Petro Matad

LN: MATD

£47.7m market cap

7.2p last close

Petro Matad is a pure-play Mongolian exploration company with a 100% equity interest in Blocks IV, V and XX. Management plans to drill four exploration wells in 2019, targeting low-risk prospects in Block XX and a high-impact well in Block V.

Investment summary

Petro Matad’s acreage combines high-impact exploration and low-risk targets across three blocks and multiple basins. 2018’s two-well programme did not yield a discovery, but the resulting data already highlighted three new structures in Block V. One of the three identified Block V ‘Raptor’ prospects is planned to be drilled in 2019, with the alternative 200mmbbl Fox prospect remaining an option. Three wells will also be drilled in the low-risk Block XX analogous to producing fields to the northeast, including the more material 48mmbbl Red Deer prospect in the south-west of the block. Heron-1 and Red Deer-1 wells were spud in July and August respectively and their results are expected in September. Our risked valuation currently stands at 21.6p/share, which we expect to revisit post-drill.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2017A 0.2 (9.7) (9.9) (0.3) N/A N/A
2018A 0.6 (18.2) (18.5) (0.3) N/A N/A
2019E 0.0 (5.0) (5.0) (0.1) N/A N/A
2020E 0.0 (5.0) (5.0) (0.1) N/A N/A
Last updated on 13/09/2019
Industry outlook

Petro Matad’s prospect inventory benefits from low well costs, simple development concept and attractive fiscal terms. Despite some uncertainty around offtake options, our analysis suggests an attractive risk/reward incentivising exploration. Even small Block V oil discoveries (c 10mmbo) generate positive returns at US$70/bbl Brent.

Last updated on 13/09/2019
Sector
Oil & gas
Share price graph
Balance sheet
Forecast net cash (US$m) 6.5
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual 35.2 (8.0) (12.2)
Relative* 32.1 (8.7) (12.8)
52-week high/low 8.8p/2.0p
*% relative to local index
Key management
Mike Buck CEO
John Henriksen CFO