Petro Matad

LN: MATD

£34.3m market cap

4.93p 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 announced yesterday that the Red Deer-1 well in Block XX in Mongolia did not encounter hydrocarbons. The well was the second in a three well exploration and appraisal campaign and follows on from last week’s successful result in Heron-1. We valued Heron-1 at 3.3p/share, which has now been de-risked, and Red Deer-1 at 2.8p/share, which can now be discounted, but on balance we expect little to change in our last risked valuation of 21.6p/share The company will now complete its programme with the drilling of Gazelle-1 and the testing of Heron-1.

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 18/09/2019
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 18/09/2019
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 (28.1) (27.6) (34.7)
Relative* (30.1) (27.7) (34.5)
52-week high/low 8.8p/2.0p
*% relative to local index
Key management
Mike Buck CEO
John Henriksen CFO