PETRO MATAD LIMITED

Quarterly Report • Sep 19, 2024

National Storage Mechanism | Additional information

RNS Number : 7653E

Petro Matad Limited

19 September 2024

Petro Matad Limited

('Petro Matad' or the 'Company' or the 'Group')

Interim results for the six months ended 30 June 2024

LONDON, 19 September 2024: Petro Matad Limited, the AIM quoted Mongolian oil company, announces its unaudited interim results for the six months ended 30 June 2024.

Financial Summary 1H 2024

The Group posted a loss of USD 2.56 USD million for the 6-month period ended 30 June 2024, which compares to a loss of USD 1.90 million for the comparable period in 2023. The Company's cash balance at 30 June 2024 was USD 1.93 million (USD 0.77 million in cash and USD 1.16 million in Financial Assets), which compares to a cash balance of USD 8.39 million (USD 0.82 million in cash and USD 7.57 million in Financial Assets) on 30 June 2023.

As previously announced, a successful fundraise totalling USD 9.4 million of gross proceeds was completed in July 2024 to fund commencement of production and development of the Heron oil discovery in Block XX and to continue to develop renewable energy projects through the SunSteppe Renewable Energy (SRE) joint venture.

Operational Summary 1H 2024 and look ahead

On the Company's Block XX in eastern Mongolia where the Heron oil discovery had been ready for the first phase of development for some time, the land access issue continued to delay activities through the first half of 2024. The hold up was due to delay in the government completing the registration of Block XX as State Special Purpose Land even though this had been approved by the cabinet in July 2023. With the matter delayed at provincial level, Petro Matad was able to secure land use agreement at the district level in late May 2024 that allowed operational activity to go ahead in the second half of the year.

Following the reporting period, the Company has announced the downhole completion of the Heron-1 discovery well, the commencement of drilling of the Heron-2 development well and the plans to spud the Gobi Bear-1 exploration well. Operational activities are focussed on starting production from the discovery and securing a route to market for the oil.

On the Block V Production Sharing Contract (PSC) in central Mongolia, with the expiration of the exploration period due in late July 2024, the Company undertook all the necessary work to hand back the acreage to the government in good order. This work was completed ahead of the expiration of the period on 28 July 2024.

MRPAM's Exploration Tender Round offering new PSC areas continued through the first half of the year although progress was held up by the late June 2024 parliamentary elections. As previously reported, the Company has been selected as the preferred contractor for the two blocks for which it submitted applications. Following the parliamentary elections the Company has been advised that the process to award the new PSCs is now progressing.

The Company's renewable energy initiative continued to make good progress in the first half of 2024. The SunSteppe Renewable Energy (SRE) joint venture had high graded two projects for development. The first project involves the provision of Green Hydrogen to Mongolia's major Oyu Tolgoi copper and gold mine in which Rio Tinto is the major investor. An exclusive Memorandum of Understanding was signed with Oyu Tolgoi and the Japanese Overseas Environmental Cooperation Centre (OECC) to develop the project and supply Green Hydrogen to be used to provide heat to facilities at the mine. Through the involvement in the venture of OECC, the partnership was able to secure some Japanese Government grant funding and an application for further grant funding is expected to be made in due course.

SRE's second high graded project is the Choir 50MW Battery Energy Storage System ( BESS). The government has identified the need for a substantial BESS at Choir to help stabilise the grid and reduce high-cost import of power from China and Russia at peak hours and the economically wasteful export of power during off peak periods. SRE secured approval of the feasibility study from the Ministry of Energy for a 50MW BESS project at Choir and began preparation of the application for the licence to construct which continued beyond the end of the reporting period.

In parallel with bringing its two high graded projects to construction readiness expeditiously, SRE is reviewing a number of other renewable energy opportunities in Mongolia in order to add the most attractive to its high graded portfolio.

Mike Buck, CEO of Petro Matad, said:

"The progress made on the land issue in 1H 2024 has been a long time coming but with permits now in hand, our successful fund raise in July has allowed operational activity to commence in earnest with downhole completion of Heron-1, spud of Heron-2, plans to spud Gobi Bear-1 and preparations for production start up.

I would like to thank the entire Petro Matad team for their relentless work, in often frustrating conditions, so far this year and we look forward to updating shareholders on the progress and conclusion of several workstreams in the months to come." 

- Ends -

Further information please contact:

Petro Matad Limited
Mike Buck, CEO	+976 7014 1099 / +976 7575 1099
Shore Capital (Nominated Adviser and Broker)
Toby Gibbs Rachel Goldstein	+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 Catrin Trudgill	+44 (0) 20 3727 1000

About Petro Matad

Petro Matad is the parent company of a group focused on oil exploration, development and production in Mongolia. Currently, Petro Matad holds 100% working interest and the operatorship of the Matad Block XX Production Sharing Contract with the government of Mongolia. Block XX has an area of 214 square kilometres in the far eastern 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 2024

		Consolidated
		30 Jun 2024	30 Jun 2023
		$'000	$'000
Continuing Operations
Revenue
Consulting service revenue		-	100
Interest Income		102	11
Other Income		-	30
		102	141
Expenditure
Consultancy fees		(65)	(62)
Depreciation and amortisation		(105)	(89)
Employee benefits expenses		(869)	(892)
Exploration expenditure		(1)	(52)
Other expenses		(1,626)	(948)
Profit/(Loss) from continuing operations before income tax		(2,564)	(1,902)
Income tax expense		-	-
Profit/(Loss) from continuing operations after income tax		(2,564)	(1,902)
Net Loss		(2,564)	(1,902)
Other comprehensive income/(loss)
Exchange rate differences on translating foreign operations		13	5
Other comprehensive income/(loss), net of income tax		13	5
Total comprehensive loss		(2,551)	(1, 897 )
Profit/(Loss) attributable to owners of the parent		(2,564)	(1,902)
Total comprehensive income/(loss) attributable to owners of the parent		(2,551)	(1, 897 )
Earnings/(loss) per share (cents per share)
-       Basic and diluted earnings/(loss) per share		(0.23)	(0.18)

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2024

	Consolidated
	30 Jun 2024	31 Dec 2023	30 Jun 2023
	$'000	$'000	$'000
ASSETS
Current Assets
Cash and cash equivalents	772	503	815
Trade and other receivables	344	438	346
Prepayments	143	159	215
Financial assets	1,160	3,529	7,572
Inventory	217	215	218
Total Current Assets	2,636	4,844	9,166
Non-Current Assets
Exploration and evaluation	15,275	15,275	15,275
Investment in SunSteppe Power LLC	793	946	468
Property, plant and equipment	222	239	266
Right-of-Use asset	43	99	38
Total Non-Current assets	16,333	16,559	16,047
TOTAL ASSETS	18,969	21,403	25,213
LIABILITIES
Current liabilities
Trade and other payables	263	348	317
Lease liability	-	-	-
Total Current Liabilities	263	348	317
TOTAL LIABILITIES	263	348	317
NET ASSETS	18,706	21,055	24,896
EQUITY
Issued capital	160,17 6	160,176	160,17 7
Reserves	405	243	61
Accumulated losses	(141,875)	(139,364)	(135,342)
TOTAL EQUITY	18,706	21,055	24,896

CONDENSED CASH FLOW STATEMENT

FOR THE HALF-YEAR ENDED 30 JUNE 2024

	Consolidated
	30 Jun 2024	30 Jun 2023
	$'000	$'000
Cash flows from operating activities
Payments to suppliers and employees	(2,339)	166
Consulting service revenue	-	100
Interest received	102	11
Net cash flows from/(used in) operating activities	(2,237)	277
Cash flows from investing activities
Purchase of property, plant and equipment	(10)	(26)
Proceeds from sale of financial assets	2,369	(6,555)
Investment in SunSteppe Power LLC	153	(468)
Net cash flows from/(used in) investing activities	2,512	(7,049)
Cash flows from financing activities
Proceeds from issue of shares	-	6,523
Capital raising costs	-	(403)
Payments of lease liability principal	(19)	(13)
Net cash flows from/(used in) financing activities	(19)	6,107
Net increase/(decrease) in cash and cash equivalents	256	(665)
Net foreign exchange differences	13	4
Cash and cash equivalents at beginning of period	503	1,476
Cash and cash equivalents at end of period	772	815

STATEMENT OF CHANGES IN EQUITY

FOR THE HALF-YEAR ENDED 30 JUNE 2024

	Consolidated
	Attributable to equity holders of the parent
	Issued Capital $'000	Accumulated Losses $'000	Other Reserves $'000	Total $'000
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
As at 1 January 2024	160,176	(139,364)	243	21,055
Income/(Loss) for the period	-	(2,564)	-	(2,564)
Other comprehensive income	-	-	13	13
Total comprehensive income/(loss) for the period	160,176	(141,928)	256	18,504
Transactions with owners in their capacity as owners
Issue of share capital	-	-	-	-
Transfer of Petromatad Singapore	-	53	-	53
Cost of capital raising	-	-	-	-
Share based payments	-	-	149	149
As at 30 June 2024	160,17 6	(141,875)	405	18,706

1.   CORPORATE INFORMATION

The financial report covers the consolidated entity of Petro Matad Limited and its controlled entities.

Petro Matad Limited (Company) incorporated in the Isle of Man on 30 August 2007 has five wholly owned subsidiaries, which are: 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 Energy Limited (incorporated in Isle of Man). Petro Matad Limited owns 50% of Sunsteppe Renewable Energy Pte. Ltd. (formerly known as Petro Matad Singapore Pte. Ltd.), which is incorporated in Singapore, which is owned jointly together with Sunsteppe Energy LLC to pursue renewables energy projects. The Company and its subsidiaries are collectively referred to as the "Group". The Group's principal activity in the course of the financial year consisted of oil exploration and development and investment in renewable projects in Mongolia. 

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 2023. 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 2023.

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 2024.

(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 2024		31 Dec 2023
					$'000		$'000
Ordinary shares (i) 1,113,883,601 shares issued and fully paid. (31 Dec 2023: 1,113,883,601)				160,176		160,176
				160,176		160,176

(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 of Shares		Issue Price$		$'000
	At 1 January 2024		1,113,883,601				160,176
	No transactions during the period		-		-		-
	At 30 June 2024		1,113,883,601				160,176

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 2023	831	593	(1,363)	61
Currency translation differences	-	-	21	21
Expiry of Options	-	(2)	-	(2)
Share based payments	-	163	-	163
As at 31 December 2023	831	754	(1,342)	243
Currency translation differences	-	-	13	13
Share based payments	-	149	-	149
As at 30 June 2024	831	903	(1,329)	405

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 2024	30 Jun 2023
Basic earnings/(loss) per share
Total basic earnings/(loss) per share (US$ cents per share) (note a)	(0.23)	(0.18)
Diluted earnings/(loss) per share
Total diluted earnings/(loss) per share (US$ cents per share) (note b)	(0.23)	(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$'000)	(2,564)	(1,902)
Weighted average number of ordinary shares for the purposes of basic earnings per share ('000)	1,113,884	1,067,531
(b)  Diluted earnings/(loss) per share
The profit/(loss) and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:
Net profit/(loss) attributable to ordinary shareholders (US$'000)	(2,564)	(1,902)
Weighted average number of ordinary shares for the purposes of basic earnings per share ('000)	1,113,884	1,067,531

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

On 1 July 2024, the Company concluded a placing by issuing 189,311,666 shares at a price of GBP0.020 per share arranged through its nominated adviser, broker and joint book runner for the purposes of the Placing, Shore Capital Stockbrokers.

On 1 July 2024, the Company concluded a placing by issuing 117,381,250 shares at a price of GBP0.020 per share arranged through its broker and joint book runner for the purposes of the Placing, Zeus Capital.

On 1 July 2024, the Company issued 43,307,084 shares through direct subscriptions at a price of GBP0.020 per share.

On 1 July 2024, the Company issued 20,000,000 shares to shareholders at a price of GBP0.020 per share through a retail offering.

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