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PetroMatad (MATD)

Business description

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 2018, targeting multiple basins and a mid-case prospective resource of over 400mmbo.

Stock data

Market cap.£34.9m
Last close5.28p
High / Low (52 weeks)14.0p / 5.3p
Stock market listingLN
Forecast net cash (US$m)16.7
Forecast gearing ratio (%)N/A
TeamResources - Oil & Gas
SectorOil & Gas

Price performance

%1m3m12m
Actual(16.9)(33.2)(20.4)
Relative *(16.9)(28.6)(16.5)

* % Relative to local index

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Y/E Dec Revenue (US$m) EBITDA (US$m) PBT (US$m) EPS (c) P/E (x) P/CF (x)
2016A 18.9 11.1 10.8 0.4 17.3 11.0
2017A 0.2 (9.7) (9.9) (0.3) N/A N/A
2018E 0.0 (5.5) (5.4) (0.1) N/A N/A
2019E 0.0 (5.5) (5.4) (0.1) N/A N/A

Last updated on 21/10/2018

Investment summary

Petro Matad’s acreage combines high-impact exploration and low-risk targets across three blocks and multiple basins. The Snow Leopard-1 well (100% Petro Matad) was drilled to total depth of 2,930m in granitic basement. No sands were encountered in the shallow target, although gases and an oil sheen were observed in the drilling mud. Once operations to plug and abandon the well are complete, the rig will move to the Wild Horse prospect, targeting 480mmbo of unrisked prospective resource. Our valuation included 4.2p/share risked for the Snow Leopard prospect, which we expect to remove from our RENAV of 30.8p/share, reducing it by 13.6% to 26.6p/share.

Last updated on 26/10/2018

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 oil discoveries (c 10mmbo) generate positive returns at $70/bbl Brent.

Last updated on 26/10/2018

Key management

Mike Buck, CEO
John Henriksen, CFO

Company address

6th Floor Victory House, Prospect Hill
Douglas
IM1 1EQ
United Kingdom
+44 16 2462 7099
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