Petro Matad (LSE:MATD) said approval of its 2026 Oil Sales Agreement with PetroChina is expected shortly, paving the way for the sale of approximately 35,000 barrels of accumulated oil production from Block XX. The company expects the agreement to allow sales at current higher market prices, potentially improving near-term cash generation.
Production from the Heron-1 and Gazelle-1 wells continues to perform in line with or above company expectations. Management also noted that operating costs have remained under control despite increased production volumes across the field operations.
Alongside ongoing production activity, Petro Matad is evaluating a potential near-term 3D seismic survey programme aimed at improving reservoir understanding and supporting future appraisal and development drilling plans.
Partner Discussions and Renewable Expansion Continue
The company said farm-out negotiations relating to Block XX and Block VII have progressed more slowly than initially anticipated. However, stronger oil prices have recently generated renewed interest from prospective partners, widening Petro Matad’s strategic options.
Beyond hydrocarbons, the group is continuing to expand its renewable energy business through SunSteppe Renewable Energy. The division is advancing plans for a 200MW hybrid power project and is also participating in tenders or early-stage discussions for several additional solar, wind and battery storage developments ranging between 90MW and 100MW.
Management believes these projects position the company to benefit from Mongolia’s growing demand for renewable and grid-stabilising energy infrastructure as the country accelerates its energy transition strategy.
Operational Updates and Shareholder Engagement
Petro Matad also confirmed arrangements for its upcoming Annual General Meeting in Ulaanbaatar, with shareholders able to participate either in person or remotely. The company said further updates are expected as the PetroChina sales agreement progresses, seismic plans advance and renewable project opportunities develop further.
Financial Outlook Remains Mixed
The company’s outlook is held back primarily by very weak profitability and consistently negative (and worsening) free cash flow, despite sharp revenue growth. A strong, low-debt balance sheet provides an important offset, while technical signals are mixed/neutral and valuation remains challenging due to losses and lack of dividend data.
More about Petro Matad
Petro Matad Limited is an AIM-quoted oil and gas company focused on exploration and production in Mongolia, primarily through its Block XX and Block VII licences. The group also has a growing presence in renewable energy via its SunSteppe Renewable Energy arm, which is developing large-scale hybrid wind, solar and battery storage projects to support Mongolia’s power grid and energy transition.
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