Petro Matad Limited (AIM: MATD), the AIM-quoted Mongolian oil explorer, is pleased to announce that it has signed contracts for two rigs for its upcoming 2019 four well drilling programme.
· Four well fully-funded programme remains on track for completion in 2019
· Two rig contracts signed and both rigs in close proximity to Block XX
· Heron 1 and Red Deer 1 wells expected to spud in July
· Spudding of Gazelle 1 will follow completion of drilling at Heron 1
· Rig contracts allow for possibility of immediate appraisal of any discovery
Rig contracts signed
The Company has contracted DQE International, Mongolia’s most experienced and active drilling operator, for its Rig 40105, to drill the Heron 1 and Gazelle 1 wells in the north of Block XX. The contract gives the Company the option to drill an additional well to allow for immediate appraisal of any discovery made during the 2019 drilling programme. Any discovery will be tested using a separate workover rig. The rig was drilling in neighbouring Block XIX up until the end of the last drilling season, so mobilisation will be short and logistically straightforward.
The second contract is with Daton Petroleum Engineering and Oilfield Service LLC, for their Rig DXZ1, to drill the Red Deer 1 well in the south of Block XX. The contract gives Petro Matad the option to drill a second well, to either appraise any discovery made in Red Deer 1 or for drilling in Block V in western Mongolia. Any testing operations will be performed by a separate workover rig. Daton’s rig was working until the end of 2018 and is currently located approximately 125km east of the Red Deer location, so mobilisation to Block XX will be relatively short.
Updated drilling schedule
The Company expects to spud Heron 1 in early July. The spud date has been moved back to allow for certain electrical and safety modifications to the rig ahead of drilling.
Heron 1 will be drilled to a planned total depth (TD) of 3,050m and will take approximately 40 days to drill and log. On completion of operations at Heron, the rig will immediately move to the Gazelle 1 location. Gazelle 1 will take approximately 35 days to drill and log. The planned TD is 2,500m.
Red Deer 1 is expected to spud in July and is forecast to take 35 days to drill and log. The planned TD of the well is 2,100m. On completion of drilling and depending on the success of the well, the Company will then take the decision to either drill a further well at Red Deer; move the rig to drill a well in Block V; or focus on activities in the north of Block XX.
Running two rigs, with a separate workover rig for any testing operations, gives the Company sufficient time to complete its 2019 four well drilling campaign before the winter operational shutdown late in Q4.
Block XX drilling targets
The Company has recently secured access to a high-quality 3D seismic data set which covers the northern part of Block XX. This data, along with recently reprocessed 2D seismic data, clearly shows the Heron Prospect to be a southerly extension of the proven oil-bearing structure drilled by the T19-46-3 discovery well in Block XIX. The latest mapping shows the majority of the structure, including the crest of the trap, lying in Block XX. The Heron Prospect is estimated to have mean recoverable prospective resource potential of 25 MMbo. Heron 1 will be located 1.1km south of the T19-46-3 oil well and is prognosed to encounter the top of the primary reservoir targets at approximately 2800m.
The Gazelle Prospect is located on the south-western flank of the Tamsag Basin, which is the primary source kitchen charging the Block XIX discoveries. The Gazelle 1 well will be drilled 5km west of Heron 1 and 4.5km southwest of the T19-46-1 oil well. The mean prospective recoverable resource assessment for the Gazelle Prospect is 13 MMbo.
Red Deer Prospect
The Red Deer 1 well will target a basin centre, fault bounded, structural closure in the southern part of Block XX. The mean prospective recoverable resource assessment for the Red Deer Prospect is 48 MMbo.
Mike Buck, the CEO of Petro Matad said:
“We are pleased to announce the signing of the two rig contracts which marks a major milestone for the four well drilling programme scheduled for 2019. The contracts secured allow for simultaneous drilling of prospects and immediate appraisal in the event of a discovery which could be transformational for the company. It is an exciting year ahead for Petro Matad and we look forward to working with our contractors to deliver value for our shareholders.”