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.
Petro Matad hits new high on initial Davsan Tolgoi follow-up well results
Petro Matad (LON:MATD) shares made another new high this morning, after the Davsan Tolgoi follow-up well found ‘significant hydrocarbons’.
Davsan Tolgoi 2 (DT2) was drilled on the same structure as the DT-1 discovery well, which encountered a 71m thick section of the targeted Tsagaantsav formation back in July.
"It is significant that DT-2 encountered hydrocarbons over the stated intervals,” Petro Matad chief executive Douglas McGay said.
“[This] provides further proof that the Davsan Tolgoi anticline has been charged with oil and gas which has migrated out of the deeper hydrocarbon-generating kitchens.”
Petro Matad’s stock has more than trebled in value since the DT-1 well made the discovery on Block XX in Eastern Mongolia - soaring from just under 60p in July to an all time high of 199p late this morning. By midday, Petro Matad was trading up 3.2% on the day at 176.5p.
In its ‘Daily Oil & Gas Filter’ Westhouse Securities called today’s news “a very encouraging result, as it derisks both the Davsan Tolgoi anticline and the surrounding structures".
With the recent fundraising, the company has the money to both undertake significant appraisal drilling on Davsan Tolgoi and drill the surrounding structures. However, with winter approaching, most of these wells will be drilled in the 2011 season, the broker said.
“On the back of this result we are raising our price target to 250p and retaining our BUY recommendation,” Westhouse added.
DT-2 was drilled to 1,336m, and preliminary analysis has indicated the presence of significant hydrocarbons in three intervals in the lower 275m of the well.
The well encountered the Tsagaantsav formation (its primary target), the overlying Upper Zuunbayan formation and the underlying Sharilyn formation.
Petro Matad said that initial results indicate that both DT wells share a common hydrocarbon column in the Tsagaantsav Formation.
The company also noted that the Tsagaantsav reservoir is better developed in DT-1, and this reservoir variation is being integrated into the interpretation of the 3D seismic data.
"While the interval of oil shows within the Tsagaantsav formation is not as appreciable as encountered in DT-1, the total hydrocarbon column and the extra zones outside of that formation are very encouraging,” McGay added.
The first two wells were positioned on the crest and the flank of the Davsan Tolgoi anticline, next the third well will be drilled on the apex of the anticline.
The rig has already been mobilised to the Davsan Tolgoi 3 (DT3) site, 7.7 kilometres south-southeast of DT2.
With DT3 Petro Matad intends to test the full height of the hydrocarbon column.
The next well has a target depth of 1,205m.
