Petro Matad Limited (LON:MATD) shares collapsed around 40% lower in Monday’s early deals after the exploration company revealed that the Wild Horse well in Mongolia failed to find hydrocarbons.
The company, in a stock market statement, confirmed that the well had been drilled down to a depth of 1,490 metres in the Baatsagaan Basin, and, whilst it encountered interbedded sands and shales within pre-drill prognosis, no oil shows were observed in the well.
It follows a similarly disappointing result in the Snow Leopard exploration well back in September.
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Now, the company intends to analyse the Wild Horse well data along with those from Snow Leopard, and, it will assess the surrounding prospectivity.
"The Wild Horse 1 result is clearly disappointing but this was too big a structure to leave undrilled,” said Mike Buck, Petro Matad chief executive.
“We will use the data gathered to re-evaluate the Baatsagaan Basin and to look again at the prospectivity in the other basins in Block IV.”
Wild Horse will be plugged and abandoned, meanwhile, having worked into the onset of the Mongolian winter the rig and drill crew will pause until the planned 2019 well campaign.
Petro Matad said that Wildhorse was completed on time and on budget, and, with a cash balance above US$25mln it remains fully funded for next year’s drilling.
Buck added: “As we are fully-funded for the 2019 drilling programme, we are now in the process of identifying our priority targets.
“In Block V, our post-well analysis has highlighted three, four-way dip closed structures with large resource potential which we are working up to drillable status and we are also using Snow Leopard 1 data to calibrate the prospectivity in the neighbouring Tugrug Basin, including the high-graded Fox prospect.
“Preparations for 2019 drilling operations in Block XX in the east of Mongolia, adjacent to the country's producing oil fields, are well advanced and will focus on near field and appraisal targets. We look forward to continuing our drilling campaign and to delivering success through the drill bit."
Petro Matad shares fell over 2p or 40.4% to change hands at 3.04p on Monday morning.