Petro Matad Limited, the AIM quoted Mongolian oil explorer, provides an update on cost saving measures and its application for an Exploitation Licence covering the Heron 1 oil discovery.
In order to ensure that the Company's current financial resources can sustain the organisation through the processing of its Block XX Exploitation Licence application and, at the same time, recognising the impact that the ongoing COVID-19 pandemic has had on global financial markets, Petro Matad's Board of Directors has implemented certain cost saving measures.
- All Executive Directors, Non-Executive Directors and other senior managers have agreed to take salary cuts averaging 50%, backdated to the start of Q2 2020.
- The Company's professional advisers have also agreed to reduce fees by up to 45%.
- With these measures implemented, the overhead costs of the Company have been halved whilst crucially maintaining our operating capability. Further cost cutting measures have been identified and can be executed if market conditions make this necessary.
- The measures already undertaken will enable Petro Matad to continue to operate with the cash resources it currently has on hand up to the end of Q1 2021, and if the identified further cost cutting measures are implemented, up to the end of H1 2021.
During this period the Company will focus on: securing its Block XX Exploitation Licence for the development of the 2019 Heron 1 oil discovery; retaining and prolonging its Block V Exploration Licence; seeking partners to join it in existing and new ventures in Mongolia as well as securing additional funding as necessary to take the Company through to the next phase of its development as a leading Mongolian focused explorer and producer.
Exploitation licence update
As outlined in our last update issued on 23 March, the proactive approach taken by the Mongolian Government has been successful in containing the spread of COVID-19 in the country. Apart from the cessation of international travel, there remains no significant impact on Petro Matad's operations in country and the Government ministries are open and functioning as normal.
The Block XX Exploitation Licence application is progressing with the Mongolian authorities with meetings already held with industry regulator MRPAM and their audit of the Heron Reserves Report now successfully completed. The next step in the process involves the Reserves Report being reviewed by technical departments in the Ministry of Mining and Heavy Industry after which the Plan of Development will be required to be submitted. Work is already well advanced on the Plan of Development documentation and we continue to look for ways to expedite the approvals process in cooperation with the relevant authorities.
Mike Buck, the CEO of Petro Matad said:
"The combination of the global pandemic, its impact upon financial markets and the significant reduction in the oil price make these testing times for all those that operate in our industry. However, Petro Matad is determined to weather the storm, pursue the permits we need and prepare for the next phase of our activities.
The changes we have made to our cost base are prudent steps to take at this time and the Company is highly appreciative of the flexibility and commitment demonstrated by staff, contractors and advisers. We are heartened that, despite the disruptions evident around the world, we are still able to progress the Block XX Exploitation Licence application with the Mongolian authorities."