The Isle Of Man registered Petro Matad (LON:MATD) is looking to raise $8.5m by way of a Placing and a Subscription by a Director, together with a $0.5m Retail Offer of new shares at 2.0p each.
The net proceeds of the Capital Raising will primarily be used to complete and put Heron-1 on production, drill, complete Heron-2 and put on production, drill the Gobi-Bear 1 exploration well and develop renewable energy projects.
The Capital Raising is being handled by Joint Bookrunners – Shore Capital and Zeus Capital, with the gross proceeds expected to be up to $9.0m before expenses.
The Use Of The Proceeds
CEO Mike Buck stated that:
“This capital raise will allow Petro Matad to commence the development of the Heron oil discovery with the goal of generating sufficient production revenue to cover the operating costs of the company and to accumulate cash to allow for the drilling of future appraisal and development wells to increase proven reserves and production.
The raise also includes funds to drill the low cost, high impact Gobi-Bear 1 exploration prospect at the southern end of the prolific Tosun Uul sub-basin.
The prospect has estimated recoverable resource potential of circa 100 million barrels close to the Heron field.
In addition, with Petro Matad’s SunSteppe Renewable Energy joint venture already having secured two development projects, a number of new opportunities are being worked up and ranked to prioritise the most attractive near term targets.
The raise includes a small amount of extra development funding to bring the high-graded projects to internationally bankable, build ready status.
Petro Matad expects to sign two new Production Sharing Contracts with the government of Mongolia later in 2024 or early in 2025, and the company is keen to advance these projects in parallel with its existing business.
We are pleased to have been able to access the funding needed to kickstart development operations and to offer participation in the raise to existing shareholders through the Bookbuild platform.”
The Company’s Interests
Petro Matad is the parent company of a group focused on oil exploration, as well as future development and production in Mongolia.
Currently, Petro Matad holds 100% working interest and the operatorship of two Production Sharing Contracts with the government of Mongolia.
Block XX has an area of 214 sq.km in the far eastern part of the country, and Block V has an area of 7,937 sq.km in the central part of the country.
Just a week ago, when announcing the 2023 Final Results to end December, CEO Mike Buck informed the group’s shareholders that:
“2023 proved to be a frustrating year on Block XX, where the significant step of Cabinet approval of State Special Purpose Certification for the area did not translate into a rapid renewal of Petro Matad’s licence to operate.
Whilst that certification is still to be finalised and is having to wait until after the imminent Mongolian parliamentary elections, the fact that we were recently able to secure locally approved land use agreements for the areas in which our next operations are planned, ends a very long wait.
We share our shareholders’ relief and excitement that the completion operations on Heron 1 will go ahead with contractors planned to mobilise in July to prepare the well for production.
Negotiations with PetroChina for oil transport, processing, export and sale are ongoing with the support of the industry regulator.
The Company will be focussing maximum effort on moving the Heron development forward through the second half of 2024 and I look forward to updating you further.”
The group’s shares, which a year ago were 5.7p each, closed last night at 3.75p, valuing it at £42.95m before the Capital Raise at the deeply discounted 2.0p per share.