Petro Matad (LON:MATD) today announced that chief financial officer Clyde Evans has now retired from his executive position.

John Henriksen joins the company as the new CFO. And Evans will remain a non executive director of the company.

Henriksen has 36 years experience in the oil and gas industry and he was most recently Salamander Energy’s country manager for Indonesia. He will run the group’s accounting and financial activities from the group’s main offices in Ulaanbaatar, Mongolia. Subsequently the group’s office in Perth, Australia, is being closed.

"Petro Matad is delighted to welcome John to the position of CFO.  From a very well qualified group of candidates, he impressed us as the ideal fit for our company and its objectives,” said chief executive Douglas McGay.  

“His relocation to work with the company's executive and technical professionals in Mongolia is another forward step for the efficient and progressive management of the company.  In particular, we anticipate his industry experience will add substantial value to the company and its operations.”

Additionally Petro Matad also reported that exploration manager Dr. James Coogan has also retired and is has nearly completed the process of hiring a replacement. In the meantime chief geologist Dr Kurt Constenius is managing the team. 

Petro Matad (LON:MATD) today announced that Ms Amarzul (Amaraa) Tuul has been promoted to the board of directors.

Ms Armazul has worked for Petro Matad since the group was formed in 2006. During that time, she has overseen and managed the group’s operations in Mongolia, including the process of apply for and signing production sharing contracts.

"In addition to the recent announced board changes, it gives me great pleasure to welcome Amaraa, a young and talented Mongolian to the company's board of directors,” said chief executive Douglas McGay.

“The appointment strengthens executive and management representation on the Board.  

“Through her role as the executive director of Petro Matad's operating subsidiaries, Ms. Amarzul has earned the respect of both her colleagues and Petro Matad's stakeholders.  

“I believe her business acumen, management insights, local knowledge and experience will contribute greatly to the board's decision-making processes."

Petro Matad (LON:MATD) today announced that it has confirmed the presence of a working petroleum system in the Tugrug basin, in Block V Mongolia.

The explorer today gave investors an update on its operations as it nears the end of its field season on Block IV and V Production Sharing Contract (PSC) areas in central Mongolia.  

The exploration programme consisted of stratigraphic core drilling, 2D seismic acquisition and field geology operations.  

It provided the first documentation of ‘live oil’ and active oil migration in central Mongolia, Petro Matad said.

"This year's exploration programme in Blocks IV and V was designed to progress the company's knowledge towards identifying drillable prospects,” said chief executive Doug McGay.

“The programme has achieved this objective and also confirmed the presence of a working petroleum system in the Tugrug basin, in Block V, which bodes well for the rest of the sub-basins in these two Blocks.

"The identification of multiple phases of live hydrocarbons in Block V is a highly significant development for hydrocarbon exploration in central Mongolia.”  

Petro Matad explained that the Block IV and V rift basins are located beneath the modern "Valley of the Lakes". This is an area where the geological features have enhanced the trap potential compared with the producing basins of eastern Mongolia, it said.

The group said that the exploration highlights included the confirmation of oil generation and migration in the Tugrug Basin of Block V.

As well as the documentation of thick, rich oil shale source rock throughout Blocks IV & V; the identification of favourable reservoir characteristics in core and outcrop; the acquisition of 1,842 kilometres of 2D seismic data for both blocks.

It also told investors that it has delineated 6,700 square kilometres of potential oil generation kitchen areas within the two blocks and identified multiple anticline, fault, and unconformity trap leads within and adjacent to these kitchens.

“Petro Matad has pioneered the previously unexplored basins in the eastern two-thirds of Mongolia and provided the first documentation of a viable hydrocarbon system in this vast region,” McGay said.

“Additionally, the source rock quality, thickness, and maturity compare very favourably with the producing fields of eastern Mongolia (Tolson, Tsagaan Els and Zuunbayan).  

“The potential for higher quality reservoir rocks in central Mongolia is also a most encouraging development.

He added: “We look forward to the finalisation of stratigraphic drill hole in the Biger Basin on Block IV.  Further analysis and interpretation will be undertaken during the winter.  

“As well as providing us with even better understanding of these exciting areas, the studies will help our 2012 exploration programmes, including investigating the potential for exploration drilling." 

The firm said that the oil shows that had been encountered and previously reported are now considered to be residual oil, adding that oil observed in the Tsagaantsav reservoirs in the DT-1, DT-2 and DT-3 wells along the crest of the Davsan Tolgoi anticline is also now interpreted as residual oil.

However, four wells drilled at a lower elevation to the crest of Davsan Tolgoi, or on separate structures, are still considered valid candidates for further testing, said Petro. Meanwhile, the firm said, the drilling programme to date has proven the fundamentals of a petroleum system on Block XX, in eastern Mongolia where Davsan Tolgoi is located.

Petro said that it is continuing to develop new leads and prospects in the greater Davsan Tolgoi area from detailed seismic interpretation and that the processing and interpretation of the 2011 2D seismic programme on the six sub-basins of Block XX is also continuing.

“We are disappointed that the test results from DT-11 have revealed that the crest of Davsan Tolgoi anticline does not contain commercial oil,” said Petro Matad’s chief executive officer, Doug McGay. “However it is important to note that the focus on the prospect on the crestal area is only one component of Davsan Tolgoi and there is still scope for the development of other parts of the prospect.  In addition there remains advanced exploration potential in the area around Davsan Tolgoi and the other basins in Block XX are developing into promising plays.”

Shares in Petro Matad had fallen by 13.95 per cent to 18.5 pence each by 11:27am today.

Mongolia focused oil and gas firm Petro Matad (LON:MATD) told investors that it is considering a stimulation programme on the Davsan Tolgoi 8 well after it failed to produce oil under natural pressure.

Last month the DT-8 reached a total depth of 1,850 metres. The well penetrated 127 metres gross thickness of the Uppermost Tsagaantsav formation, from a depth of 1,670 metres. It has subsequently been tested.

Between September 15 and 28 September it tested two zones in the Uppermost Tsagaantsav formation, and limited oil and water analyses were received on October 14.

A small amount of oil and water was recovered from the primary zone, Petro Matad said. It added that pressure build-up data indicates low permeability for the zone, with some permeability impairment from exposure to drilling fluids.  

However, according to Petro Matad, the presence of oil and the petrophysical log characteristics support consideration of this zone as a candidate for future stimulation.

"The DT-8 test is a continuation of Petro Matad's initial assessment of the flow characteristics of Tsagaantsav reservoirs,” said chief executive Doug McGay.

“We are finding that the completion characteristics of both the Uppermost and the Lower Tsagaantsav reservoirs are similar to neighbouring producing areas where fracture stimulation is needed to overcome the permeability challenges associated with fluid-sensitive clay and volcanic-derived cements in these complex reservoirs."

At 14:45 on AIM Petro Matad shares were down 3.5p, or 11p, trading at 28p a share.

Mongolia-focused oil explorer Petro Matad (LON:MATD) said this afternoon that it has received "valuable information" from the DT-4 well at its Davsan Tolgoi project.

The company has completed the analysis of initial test results for the Davsan Tolgoi 4 well (DT-4) and is designed a stimulation programme as well as contracting stimulation services for final completion of the well.

Results from tests on DT-4 conducted earlier this month were received on 23 September. Swabbing of the primary test objective (between 1,785 metres and 1,801 metres) recovered two litres of 42.5 degree API oil with no water, with an indicated un-stimulated flow rate of two barrels of oil per day.

“The testing of DT-4 has provided valuable information regarding the reservoir characteristics in the deeper parts of the Davsan Tolgoi area,” said Doug McGay, Petro’s chief executive officer. “The recovery of oil without water provides encouragement for the development of the DT-4 oil accumulation.  The Lower Tsagaantsav reservoir characteristics at DT-4 compare favourably with historical production data from Block XIX, where all but four wells are reported to have required fracture stimulation, and where fracture stimulation is believed to have substantially increased production.”

McGay added that the 42.5-degree API oil recovered has confirmed Petro’s previous statement about the quality of the oil being expected to vary across the Davsan Tolgoi prospect. The final analysis of the oil obtained from DT-1 has revised the preliminary API announced on August 31 upwards to a grade of 26 degrees API. “When these results from DT-1 and DT-4 are compared with the reported average of 38 degrees API of the oil obtained by Petro China in the adjacent Block XIX, a clear picture of medium to high quality petroleum in the reservoirs fed by the Tolson Uul kitchens is emerging,” he said.

Petro Matad (LON:MATD) today revealed that its latest well, Davsan Tolgoi-10, has been plugged and abandoned after it failed to encounter moveable hydrocarbons.

Despite the disappointing results chief executive Douglas McGay said he is confident that the group’s work in Mongolia will lead to commercial production at Davsan Tolgoi.

“The picture that is developing at Davsan Tolgoi is one of complicated stratigraphy and a complex structural history.  Exploration here will require a significant amount of drilling,” McGay said.

“The positive note is that we continue to demonstrate that hydrocarbons have migrated into the structures that we are imaging on the seismic. In fact, out of ten wells drilled to date only one has been completely dry.  

He added: “We are confident that persistent exploration, including a significant component of drilling, will lead to future commercial production at Davsan Tolgoi."

The DT-10 well targeted two objectives, a Lower Tsagaantsav primary objective and an Uppermost Tsagaantsav secondary objective on the edge of the Uvgan Gol SW Prospect.  

The well drilled 45m of non-reservoir claystone in the Uppermost Tsagaantsav, and more than 335m of interbedded sandstone and claystone in the Lower Tsagaantsav.  “No shows were observed during drilling and petrophysical analysis indicates only thin scattered zones of probable residual oil,” Petro Matad said.

The next well, DT-11, is a replacement for the DT-1 well which was abandoned due to ‘probable formation damage’.  The DT-11 spud is scheduled for next week, on September 2011.

Petro Matad is exploring the Shoroo prospect further. DT-10 has been spudded, andf the well will target Lower Tsagaantsav objective but within a separate structural closure. The well will be drilled 4.3 kilometres south of DT-9.

Petro Matad (LON:MATD) told investors that it has confirmed the presence of oil in the Davsan Tolgoi-8 well (DT-8).

This afternoon it announced that DT-8 has reached a total depth of 1,850 metres. The well penetrated 127 metres gross thickness of the Uppermost Tsagaantsav formation, from a depth of 1,670 metres. 

Within this formation, between 1,714 to 1,720 metres, the well encountered live oil shows. Petro Matad said that these shows consisted of ‘spotty fluorescence’ and ‘fast bluish-white’ to ‘yellow-gold’ cut, which indicates the presence of hydrocarbons. 

The company said that initial petrophysical analysis has identified 8.5 metres of net pay, averaging 18.5% porosity for the Uppermost Tsagaantsav interval.

"We are further encouraged by the results of DT-8 which has confirmed the presence of oil in the Uvgan Gol paleovalley,” said chief executive Douglas McGay.

“The ongoing exploration, combined with the commencement of our testing program is very positive for Petro Matad's ongoing assessment of Block XX."

Meanwhile in one of the wells other geological targets, the ‘overlying Lower Zuunbayan seal’, Petro Matad said that the well encountered elevated gas. The Lower Tsagaantsav formation, which has been tested in other wells in the area, was not an objective for DT-8. 

Petro Mata explained that DT-8 was designed to test a ‘stratigraphic pinch-out’ of the Uvgan Gol paleovalley reservoir. This reservoir is believed to be between thin hydrocarbon-saturated sandstones in the DT-5 well and the producing sandstones on the adjacent Block XIX, found in the 19-62 well drilled by Chinese firm Daqing. 

The DT-8 well has now been completed and the rig is being moved to the next well location.

DT-9 will target the Lower Tsagaantsav reservoir. The well will be drilled around 2.5 kilometres south of the previously drilled DT-4 well. That well recovered oil-saturated core from the Lower Tsagaantsav reservoir back in May 2011.  

“The DT-9 location is one of a series of Lower Tsagaantsav locations in the Shoroo, Tumur and Gal prospects that lie to the west of the Uvgan Gol paleovalley play,” Petro Matad said in a stock exchange statement. “These Lower Tsagaantsav prospects have been recently reinterpreted with the benefit of enhanced processing of the Davsan Tolgoi 3D seismic survey.”  

Petro Matad also told investors that it has mobilised a work-over rig, and equipment, to Davsan Tolgoi. It subsequently plans to begin well testing operations on the DT-1 well on the 1 August.

This programme is designed to sequentially test the six separate zones of Uppermost Tsagaantsav reservoir in DT-1.  

Once the DT-1 well is complete the rig will move on to test the DT-2, DT-5, DT-7 and DT-8 wells have all been identified as production test candidates in the Uvgan Gol paleovalley reservoir.

 The DT-3 and DT-4 are slated for production testing of the Lower Tsagaantsav reservoir and the Upper Zuunbayan reservoir will be tested in DT-3.

Petro Matad (LON:MATD) told investors that it will spud the next Davsan Tolgoi well, DT-8, later today after it completed work on the seventh well.

In a stock exchange statement the junior oil firm revealed that the Davsan Togoi-7 well found three zones of possible net oil pay, with totalling 4.8 metres in thickness and averaging 25 percent porosity.

Petro Matad said that between these three zones of moveable hydrocarbons, is a water-bearing reservoir totaling 18.5 metres. It added that a similar pattern of oil and water-bearing sandstone reservoirs is common in the nearby Tolson Uul field on Block XIX, north of Davsan Tolgoi. 

"Once again, it is pleasing to note that we have encountered hydrocarbons in our Davsan Tolgoi drilling programme and to have the reservoir formations' prognosis confirmed,” said chief executive Doug McGay.

"We are methodically working our way through our portfolio of targets in the Davsan Tolgoi area, having so far encountered hydrocarbons in all but one of the seven wells drilled to date.”  

DT-7 was designed to test both the ‘Uppermost Tsagaantsav’ and the ‘Lower Tsagaantsav’ reservoirs of the Davsan Tolgoi Mod Prospect.

Petro Matad confirmed that the three ‘Uppermost Tsagaantsav’ hydrocarbon zones are being evaluated as candidates for future testing, and additional well locations are being evaluated up to 75 metre up-dip to DT-7, where it believes there will be more complete hydrocarbon saturation.

Meanwhile in the ‘Lower Tsagaantsav’ objective, which was penetrated between 1,208 and 1,703 metres depth, there was minor hydrocarbon saturation. Petro Matad said that 23 metres of reservoir quality sandstone is distributed between twelve thin zones here, the average porosity was 17 percent.

“Our management and exploration team note the less-than-resounding results in DT-5 and DT-7 and the dry hole at DT-6, and conclude that is a statistically anticipated outcome of the type of exploration drilling programme needed on such a structure as Davsan Tolgoi,” McGay added.  

“Each of the wells has already given us important information that is being used to refine our geologic model, and hence our drill site selection. This should serve us well not only for the continued drilling of our prospect inventory, but also for the ongoing exploration of the remainder of Block XX.”

Petro Matad said that DT-8 will now be drilled to test a ‘stratigraphic pinch-out’ of the ‘Uvgan Gol’ reservoir, between the thin hydrocarbon-saturated sandstones at DT-5 and the thick oil-producing sandstones of the Daqing 19-62 well on Block XIX.

The company also highlighted that it expects to mobilise well testing equipment, which has been held up at the Chinese border due to the Mongolian national holidays, after the border point re-opened today. 

Meanwhile it is also making progress with its other Mongolian assets. Looking beyond Davsan Tologoi, McGay added: “The re-mapping of the newly re-processed 3D survey will also be an important milestone.  

“The area outside of Davsan Tolgoi is also being methodically explored, and we are looking forward to refining our portfolio of leads and prospects in the immediate vicinity, as well as furthering the more grass-roots exploration of other sub-basins".

Petro Matad (LON:MATD) announced that it has spudded the DT-7 well on its promising petroleum exploration and development block in far eastern Mongolia.

The DT-7 well is being drilled vertically to an estimated target depth of 1,800 metres by the company’s contractor, DQE International.

DT-7 is 2.3km south-southwest of DT-6 and 3.2km south-southeast of DT-2.

A further announcement on DT-7 will be made once drilling is completed, or as appropriate, said the company.

The company holds the sole operatorship of three production sharing contracts (PSCs) with the government of Mongolia.  Its principal asset is the PSC for Block XX, petroleum block of 10,340km² in the far eastern part of the country.

The two other Blocks, IV and V are located in central Mongolia and jointly cover 71,040km².

Earlier this month the company attracted favourable comment from broker Westhouse, which cited Petro Matad’s increasingly successful exploration programme, strong and capable technical team and 'exceptionally large' prospective  blocks as strong positives for the stock.

In their note on the company, the analysts concluded that more than anything, their recent visit to Mongolia impressed upon them the significant achievements the company has accomplished to date, operating as it does in a region where the oil and gas industry does not benefit from a mature service sector.

They added: “Petro Matad has set up the first self-contained, professional petroleum exploration team in a country that was more accustomed to fly-in/fly-out consultants and extremely limited local sectorial services.

However, rather than resting on its laurels, the company’s ambitions remain undiminished, as demonstrated by its full work schedule involving all facets of exploration and appraisal, from field studies right through to drilling and testing.”

In late trading Petro Matad shares were down 0.5p to 106.5p. 

The preceding five wells all discovered oil. Chairman Douglas McGay described the outcome of DT-6 as a ‘statistically acceptable’ result.

"The absence of hydrocarbons in DT-6 is disappointing,” McGay said.

“When taken into the context of the previous five successful wells and the complex nature of the Davsan Tolgoi Prospect, it represents a statistically acceptable result.”

DT-6 was drilled to total depth of 1,923 metres into volcanic basement rocks, below the Tsagaantsav reservoir objectives.  Petro Matad completed wireline logging and petrophysical analysis, but found no hydrocarbons through either method. The well has now been cased and cemented. 

The well was targeting the centre of a large seismic anomaly in the Uppermost Tsagaantsav formation. In DT-6 the target was 404 metres lower than the oil accumulations encountered in both DT-1 and DT-2.  

Petro Matad said that the well encountered this primary objective between 1,532 and 1,690 metres, where the reservoir rock exhibited good reservoir development but negligible hydrocarbon saturation.  

It will now integrate the results from DT-6 and DT-5 results, along with 3D seismic interpretation.

“The presence of significant hydrocarbon saturation at DT-5 and its absence at DT-6 will require adjustment to the initial trap model for Uvgan Gol Prospect,” the company said.

Meanwhile the site for DT-7 is being prepared. This next well is designed to test a different target, the Davsan Tolgoi Mod prospect – about 2.25 kilometres southeast, and approximately 360 metres higher than DT-6.  

McGay added: “The company is pursuing an evolving, but aggressive exploration programme on Davsan Tolgoi and the data from this and previous wells is assisting our exploration professionals in their understanding of the Prospect, and the location of future drilling."