Petro Matad Limited (AIM: MATD), the AIM-quoted Mongolian oil explorer, is pleased to provide an operational update.
2018 Drilling Results – Post Well Analyses:
Data acquired from the Snow Leopard-1 (Block V) and Wild Horse-1 (Block IV) wells are currently being evaluated to better understand the well results and their impact on the prospectivity of the respective basins within which the wells were drilled.
All well samples have been received by the UK based contractors undertaking biostratigraphy and geochemical analyses and the work is progressing.
Initial results from geochemical analysis of Snow Leopard-1 samples indicate that the oil observed in the drilling fluid at a depth of 1415 metres is a light oil derived and migrated from a mature source rock. This finding is very positive for the surrounding prospects in the Taats Basin.
A prospective trend of four-way dip closed inversion anticlines (the “Raptor” trend) lying 6km to the south of Snow Leopard has been high graded by the evidence of a working petroleum system in the Taats Basin. Seismic data indicates that thick reservoir quality sandstones encountered in Snow Leopard-1 are likely to be present within these anticlines and also that the prospects overlie thick hydrocarbon source rocks that the well also penetrated. The primary closure on this trend has been named Velociraptor and has prospective resources assessed by the Company at 200MMbo recoverable. Three satellite structures bring the total resource potential on the Raptor trend to c.400MMbo. Once the post well analyses are complete, we will be undertaking a prospect ranking exercise to determine which of the Raptor prospects or Fox will be selected as the target of our next well in Block V. Drilling permits are already in hand for Fox and are being progressed for the Raptor trend.
We expect to be in a position to make a decision on which prospect to target by the middle of the year, in good time to mobilise the rig from Block XX once the firm three well programme there is completed.
2019 Drilling Programme:
The Company’s tender processes for the 2019 drilling programme are at an advanced stage. The evaluation of bids is near completion and discussions with the Regulator, the Mineral Resources Petroleum Authority of Mongolia (MRPAM), on evaluation results and contract awards are in process. We aim to complete contract negotiations with the winning bidder in time to ensure rig mobilisation in April 2019 to spud the first well in the northern area of Block XX.
Technical work continues on the reprocessing of 2D seismic data and the incorporation of 3D data into the detailed prospect mapping for the northern area of Block XX. We expect our revised mapping to be complete in February 2019 including the final selection of drilling targets, well locations and drilling order.
The work so far has confirmed the mapping of the Heron Prospect (16MMbo mean prospective recoverable resources (“Mean”)) and the Gazelle Prospect (13MMbo Mean) and has improved our understanding of the Antelope Prospect (7MMbo Mean). The likely location for Heron-1 is less than 1km south of the Petro China discovery well L19/46-3 and the new mapping confirms the Heron Prospect is an extension of the L19/46 structure. As such, Heron-1 will be an appraisal well of an existing discovery. Permits are already in hand for the two wells programmed to be drilled in the northern area of Block XX covering any of the locations we may choose once prospect mapping is complete. We are in the process of permitting for two more potential locations to be able to follow up quickly on any success we may have in the firm drilling programme.
The Red Deer-1 location has been confirmed by our latest mapping and the environmental permit was submitted to the Ministry of Environment for approval in early December. It is expected to be approved shortly. Red Deer offers significant resource potential (48MMbo Mean) in an as yet undrilled basin but one that is adjacent to productive basins that have the same geology and petroleum systems as Mongolia’s main producing area to the northeast in Block XIX and producing basins to the east in China.
With encouragement in the Block XX drilling programme we have a well testing contract already in place to allow for flow tests to be conducted quickly. Petro Matad also has production pumping equipment in its warehouse so that long term test production, as allowed under the Mongolian Petroleum Law and the Production Sharing Contract, can be established quickly in the event of success. Early establishment of test production will require processing and export cooperation with the neighbouring production operator and preliminary discussions have been held with a plan to re-engage once the 2019 wells are drilled.
In the event of success in Block XX we will review priorities going forward as the establishment of commerciality in Block XX will be an important goal.
Mike Buck, the CEO of Petro Matad said:
“The Mongolian winter months have been very busy for the Petro Matad team preparing for the 2019 four well drilling programme.
We are very keen to start operating in Block XX as soon as the weather permits, and our initial focus will be on near field exploration and appraisal where the targets we are pursuing have good chances of success and can be highly value accretive and material for the Company.
The ongoing evaluation of the 2018 drilling results has generated some exciting possibilities for follow up in Block V. 2019 is a key year for Petro Matad and we look forward to delivering the four well drilling programme and, with success, moving the Company towards commercialisation.”