The £43m capitalised Petro Matad (LON:MATD) is focussed upon the exploration, development and production of oil in Mongolia.
The Operational Update issued today is that the Velociraptor-1 well is expected to spud in two months, as soon as the rig is released from its current programme.
That is big news for the company.
CEO Mike Buck stated that:
"As shareholders will know, we have wanted to drill Velociraptor for some time now and so we are very excited to have agreed a firm schedule with the drilling contractor.
The necessary preparatory work is already underway and all equipment for the well is in the country ensuring we are ready to spud in June.”
Based in the Isle of Man, the group holds 100% working interests and is the operator of two Production Sharing Contracts with the Government of Mongolia.
The country’s leading explorer has 100% interests in production sharing contract blocks, including Ongi Block V that covers an area of approximately 7,937 sq kms; and Matad Block XX that consists of an area of approximately 218 sq kms in Mongolia.
In February the company easily raised $6m gross @ 2.5p a share to provide funds to drill the Velociraptor prospect in Block V, which could prove transformational.
On Block XX the company is about to move ahead with completing the Heron-1 oil discovery into a production well and to start generating cash flow. Crews and equipment are ready to be brought in, while DQE is contracted for a multi-well drilling. Petro China has the ability to export crude through its nearby facilities.
Buck commented that:
“We continue to push the Mongolian Government for the certification of Block XX Exploitation Area as Special Purpose Land and are pleased that the Ministry of Mining and Heavy Industry is proposing the certification on the grounds of this being a project of national importance."
Analyst Opinion – keenly awaiting further news
Daniel Slater at Zeus Capital continues to value Velociraptor-1 at 7.7p risked in its NAV, going to 77p unrisked, which he says helps to demonstrate the materiality of success for Petro Matad.
The group’s shares are up 4% on the news at 0.395p.