Petro Matad

LN: MATD

£23.2m market cap

3.5p 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. In October, the company announced the results for its Block XX 2019 drilling campaign. During flow test, Heron-1 recorded a commercial flow rate of hydrocarbons reaching a peak production of 821bopd. The company will now incorporate all data from the drilling campaign into reinterpretation of Block XX to apply for an Exploitation Licence from the Government of Mongolia to be able to put Heron-1 into production in 2020. Our updated risked valuation stands at 20.1p/share with 4.9p/share being attributed to Heron and 1.4p/share to Gazelle, also drilled in October and proved to be dry in the Lower Tsagaantsav formation.

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
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 oil discoveries (c 10mmbo) generate positive returns at US$70/bbl Brent.

Last updated on 11/12/2019
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 (22.7) (50.0) 70.7
Relative* (21.9) (49.6) 58.5
52-week high/low 8.8p/2.0p
*% relative to local index
Key management
Mike Buck CEO
John Henriksen CFO