Petro Matad revealed it had lost its partner in the Block IV and V Production Sharing Contracts in west and central Mongolia on Friday.
The AIM-traded company said that, on 28 April,Shell - through its affiliate company - issued an exit notice to Petro Matad’s 100% owned subsidiary Central Asian Petroleum Corporation, exercising its option to leave the farmout agreement dated 7 April 2015.
“The decision by Shell is based on optimisation of its own portfolio and it is not related to the technical prospects for the blocks,” Petro Matad’s board said in a statement.
“The exit is subject to Mongolian government consent.”
As required in the agreements, Shell’s affiliate company will compensate Central Asian Petroleum Corporation as a result of the exit decision.
Petro Matad said the amount will be “highly material” to the company. Its working interest in the two production Sharing Contracts will revert to 100% from the current 22%.
“Petro Matad will continue to execute the work program as planned,” the board confirmed.
“Currently, our seismic contractor is mobilising to the field and will soon commence the second phase of the planned seismic acquisition programmes in Blocks IV and V.”