Petro Matad 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 1 January 2015.

Under the terms of the agreement, BG Group has committed to cover Petro Matad's portion of the agreed US$28m work programme, which is expected to include Airborne FTG Gravity and magnetics, 2D seismic, core holes and exploration wells, as well as providing additional cash consideration to the Company of US$4.55m, which will be used by Petro Matad as working capital to fund ongoing operations and obligations.

The transaction remains subject to the receipt of Mongolian Government approval and other Mongolian regulatory formalities. A further announcement, in relation to these conditions, will be made in due course.

Tags: BG Group, Petro Matad