www.petromatad.com
Petro Matad is the parent company of a group focused on oil exploration, as well as future development and production in Mongolia. The Group’s principal asset is the Production Sharing Contract (PSC) over Matad Block XX, a petroleum block with an area of 14,250km2 in the far eastern part of Mongolia, near the Chinese border. Recently the company signed two more Production Sharing Contracts on Bogd Block IV and Ongi Block V, a total of approximately 71,000km² in central Mongolia. Petro Matad Limited’s shares were admitted to trading on AIM, London Stock Exchange, on May 1st, 2008. The company’s largest shareholder is Petrovis LLC, the largest importer and distributor of petroleum products in Mongolia. The company is the first substantially Mongolian owned company to have its shares admitted to trading on any major international stock exchange.
Westhouse issues upbeat note on Petro Matad following Davsan Tolgoi oil discovery
In response to the oil discovery in Petro Matad’s (LON:MATD) Davsan Tolgoi-1 well, on Block XX in Mongolia, London-based stockbroker Westhouse Securities said that DT-1 has provided a “very positive result” in the first well of the current drilling campaign, and “there is a lot more action to come”.
The company initially reported that it had encountered oil shows on 13 July. Yesterday, Petro Matad provided investors with more details on its new oil discovery in Mongolia, reporting that the drilling reached a final measured depth of 1,220m, and passed through the Lower Tsagaantsav formation from 1,075-1,146m.
Westhouse highlights that the Tsagaansav formation was 71 metres in total thickness, with an aggregate net pay of 35 metres in six potentially productive horizons. Petro Matad reported that several of the horizons gave very good oil shows that included cut (oil impregnated core samples), fluorescence, oil staining and strong petroliferous odour.
The broker also emphasised that the drilling team encountered fast “drilling breaks”, which evidences the possibility of good reservoir quality. “The immediate post-drill interpretation is that the well has been drilled at a structural crest of a faulted four-way closure, with progressively thickening sandstones eastwards from the well”, Westhouse stated.
Petro Matad will now carry out wireline logging on DT-1 before the rig moves to drill DT-2, 4km to the west. DT-2 will be drilled deeper, to 2,000m, in order to test the lower Tsagaantsav formation.
Westhouse said that DT-2 is likely to be drilled on a somewhat smaller structure than DT-1, but with a significantly higher pre-drill chance of success, and subsequently Petro Matad will also drill a third well immediately after DT-2, “but we understand that the location of this has yet to be decided”, Westhouse noted.
“The well result confirms that oil has migrated into Block XX in significant quantities. However, while the other structures in the North East of Block XX have been significantly de-risked, we have not included them in our current valuation”, Westhouse commented.
