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 spuds DT-6 well in Mongolia
Petro Matad (LON:MATD) told investors that it has spudded thet DT-6 exploration well in Mongolia to test a very thick section of the Tsagaantsav formation at Block XX.
Just yesterday, the company reported that drilling operations on the DT-5 well were completed with numerous thin zones of hydrocarbons identified; however, now oil shows were observed during drilling.
The company intends to test the well during 2011 but feels stimulation will be needed to induce oil flow.
Chief executive of Petro Matad Douglas McGay commented noted that each of the five wells drilled to date intersected testable zones. He assured investors that the company had always expected to see variations in well results during the exploration phase.
“It is gratifying to see the presence of hydrocarbons in the Lower Tsagaantsav formation continuing to be relatively predictable," he added.
The result had no impact on Westhouse’s analysis of the Davsan Tolgoi discovery and the prospectivity of the surrounding area of Block XX. The broker stated that despite the low amount of net pay, the well could still be a producer.
In addition to that, the log data from the well could be tied in with the seismic data to improve Petro Matad’s understanding of the reservoir.
“The find is almost certainly commercial, given that the Chinese are producing from similar accumulations in the Tolson Uul fields, north-east of the location of the Davsan Tolgoi discovery,” said Westhouse.
“We consider that the field economics are likely to be robust, especially if oil prices stay at or go above current levels.”
The broker’s “buy” recommendation for the stock and target price of 341 pence were upheld.
