Petro Matad reports reduced H1 2026 loss and zero oil revenue as PetroChina sales agreement remains unsigned

Petro Matad pumped 41,941 barrels of crude oil from its Mongolian Block XX wells in the first half of 2026 — and collected zero in oil sales revenue for the entire period. The AIM-listed company posted a net loss of $0.59 million for the six months ended June 30, 2026, down from $1.70 million a year earlier, while $2.16 million in receivables sat uncollected. The culprit: a 2026 Oil Sales Agreement with PetroChina Daqing Tamsag LLC that stayed unsigned despite months of back-and-forth.

H1 2026 financial results at a glance

The narrowed loss tells the story of a company that cut costs while waiting on revenue that never showed up. Petro Matad’s net loss for the six months ended June 30, 2026 came in at $0.59 million — a real improvement from the $1.70 million recorded in the same period a year earlier. That progress came from careful cash management, not new income.

The cash position also nudged up year-on-year. As of June 30, 2026, Petro Matad held $2.76 million combined — $2.14 million in cash and $0.62 million in financial assets — up from $2.37 million at the same point in 2025. Not all of it’s available to spend.

But then the obstacle shifted to PetroChina’s Head Office legal and compliance teams, which kept raising new issues as each previous one got resolved.

$0.9 million is earmarked for MRPAM production share and royalty payments under the production sharing contract, held back until the oil sales agreement dispute gets resolved and PetroChina actually pays. Then there’s the receivable: $2.16 million outstanding at period end, owed for oil already delivered to Block XIX but not yet paid for, calculated using the average oil price for the year to June 30, 2026.

Why no oil revenue was received: The PetroChina agreement delay

The 2026 Oil Sales Agreement had a long, frustrating journey. Petro Matad drafted it in October 2025, modeling it closely on the 2025 agreement — the one that had worked fine before. Progress stalled almost immediately.

By early 2026, MRPAM and General Tax Authority representatives were brought in to address PetroChina Mongolia’s concerns. That worked — PetroChina Mongolia agreed to the terms in April 2026. But then the obstacle shifted to PetroChina’s Head Office legal and compliance teams, which kept raising new issues as each previous one got resolved.

The agreement was still unsigned as of June 30, 2026. Throughout all of this, PetroChina kept accepting Block XX crude for storage at Block XIX — but without an executed agreement, no payments were made. Things got worse after the reporting period closed.

In August, PetroChina confirmed by letter that the agreement had been sanctioned and payments would start in September. That didn’t happen. Then in September, with storage tanks near capacity, PetroChina told Block XX to shut in production entirely. Petro Matad has since escalated, drawing support from MRPAM, the Minister of Industry and Mineral Resources, and the Office of the Deputy Prime Minister.

Block XX production operations: Output and well performance

Despite the commercial mess, the wells themselves held up well. Heron-1 and Gazelle-1 averaged a combined 241 barrels of oil per day throughout H1 2026, delivering 41,941 barrels of sales crude to the TA-1 processing facility at Block XIX across 265 loads.

Heron-1 was the steadier performer. It hit operational uptime of over 99%, averaged 123 bopd, and kept water cut below 5% — all in line with forecasts.

Gazelle-1 had a more complicated story, though ultimately a positive one. The well averaged 118 bopd, exceeding expectations by around 46%. Early water breakthrough had been observed, but careful management of pumping hours and surface pressures brought the water cut down to roughly 20%, with operational uptime holding at around 95%.

Planned 2026 activities got deferred across the board. A new 3D seismic survey covering Block XX’s entire prospective area, further stimulation work at Heron-2, and a well test at Gobi Bear-1 were all put on hold pending receipt of revenue. Low-cost in-house analysis of Block VII drill cuttings continued in the meantime.

Renewable energy unit secures 290 MW of new projects

While oil revenue stayed elusive, Petro Matad’s renewable energy joint venture kept moving. SunSteppe Renewable Energy locked in exclusivity on three new projects totaling 290 MW during the reporting period, benefiting from what the company described as a new and dynamic environment for renewable energy following cabinet-level changes in the Mongolian government.

Two of those projects received government prioritization for early construction. The 100 MW Dundgobi and 100 MW Uvurkhangai Solar Powered Battery Energy Storage System projects both secured Feasibility Study approvals from the Ministry of Energy and Licenses to Construct.

The third came through a competitive process — an SRE consortium ranked first in the tender for the 90 MW Hunnu Solar BESS project, which will supply power to Ulaanbaatar to strengthen the reliability and sustainability of the capital’s electricity supply. After the period closed, SRE agreed commercial terms with a major international renewable energy company giving it first right of refusal to co-invest once power purchase agreements are finalized. SRE also joined a consortium participating in a tender for a 100 MW wind project managed by the IFC.

Where Petro Matad stands now

Petro Matad heads into H2 2026 in an unusual spot: operationally solid, financially cautious, and commercially stuck. Its wells delivered reliable output throughout the first half of the year. Its renewable energy arm built a meaningful pipeline of new projects. The net loss narrowed substantially from a year ago.

The central unresolved issue remains the PetroChina oil sales agreement. Block XX production has been shut in since September. $2.16 million in receivables is still outstanding, and $0.9 million in MRPAM payments sits withheld — waiting on revenue that hasn’t arrived.

The company’s pushing for resolution at the highest levels of the Mongolian government, while farm-in discussions for Block XX and Block VII continue with international and Chinese parties. How fast the PetroChina impasse clears will determine whether H1 2026’s operational progress actually shows up in the financial results ahead.