Petro Matad says latest drilling results are "less than resounding"

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".