This oil company has recently seen some interesting momentum being created in its shares, particularly with private investors.
The Isle of Man-based Petro Matad (LON:MATD) is focussed upon the exploration, development and production of oil in Mongolia.
The £47m capitalised 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.
Last month 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.
The 2023 Exploration Licencing Round
The Petroleum Authority of Mongolia has a round in progress offering 14 blocks in southern half of the country. The company has an application out on one round and has identified three other blocks in subsequent 2023 rounds.
Renewable Energy possibilities
Mongolia has huge renewable energy generation potential from solar and wind projects.
The group has formed a joint venture with SunSteppe Energy, which is a Mongolian renewable energy project developer. The JV projects, ranging in size from a few tens of megawatts to hundreds of megawatts, have already been identified in solar supplied battery storage to help improve Mongolian grid efficiency and in clean energy supply to mining projects in the South Gobi region.
Analyst Opinion – a ‘potential company-maker’
Craig Howie at Shore Capital, the group’s NOMAD and Joint Broker, has an updated risked net asset value of 14.5p on the shares, against 11.5p previously.
Shore Capital rate the company’s Velociraptor-1 well as being a ‘potential company-maker’, targeting 200mmbbl.
His estimates for turnover in the 2023 year to end December are $4.68m (nil), producing a loss before tax of $2.37m ($3.27m).
For next year he has predicted a very much higher revenue of $13.87m, upon which he forecasts a $1.64m pre-tax profit.
Analyst Peter Hitchens at Progressive Research, influenced by the Velociraptor prospect, has increased his risked exploration net asset value for the shares from 29.0p to 58.7p per share.
Conclusion – an exciting ride ahead
For the time being this group is well funded and able to go about its work.
Apparently, there are plenty of opportunities in the group’s expanding oil areas of operation, while the JV on renewable energy holds interesting possibilities.
We await further news on the progress of its Heron-1 completion and into production, while its Velociraptor exploration well adding to the excitement.
A year ago, the group’s shares were 3.45p each, before peaking at 5.6p in January of this year.
Now at 4.25p they could offer patient investors an exciting ride as they inevitably increase in value, possibly even multiplying.
