Petro Matad farms out stake in Mongolia blocks to BG Group

Petro Matad Ltd. has entered into a farm-out agreement with BG Group whereby BG Group will acquire a 78% interest in Block IV and Block V in central Mongolia, with an effective date of Jan. 1.

Under the terms of the agreement, BG Group has committed to cover Petro Matad’s portion of the agreed $28 million work program and to provide additional cash consideration to the company of $4.55 million, which will be used by Petro Matad as working capital to fund ongoing operations and obligations.

Following the transaction, Petro Matad will hold a 22% interest in Blocks IV and V. Petro Matad will retain operatorship in Block IV and Block V until such time as there is an extension to the Block IV or Block V contract term, at which point BG Group will assume operatorship.

The transaction remains subject to the receipt of Mongolian Government approval and other Mongolian regulatory formalities.

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