Petro Matad, the AIM quoted Mongolian oil explorer, has provided an operational update on progress towards its planned drilling programme in 2019, and its application for PSC extensions for Blocks IV and V.

Operational Highlights

Drill sites for the three Block XX wells, Heron 1, Red Deer 1 and Gazelle 1, have been completed and water supply wells are ready
Rig mobilization notices have been issued to both drilling contractors and customs clearance for their equipment and supplies has been obtained
The Company is on track to spud the Heron 1 during July 2019, using DQE's rig 40105. The Gazelle 1 well will follow immediately after Heron 1 operations, allowing for a short rig move
Red Deer 1 is expected to spud before the end of July 2019, using Daton's rig DXZ1
Applications for extensions to the Blocks IV and V Production Sharing Contracts (PSC), submitted in mid-April 2019 have received support from the working group at the Mineral Resources and Petroleum Authority of Mongolia (MRPAM)
The Velociraptor Prospect has been chosen as the next drilling target in Block V and permitting is progressing

The three well drilling campaign in Block XX will begin in the north with the Heron 1 well to be be drilled with DQE's rig 40105. Heron is an estimated 25 MMbo prospect (Mean Prospective Recoverable Resource) and the well is on target to spud during July 2019. The latest mapping shows that the well is an appraisal of the T19-46 oil field immediately to the north in Block XIX. Mapping is based on the interpretation of high-quality 3D seismic data covering southern Block XIX and northern Block XX recently provided to the Company by Petro China. Heron 1 will be drilled to a planned total depth (TD) of 3,050 metres and will take approximately 40 days to drill and log.

The Gazelle 1 well will follow Heron 1 after a six kilometre rig move and will take approximately 35 days to drill and log. The planned TD is 2,500 metres and the Gazelle Prospect has an estimated Mean Prospective Recoverable Resource of 13 MMbo. Gazelle 1 is located updip of Petro China's T19-46-1 oil well on the western flank of the Tamsag Basin which is the primary source kitchen for the fields in Block XIX.

The Red Deer 1 well in the south of Block XX is to be drilled by Daton's rig DXZ1, with spud targeted before the end of July 2019. The Red Deer 1 well will be drilled to a planned TD of 2,100 metres and is forecast to take 35 days to drill and log. The Mean Prospective Recoverable Resource assessment for the Red Deer prospect is 48 MMbo.

Site construction for all three drilling locations has been completed and water supply wells are ready. Rig mobilization notices have been issued to the drilling contractors, customs clearance for the equipment and supplies being imported into Mongolia by both drilling contractors has been obtained and visa approvals have been secured for the Chinese rig crews, who are now mobilizing to Mongolia.

In accordance with PSC provisions, the Company has commenced discussions with MRPAM and the Ministry of Mining and Heavy Industry to secure an Exploitation License under the Block XX PSC for any discoveries made in the 2019 drilling campaign. Appraisal activities will be prioritised by the Company in the event of success.

Blocks IV and V

The Company is pleased to announce that its applications for two-year extensions, running until July 2021, for Blocks IV and V are supported by the working group within MRPAM. Formal notification of the extensions is expected shortly.

In the event that the Company needs to focus its efforts on the rapid appraisal of any discoveries made in Block XX in the 2019 drilling season, these extensions provide the flexibility and time to drill the Blocks IV and V prospects during the 2020 drilling season.

Technical work on Blocks IV and V has continued following the 2018 drilling campaign with a number of new prospects and leads identified. Following the Snow Leopard-1 well proving a working petroleum system in the Taats Basin, the Velociraptor Prospect has been chosen as the next target for drilling in Block V. Velociraptor is a large, shallow, inversion anticline in the Taats Basin with Mean Prospective Recoverable Resource potential of 201 MMbo. Work is progressing to secure the environmental permits for the drill site and for potential follow up locations along the Raptor trend.

Mike Buck, the CEO of Petro Matad said:

'We are looking forward to starting our 2019 drilling operations after considerable effort to secure all the necessary permits and to complete preparations. The real work starts now and the next few months will certainly be a very exciting time for the Company.'

Published Date:2019-06-27