Petro Matad, the AIM quoted Mongolian oil company, announce its unaudited interim results for the six months ended 30 June 2020.

Financial Summary

The Group posted a loss of USD 2.35 million for the six-month period ended 30 June 2020, which compares to a loss of USD 4.41 million for the comparable period in 2019. The Company's cash balance at 30 June 2020 was USD 2.08 million (USD 2.07 million in cash and USD 0.01 million in Financial Assets), which compares to a cash balance of USD 16.12 million (USD 3.79 million in cash and USD 12.33 million in Financial Assets) on 30 June 2019.

The Company has strategically put in place cost saving measures without sacrificing its operational capability, which in the absence of new sources of financing, will enable it to remain in an operationally ready state until mid-2021. Meanwhile the Company is pursuing a number of options to fund the next stage of its activities.

Operational Update

• The Block XX Exploitation Licence (EL) application continues to progress through the government's approval processes. A key component is approval of the Company's reserve report for its Heron 1 oil discovery. The report has been reviewed by auditors appointed by the Ministry of Mining and Heavy Industry (MMHI) and forwarded for final review and approval to the Mineral Resource Professional Council (MRPC). We are pushing for the council to meet and we are hopeful that it will do so before the end of the third quarter.
• Once the reserves report has been approved, the EL award process requires the development area to be agreed with industry regulator Mineral Resources and Petroleum Authority of Mongolia (MRPAM) and then the Plan of Development must be reviewed and approved by MRPAM and MMHI. The Plan of Development has been completed save for any minor modifications which may result from the ongoing review of the reserves report and it will be submitted to the relevant bodies as soon as the reserves report approval is in hand.
• The Covid-19 pandemic combined with the Mongolian parliamentary election which was held in June 2020 have caused some delays in the EL approval processes but the previously announced one-year moratorium obtained for Block XX ensures that the PSC remains in good standing as the EL award process progresses.
• In parallel with the EL the Company is also working with MRPAM to progress the issues of land access which caused some delay and disruption to operations in 2019. MRPAM advises that they expect the issues, which arose as a result of new legislation (Reg 287 of 2017), will be resolved by the adoption of the conclusions of a working group. Those conclusions are currently progressing through the government's approval processes.
• Mongolia continues to manage the Covid-19 pandemic with the strict application of in-country measures as well as maintaining border closures to all but essential travel. To date, community spread has successfully been prevented in Mongolia and the impact on the Company's activities has been limited with its office and those of MRPAM and MMHI functioning as normal throughout.

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