LONDON (Alliance News) - Petro Matad Ltd Wednesday said its 2D seismic studies in Mongolia have confirmed some oil prospects, but its shares fell 28% as it said it continues to search for development partners in the region, leading it to focus on cash preservation.
The oil exploration company, with operations in central Mongolia, said interpretation of 220 kilometres worth of seismic data acquired in November 2013 has shown a new prospect in its Block IV which holds possible recoverable reserves of 60 million to 100 million barrels of oil.
The company said the Block IV site also holds a smaller, well-imaged prospect of around six million barrels.
Petro Matad said that in its Block V region it found a deep region with two prospects each estimated to hold a possible 22 million to 24 million barrels of oil, but another prospect in the block was deemed high risk.
The company said the two deep prospects in Block V are excellent candidates for testing the potential of the region's sub-basin in terms of reservoir quality and source potential.
It highlighted that these sites represent the first drillable prospects in a region of Mongolia where there has been limited seismic studies and no exploration tests, but it is confident that there are many other similar prospects in the large area.
Petro Matad said its seismic cannot confirm a larger region of prospects and so it is considering its options for exploration, including airborne tensor gravity gradiometry.
However, the company said it continues its ongoing farm-out process for interest in its blocks and, although it has met with a number of different companies, no agreements have been made and finalising a deal could take some time.
As such, the company has set out a range of measures to preserve cash and maximise funds for operational activities in the hope that it can achieve a partner in the future.
Petro Matad said its non-executive directors have foregone their usual fees and will receive certain payment in shares, whilst its executive directors and some other employees have agreed to trade a portion of their salary to participate in a share-award programme.
The company did say it had USD2.4 million in cash on March 31, which is currently enough for it to maintain its status as a going concern.
Petro Matad shares were down 28% to 3.62 pence, putting it among the worst AIM ALL-Share fallers Wednesday.