Petro Matad Farms Out 78% Stake in Mongolia's Blocks IV, V to BG
Petro Matad Ltd. announced Tuesday that it has entered into a farm-out agreement with BG Group whereby BG Group will acquire a 78 percent interest in Block IV and Block V in central Mongolia, with an effective date Jan. 1 (the Farm-out).
Under the terms of the agreement, BG Group has committed to cover Petro Matad’s portion of the agreed $28 million work program, which is expected to include Airborne FTG Gravity and magnetics, 2D seismic, core holes and exploration wells, as well as providing additional cash consideration to the Company of $4.55 million, which will be used by Petro Matad as working capital to fund ongoing operations and obligations.
The transaction remains subject to the receipt of Mongolian Government approval and other Mongolian regulatory formalities. A further announcement, in relation to these conditions, will be made in due course.
- BG Group to fund Petro Matad’s share of an agreed $28m Block IV and Block V accelerated exploration work programme in primarily unexplored areas of the blocks, which is expected to comprise:
- Airborne Full Tensor Gradiometer and High Resolution Aeromagnetics program in 2015
- 1,242 mile (2,000 kilometer) 2D seismic acquisition program in ─ Two 4,921 foot (1,500 meter) core holes in 2015; and
- Two 11,482 feet (3,500 meters) stratigraphic wells, of which one is expected to be drilled in 2015, and the second is expected to be drilled in 2016
- In addition, $2.75 million will be payable to the Company immediately upon completion and a further $1.80 million via payments of $50,000 per month over 36 months. These proceeds will be used as working capital to fund ongoing operations and obligations
- Petro Matad to retain operatorship in Block IV and Block V until such a time as there is an extension to the Block IV or Block V contract term, at which point BG Group will assume operatorship
- BG Group will provide technical support, including a secondee to Petro Matad, whilst Petro Matad remains as operator, which will be particularly relevant for well planning and drilling operations
- Following the transaction Petro Matad will continue to hold a 100 percent interest in Block XX and will hold a 22 percent interest in Blocks IV and V
Commenting, Dr Oyungerel Janchiv, Petro Matad acting chairperson, said:
“I am very pleased to announce this agreement which will enable Petro Matad to move our exploration work on Blocks IV & V to the next stage. BG Group’s decision to enter Mongolia is an endorsement of the potential within the acreage and Petro Matad’s technical work to date. As a result of this transaction Petro Matad will be fully funded in relation to the remaining license commitments on Blocks IV & V. We look forward to building a lasting relationship with BG Group”.
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