Petro Matad Ltd said that in preparation for its drilling programme in Blocks IV and V, expected to commence in mid-2017, it has today issued a tender for a drilling rig and related services.
In 2016, the Company pre-qualified potential new bidders and in combination with a bidder that has previously drilled wells for Petro Matad, four companies have been issued the tender.
Based on pre-qualification results, drilling operational facility visits and rig inspections of the pre-qualified drilling contractors which were undertaken in Mongolia and abroad, the Company believes that any of these potential bidders will be able to undertake the drilling programme.
Bids were due to be received in late February following which an evaluation of the bids would be undertaken by the company. Contract award, after completion of negotiation of contract terms with the successful bidder, was expected to occur in late March or early April.
Rig mobilization would commence shortly thereafter.
Following receipt of the initial $10 million payment from Shell in 2016 and settlement of outstanding invoices for seismic acquisition, etc., the Company’s current cash balance is $6 million.
As noted in previous announcements an additional $5 million will be paid by Shell as part of their Block IV and V exit obligations and these funds are expected to be received early next week.
Upon receipt, the Company’s cash balance will be circa $11 million, which will be sufficient to undertake a drilling programme this year as planned, even in the absence of securing a farmout.
The farmout process continues. The Company can report that there has been considerable interest shown by potential farmee’s in all the Company’s blocks (IV, V and XX).
To-date, a significant number of companies have signed confidentiality agreements and have gained access to our virtual dataroom (VDR).
The VDR is a convenient mechanism for companies to initially review data on-line and decide if they want to move to the next stage, which would be to visit the Company’s physical dataroom. Most companies that visited the VDR have requested access to the physical dataroom and this process is ongoing.
The initial eight-year terms for Blocks IV and V expire on 29 July 2017. The PSCs provide for two times two-year extensions on the same terms. PSC extension discussions with the regulatory body (MRPAM) have commenced and no issues are expected.
The Company expects that the extensions will be granted well in advance of the commencement of the drilling programme.
At 9:28am: (LON:MATD) Petro Matad Ltd share price was -0.75p at 23.13p
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