Petro Matad (LSE:MATD) has suspended oil deliveries from its Heron-1 and Gazelle-1 wells in Mongolia’s Block XX following an instruction from PetroChina’s local subsidiary, as discussions over the 2026 Oil Sales Agreement remain unresolved.
The AIM-listed oil exploration and production company said PetroChina’s subsidiary had indicated that it could not process invoices while internal discussions with its head office continued.
PetroChina also cited temporary import suspensions associated with China’s National Day holiday and storage facilities at its Block XIX operations approaching capacity as reasons for halting deliveries.
The interruption has left Petro Matad with accumulated crude oil that remains unsold, delaying the receipt of revenue from its 2026 production.
Heron-1 and Gazelle-1 Oil Deliveries Suspended
Petro Matad has stopped delivering crude oil from its Heron-1 and Gazelle-1 wells in Block XX following instructions from PetroChina’s local subsidiary.
According to Petro Matad, the subsidiary said it was unable to process invoices while discussions concerning the 2026 Oil Sales Agreement continued at PetroChina’s head office.
The company also reported that PetroChina had identified two additional constraints affecting its ability to receive deliveries.
These included temporary import suspensions during China’s National Day holiday and limited remaining storage capacity at Block XIX.
As a result, Petro Matad has been instructed to cease deliveries, leaving accumulated crude oil awaiting sale.
The company has not disclosed the volume of unsold oil or the financial value of the delayed sales in the supplied announcement.
Oil Sales Agreement Remains Unresolved
The interruption follows continuing discussions over the terms and implementation of the 2026 Oil Sales Agreement.
Petro Matad said PetroChina’s local subsidiary had indicated that invoice processing could not proceed until internal discussions with its head office were completed.
The company has not provided a timetable for concluding the agreement or resuming deliveries.
The suspension affects Petro Matad’s ability to sell accumulated production and receive revenue from its 2026 oil operations.
No final resolution has been announced.
Company Escalates Discussions With Mongolian Authorities
Petro Matad has raised the matter through regulatory, ministerial and diplomatic channels in Mongolia.
The company reported that the issue had been escalated to senior government officials, including the Deputy Prime Minister, who has intervened in the discussions.
Petro Matad is seeking a resolution that would allow oil deliveries and the associated sales arrangements to resume.
The company has not disclosed any formal agreement resulting from these discussions or confirmed when PetroChina may begin accepting deliveries again.
Alternative Oil Buyers and Export Routes Under Review
Alongside its discussions with PetroChina, Petro Matad is exploring alternative buyers and routes to market for its crude oil.
The company is seeking to reduce its dependence on PetroChina as a sales counterparty.
The review includes potential alternative arrangements for marketing and delivering production from its Mongolian operations.
No alternative sales agreement or new delivery arrangement has been confirmed in the supplied announcement.
The company continues to pursue these options while seeking to resolve the existing sales arrangements with PetroChina.
Cash Resources Expected to Support Operations Into 2027
Petro Matad said it is managing expenditure in response to the delay in receiving revenue from its 2026 oil sales.
Despite the interruption, the company stated that it has sufficient cash resources to continue operating into 2027.
The supplied announcement does not provide a specific cash balance, expenditure forecast or estimate of the financial impact of the suspended deliveries.
The company is maintaining financial controls while working to restore oil sales and assess alternative commercial arrangements.
The duration of the interruption and the timing of future sales receipts remain unresolved.
Petro Matad’s Mongolian Asset Portfolio
Petro Matad holds 100% working interests and operatorship in the Matad Block XX and Borzon Block VII production sharing contracts in Mongolia.
Its Heron-1 and Gazelle-1 wells are located within Block XX, where the current oil delivery interruption is affecting sales arrangements.
The company also owns a 50% interest in SunSteppe, a joint venture developing utility-scale renewable energy projects in Mongolia.
Its principal activities include oil exploration, development and production, alongside its investment in renewable energy.
Outlook
Petro Matad’s immediate priority is to resolve the outstanding Oil Sales Agreement discussions and restore deliveries from Heron-1 and Gazelle-1.
The company is continuing its engagement with PetroChina and Mongolian government representatives while investigating alternative buyers and routes to market.
Management has stated that existing cash resources are sufficient to maintain operations into 2027, despite the delay in receiving oil sales revenue.
The timing of resumed deliveries, the sale of accumulated crude and the receipt of outstanding revenue will depend on the outcome of the ongoing discussions and the availability of commercial arrangements.
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