Petro Matad drilling at Davsan Tolgoi to restart shortly after winter shutdown

Mongolia-focused oil explorer Petro Matad Limited (AIM: MATD) announced that the 2009/2010 three-hole drilling programme on the Davsan Tolgoi prospect on the company's Block XX is due to restart shortly following the winter shutdown.

The advance team and contractors have been at Davsan Tolgoi in eastern Mongolia since 27 April 2010 carrying out preparatory site-works and maintenance on the camp and the three well sites.

The firm said there was more work than expected after an unusually cold and long Mongolian winter, however the work was in progress and no undue delays or longer term problems were expected.

Petro Matad's drilling contractor, Ansai Yuehua Oil Tech Company Ltd, is finalising visa and work permit procedures for its Chinese drilling personnel, who are expected to arrive on site this week.

They will begin rig repairs and maintenance in preparation for spudding of the wells later in the month.

The company has also hired an experienced drilling supervisory team, led by drilling superintendent Richard Cole, and supplemented by international and Mongolian drilling professionals.

The post-winter procedure is following a similar timetable to the company's Petro China (Daqing) drilling operations on Block XIX, immediately north of the company's Block XX, said the company.

In regard to exploration, Petro Matad said its new exploration manager Dr James Coogan began work on 15 April with newly appointed chief geophysicist Dr Kurt Constenius and field geologist Justin Tully. The new team will work with existing and newly appointed Mongolian professionals on the company's exploration programmes.

They have been liaising with the company's academic collaborators and planning the 2010 geophysical and field geology programmes, and added to Petro Matad's extensive database of Block XX exploration data.

Among the additional information gathered and assessed by the company has been the February 2009 announcement by the Petroleum Authority of Mongolia (PAM) of the geological resources established by Petro China's subsidiary, Daqing Tamsag Mongolia LLC, on Block XIX. 

PAM announced in-situ reserves of approximately 900 million barrels of oil and 2.5 million cubic metres of gas. Petro Matad said it very cautiously welcomed this news and the possible positive aspects for its exploration of Block XX.

The company is also collaborating with Dr W D Cunningham of Leicester University in the United Kingdom. Dr Cunningham is a noted researcher who has been actively researching the Altai and Gobi Altai regions for over 15 years, including the areas covered by the company's Production Sharing Contracts for Blocks IV and V.

Dr Cunningham's study has identified at least eight important hydrocarbon prospects in Blocks IV and V.

Petro Matad's new exploration team is planning the 2010 field exploration programme for Blocks IV and V. Mongolian geophysical contractor, Geosan LLC, has started the programme with a 4,000 point infill gravity survey.

Petro Matad CEO Douglas McGay said: "In the past eight months Petro Matad has added significant internal capacity to its operations with the expansion of its exploration team and the establishment of its in-house drilling supervision facility. This has advantageously positioned our company for a productive 2010 drilling and exploration season."

Prior to the PAM estimates Petro Matad was working with Block XX having an unrisked prospective resource of 122 mmboe (million barrels) with a 37% chance of success. The initial three wells could be followed by more exploration wells on the Davsan Tolgoi prospect or one of the other 14 prospects on the current Block XX prospect inventory, which have a mean unrisked prospective resource estimate of 516 mmboe.

The petroleum blocks Bogd Block IV and Ongi Block V adjoin each other and jointly cover an area of approximately 71,000 square kilometres.