Shares in Petro Matad Limited (LON:MATD) soared in Wednesday’s early deals after the Mongolia-focussed explorer announced it had signed up the services arm of Chinese oil giant Sinopec for a rig contract.
In early deals, the share rose 2.65p or 32% to trade at 10.9p.
Petro Matad is planning to start exploration drilling in September, with the first well targeting the Snow Leopard (or Irves) prospect in the Taats Basin, hosted in the company’s wholly owned Block V asset.
The Snow Leopard prospect has an estimated 160mln barrels of oil-in-place, though the ‘upside’ case estimating some 350mln barrels. September’s well is planned to be drilled down to a total depth of 3,150 metres, and the programme is due to last 50 days.
It is described by Petro Matad as an “important basin and play opening well”, and it highlighted that success would unlock further exploration potential in the basin, estimated in excess of 1.8bn barrels.
"I am very pleased to have executed the rig contract which is a significant milestone as we head toward exploratory drilling later in 2017,” said Ridvan Karpuz, Petro Matad chief executive.
“With the signature of the agreement with Sinopec, the Company is now poised to deliver on its commitment to undertake a high impact exploration drilling programme in 2017."
Significantly, it will be the first deep exploration well drilled in central Mongolia. But, more drilling is planned after Snow Leopard.
Sinopec, on Petro Matad’s behalf, will subsequently move on to drill the Wild Horse (or Takhi) prospect in the Baatsagaan Basin, in Block IV. This will be a shallower well, about 1,850 metres, with the programme slated for 20 days.
Wild Horse will, nonetheless, have a significant target seen as 280mln barrels oil-in-place, with the upside case of 650mln barrels. Like Snow Leopard, this will be a potential ‘basin opener’, with follow on potential seen in excess of 1.2bn barrels.
The planned programme will test just two of the twelve basins that Petro Matad is exposed to via its large prospective portfolio in Mongolia.