Arden.

On 22 July 2021, the Company concluded a placing by issuing 14,285,714 shares at a price of GBP0.035 per share through a retail offering via Primary Bid.

On 6 August 2021, the Company issued 45,384,218 shares through direct subscriptions at a price of GBP0.035 per share.

On 6 August 2021, the Company issued 2,169,649 shares through Open Offer to shareholders at a price of GBP0.035 per share.

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