Company Web site : http://www.petromatadgroup.com/

Twitter : https://twitter.com/Petro_Matad/

Petro Matad is a group focused on oil exploration, as well as potential future development and production in Mongolia. The Group’s assets consist of Production Sharing Contracts (PSCs) over the following exploration blocks:

Matad Block XX, with an area of 10,340km2 in the far eastern part of Mongolia near the Chinese border

Bogd Block IV and Ongi Block V, adjacent to each other in west central Mongolia totalling approximately 50,000km2


Edison Research Note July 2018 : https://nofile.io/f/j90GYESdoet/MATD.pdf

March 2018 video presentation : HTTPS://www.youtube.com/watch?v=oL9rbvLAjn4

Interview with CEO July 2018 : HTTPS://www.youtube.com/watch?v=ra79wR0_jS0





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Internal CoS for WH-1 is actually 20%. So the Elephant discovery of 2018 boils down to two last chances, CHAR with Prospect S and MATD with Wild Horse-1.

Success case upside is greater on MATD as the prospect is 100% owned and the PSC terms are superb.

A mere 150 million barrel recoverable size find on Block IV for MATD would have an NPV10 of 1.27 billion US$ thanks to low cost of development wells, easy trucking and very good PSC terms ** (that value will be higher now due to rising oil prices)

NPV10 based on Economics run at Dec ‘17 Forward Curve prices: 2018 $63.67/bbl, 2019 $60.58, 2020 $58.56, 2021 $57.62, 2022 $57.25, 2023 $57.22, 2024+ 2% Esc



Well Name: Wild Horse-1 Block IV

Targeting 480 million barrels recoverable (mid case) 100% owned

Additional follow on prospects of 750 million barrels rec. (900 million rec. high case) derkisked in the Wild Horse area if Wild Horse-1 is a success.

Internal company estimates give 20% chance of success for Wild Horse-1

Wild Horse-2 appraisal well already permitted for, in the event of success.

Wild Horse-2 would drill into the other side of the WH lead in the event of a WH-1 discovery.

Due to analogous basin geology across the border in China there is a higher than frontier chance of success for frontier levels of potential

Notable Chinese productive basins include: Junggar Basin 10 Billion barrels recoverable, Songliao Basin 20 Billion barrels recoverable and Bohai-S. North China Basin with 40 Billion barrels recoverable.

Well defined 4-way dip structure and amplitude anomalies that are indicative of hydrocarbons. (Soft amplitude anomalies which conform to structure)

CEO Mike Buck comments that it is “A must drill well”. Royal Dutch Shell have told MATD they want to see Wild Horse-1 drilled.

Endorsed by Wood Mackenzie by their inclusion of Wild Horse-1 on their “one to watch wells in 2018” placing Petro Matad on a list alongside super majors like ENI and Repsol. The only onshore well to make it into the WoodMac list.



** PSC terms (the important bit to value any discovery with)

0% Corporation Tax

Royalty: Block IV 8%

Costs of Exploration, Development, Operations and Transport can be recovered in the success case. The implication for this is that on any success, when coming to arrange finance, this puts the company in a very strong position as it can demonstrate it can repay debt out of Gross revenue rather than profits. Yes, that is remarkably excellent, even transportation costs to sell the oil are recoverable. Pretty much WOW.......... The whole lot, explo, dev, op, transport...all recoverable.

Contractor Profit oil split: Block IV 50% to 57%

You cannot really value an oil discovery unless you also know clearly the PSC terms, then you are able to get a real good read on the NPV10. Given the present oil prices and forward curve the NPV10 value stated above is actually low and should be considerably higher now. The economics and IRR get better the bigger the find, so that is based on 150 MMBO, in the event after any discovery and appraisal that Wild Horse lives up to is Pmean of 480 MMBO recoverable, the figures are mind blowing, thats why its a "well to watch".

Operations Update.

They are behind where I expected them to be, however, they are confident they can spud and complete Wild Horse-1 this year, with spud now being later this month.

https://www.investegate.co.uk/petro-matad-ltd--matd-/rns/operational-update/201810010700054310C/

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Looks like they have joined Twitter too, finally.

https://twitter.com/Petro_Matad

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Wild Horse is spudded.

https://www.investegate.co.uk/petro-matad-ltd--matd-/rns/spud-of-the-wild-horse-1-exploration-well/201810230708078606E/

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Excellent timing for the rise yesterday..........as we know from Snow Leopard-1, on day 39 just as they entered the upper secondary target and got C1 to C5 gas shows.......big volume day.

And now, just as they should be entering the upper of the 3 targets (largest at the bottom), we get some good buying coming in.

So, looking good......nothing is certain, but looking good. Need to see sustained buying and a rising price, with lots of fall backs as people sell for a quick profit, followed by more buying.........repeat and repeat.

Weather has been excellent really.

https://www.accuweather.com/en/mn/bayansayr/241957/november-weather/241957?monyr=11/1/2018


This coming week they should enter the Main Target Zone, if not already. Fingers crossed something good happens, but as always, be prepared for the duster, its the most likely outcome.

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Wild Horse-1 is a duster as per todays RNS.

Got to wait for the drills in 2019 now (all of which are fully funded based on the current plans for 4 drills.


If you take the content of the RNS it looks like :

Next up will be the three low cost Block XX drills. These are all in effect appraisal and have very high chance of success. Each and every one of them is worth more than the current share price.

Drill these three first seems to be the plan, then I think a fund raising at a much higher price.

Fund raising will be for drilling in Block V where they now have (based on the SL-1 drill and latest seismic) three very large 4 way dip prospects. The fund raising will therefore pave the way for a 2 or 3 well drill campaign in Block 5. This is when the rig will drill Fox-1 and then one or two other new prospects they are working on.

So thats how I see it panning out.

1st Drill Block XX (already funded - no need for fund raise)
2nd Drill Block XX (already funded - no need for fund raise)
Fund raising based on success in Block XX and new leads.
3rd Drill Block XX (already funded - no need for fund raise)
1st Drill Block V (Fox-1) (already funded - no need for fund raise)
2nd Drill Block V (new prospect in the south of the license) Fund raise required.
3rd Drill Block V (new prospect in the south of the license) Fund raise required.