Petro Matad's Shell affiliate farm-out exit fee contributed to H1 profit

Mongolian oil explorer Petro Matad reported that the farm-out exit fee received from Royal Dutch Shell’s affiliate contributed to the company’s interim half year profit.

For the six months ended 30 June, the company reported an interim profit of $100,000 in comparison to a $1.74m loss in 2015.

The AIM-listed miner said the profit was due to cash received from BG, which is owned by oil giant Royal Dutch Shell.

Shell’s affiliate BG Mongolian Holdings (BGMH) paid a farm-out arrangement exit fee of over $10m in early August, and a further $5m is payable when the Mongolian government approved the reassignment of BGMH’s interest in mining blocks IV and V to Petro Matad.

The company said one it has received the funds from, BGMH it will be able to execute it exploration programme for the next 12 months.

Revenue increased significantly to $4.8m from $15,000 in 2015 and cash balance as of 30 June was $490,000, down from £2.51m in 2015.

Petro Matad, which is incorporated on the Isle of Man, was encouraged by the developments at the block IV during the fourth quarter of 2015 as it has already identified a series of leads, and is confident that a number of drill-ready prospects will emerge.

A leads inventory of blocks IV and V will be peer reviewed and prospects will be high-graded to be drill-ready prior to exploration drilling, which is expected in mid-2017.

Scouting information suggested there are several rigs in Mongolia that are capable of drilling exploration wells to the depths Petro Matad will be targeting. The company is currently preparing well engineering and rig tender documents to be issued to its drilling tender before the end of year.

Shares in Petro Matad were down 4.43% to 2.92p at 1046 BST.