Petro Matad Limited

('Petro Matad' or the 'Company' or the 'Group')

Operational Update

LONDON, 19 December 2023: Petro Matad Limited, the AIM quoted Mongolian oil company, provides the following operational update.

Key Company Updates

·    The Company continues to push the Government to complete the regulatory formalities to guarantee land access and allow completion operations at Heron 1 to commence. Significant progress has been made with the Matad District authorities with one outstanding issue at the Provincial level still to complete.

·    The slow bureaucratic process to complete the special purpose land certification has prevented any in-field well completion operations but the winter hiatus provides time to complete the formalities which will allow operations to commence as early as possible at the start of the operational season in 2024.

·    The Company has completed the restoration of the Heron-1 drilling location in preparation for mobilization of well completion equipment.

·    The 2022/23 Exploration Tender Round continues with Petro Matad being confirmed as the selected contractor on the two blocks for which it submitted applications.

·    The renewable energy JV, SunSteppe Renewable Energy, continues to make progress on two projects and is pursuing three others.

Operational Update

Block XX: With Cabinet approval of the special purpose certification of the Block XX Exploitation Area in early July, a number of regulatory steps were required to be completed by the Government under the 2017 legislation covering the granting and management of such areas. The Central Land Agency has completed the registration of the area and issued and signed the key Tripartite Agreement. The Ministry of Mining and Heavy Industry (MMHI) has also signed, leaving only the Governor of Dornod Province to sign. He has said he will sign once the money to make compensation payments to the 10 herder families impacted by the certification of the area has been transferred to the Provincial Government account.

In meetings facilitated by the Company, all the herders have agreed to be compensated. Under the legislation, the compensation payments should be made from the State budget but recognizing that this could be a very slow process, the Company offered and the industry regulator, the Mineral Resources and Petroleum Authority of Mongolia (MRPAM) accepted that Petro Matad would make these payments. The money has been paid into the appropriate MRPAM account and is awaiting transfer to Dornod Province once the Ministry of Finance gives approval for this to go ahead. The mechanics of the transfer have taken some time for the Government to determine but we are pushing and expect this to go through soon.

The remaining steps in the regulatory process involving issuance of the special permit to MMHI and the signing of the Land Contract between the Matad District and the Company have been agreed to go ahead once the Tripartite Agreement is signed off by the Provincial Governor.

As part of our interactions with the local authorities, the Company hosted the Matad District Citizens' Representatives Committee on a visit to the South Gobi where mining and other development projects are providing tangible benefits to the local communities in which they operate. The trip was very successful and at a meeting to conclude the trip in Petro Matad's Ulaan Baatar headquarters the Committee thanked the Company, declared their support for the Company's development activities in Matad and agreed the terms of the Cooperation Agreement which governs community aid expenditure during oil exploitation activities. The Cooperation Agreement is being prepared for signature and will be executed once land access has been confirmed. In a demonstration of the improved relationship, the district authorities received a presentation on a necessary amendment to the Company's environmental plan, raised no objections and provided the necessary documentation to allow the Company to secure Ministry of Environment approval to amend its Detailed Environmental Impact Assessment.

With the necessary approvals, the Company was also able to complete the restoration of the Heron-1 drilling location in preparation for the mobilization of well completion equipment and the installation of the beam pump, tanks and generator.

New acreage: On the two blocks for which Petro Matad submitted applications, the Company has been selected as the preferred contractor. Fiscal terms have been agreed and the Company's proposed changes to the model Production Sharing Contract are now with MMHI for review and final submission to Cabinet. The tender process has slowed in recent months, perhaps in light of political attention being diverted due to next year's parliamentary elections. Petro Matad is happy to have been confirmed as the selected contractor for the areas it has chosen and would like to see the tender process concluded soon although operational activity will focus on Block XX in 2024.

Renewables: Our renewable energy JV, SunSteppe Renewable Energy, continues to make progress under the leadership of its CEO Ms. Zula Luvsandorj. SunSteppe is progressing several exciting opportunities including two high graded projects with three more under detailed technical and commercial review.

Mike Buck, CEO of Petro Matad, said:

"On the land issue, we feel that we are almost there, but we will keep pushing until the process is complete. In the absence of any recent precedents, every step has been something new for the Government which has caused delays. We will certainly be ready to operate at the end of the winter stand down when we expect the long running saga of land access to be fully resolved."

Further operational updates will be provided in due course.

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About Petro Matad

Petro Matad is the parent company of a group focussed on oil exploration, as well as future development and production in Mongolia. At the current time, Petro Matad holds 100% working interest and the operatorship of two Production Sharing Contracts with the Government of Mongolia. Block XX has an area of 218 square kilometres in the far eastern part of the country and Block V has an area of 7,937 square kilometres in the central western part of the country.

Petro Matad Limited is incorporated in the Isle of Man under company number 1483V. Its registered office is at Victory House, Prospect Hill, Douglas, Isle of Man, IM1 1EQ.