LONDON (ShareCast) - (ShareCast News) - Petroleum explorer Petro Matad's reached a $10m settlement with Shell's affiliate BG Mongolian Holdings (BGMH).
The Mongolian miner reported that Shell's BGMH will pay a farm-out arrangement exit fee of over $10m as well as a further $5m.

In June, Petro Matad's affiliate Central Asian Petroleum (CapCorp) was in talks with BGMH to exit from a farm-out arrangement for the block IV and V production sharing contracts that span more than 60,000km of Mongolia.

It was agreed that CapCorp will get back 78% of working interest in the blocks, subject to consent form the Mongolian government, once this has happened BGMH will pay the $5m.

The $5m could be refunded by Petro Matada if a new partner is found for the exploration project.

AIM-listed Petro Matad, which was the first Mongolian owned company to list on an international stock exchange, will receive $15m in cash and hold 100% of the blocks.

Petro Matad chairperson Enkhmaa Davaanyam, said: "I am very pleased that Shell and Petro Matad were able to conclude this agreement. The cash to be provided by Shell will enable the company to continue its planned work program culminating in exploration drilling next year".

Shares in Petro Matad rose by 82.05% to 3.55p at 1434 BST

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