Petro Matad [LON:MATD], the London AIM-listed oil and gas explorer focused on Mongolia, has reported its first oil revenues in company history, marking a milestone in its long-delayed development of the Heron field, while simultaneously advancing a significant expansion into renewable energy.
For the six months to June 30, 2025, the group reported a narrowed loss of $1.7m, down from $2.56m a year earlier. Revenues were booked for the first time after crude production began at the Heron-1 well in Block XX in October 2024. Output averaged 165 barrels a day in the period, with a modest 3 per cent water cut.
Cash resources stood at $2.37m at the half-year, comprising $1.7m in cash and $0.67m in financial assets, up from $1.93m the year before. The company also strengthened its balance sheet through a £3m equity raise in July, issuing more than 370m shares at 0.8p each.
Proceeds will be used to reduce production costs at Heron-1 by connecting the well to the national electricity grid, fund well testing across Block XX, advance exploration at Block VII, and accelerate renewable energy projects.
Petro Matad potential tax liabilities
Petro Matad received $0.81m in net revenue for sales up to April 2025, at an average realised oil price of $62.9 per barrel. However, 30 per cent of sales proceeds were withheld by PetroChina, operator of neighbouring Block XIX and the company’s offtake partner, pending clarity on potential tax liabilities.
After pressure from Petro Matad and assurances from Mongolia’s tax authorities, PetroChina has indicated it will resume full payments once the sales agreement is amended. Subsequent payments for May, June and July production — totalling $0.33m — were received in the third quarter.
Chief executive Mike Buck said: “The start-up of production in Block XX in 2024 took far too long but we are delighted to have finally achieved it and now to be receiving oil sales revenue for the first time in the company’s history. We are hopeful that PetroChina’s withholding of 30 per cent of our sales revenue will soon be resolved.”
Diversification of energy portfolio
In parallel with first production, Petro Matad has sought to expand its asset base and diversify its energy portfolio. The company has revived farm-in discussions for Block XX and is now in detailed technical and commercial negotiations with a potential partner. In January it signed a production-sharing contract for Block VII in southern Mongolia, an acreage adjacent to producing fields across the Chinese border, with low initial financial commitments to limit upfront risk. A farmout process is under way to bring in a technically capable partner.
The company’s renewable energy arm, Sunsteppe, has signed an exclusive agreement to develop a 200MW hybrid wind and solar project connected to Mongolia’s national grid. Preparatory work has also begun on a much larger 1.5GW firm, plus 1.5GW contingent, renewables project in cooperation with Chinese utility SPIC. Petro Matad said some of the July fundraising proceeds will be directed towards bringing Sunsteppe’s projects to ready-to-build status.
Re-test of Heron-2 is underway
Field operations in the second half of 2025 will focus on well tests designed to boost Block XX production. A re-test of Heron-2 is under way, with testing of the Gazelle-1 and Gobi Bear-1 prospects to follow. The company is also finalising a grid connection for Heron-1 that is expected to cut operating costs by 15 per cent, replacing costly diesel with cheaper electricity.
Buck emphasised the importance of developing both sides of the business: “In the field we are working hard to complete our 2025 well test programme and at the same time, our renewables joint venture is growing into a potentially very valuable part of our business.”
He added that the company’s production crew was composed entirely of Mongolian nationals, most recruited from local communities, underscoring Petro Matad’s aim to embed itself within the country’s energy sector as it straddles fossil fuels and renewables.
By  Graeme Coles-Andrew

Published Date:2025-09-29