REG - Petro Matad Ltd - Operational Update

Petro MatadAnnouncement

07/10/2024 07:00

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RNS Number : 0856H  Petro Matad Limited  07 October 2024

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY PETRO MATAD
LIMITED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF
THE MARKET ABUSE REGULATION (EU) NO. 596/2014 AS IT FORMS PART OF UNITED
KINGDOM DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018
("UK MAR"). ON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY
INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.

 

7 October 2024

Petro Matad Limited

("Petro Matad" or the "Company")

 

Operational Update: Status of Heron-1 and 2. Gobi Bear-1 drilling results.

 

Petro Matad Limited (AIM: MATD), the AIM quoted Mongolian oil company,
provides the following operational update on activities in its Block XX
Production Sharing Contract area in eastern Mongolia.

 

Highlights

·    The Ministry of Industry and Mineral Resources (MIMR) and the
Ministry of Construction and Urban Development (MCUD) have approved the
Company's proposal to reclassify oil production well pads such that they do
not require construction permitting. MIMR has issued instructions to the
Company to start production. Construction of long-term production facilities
at Heron-1 has commenced and production startup during October is expected.

·    Commercial details for the cooperation agreement between the Company
and the operator of Block XIX facilities have been provided and are in line
with expectations. As soon as the agreement is in final form it will be shared
with industry regulator the Mineral Resources and Petroleum Authority of
Mongolia (MRPAM) for approval.

·    Preparations to test the Heron-2 well are underway with results
expected in early November. Now that construction permitting is not required,
the Company is progressing plans to be ready to bring the well onstream in
November in the event of a good test.

·    The Gobi Bear-1 exploration well has been drilled and logged. Casing
has now been run to bottom and the well will be suspended pending further
evaluation prior to likely well testing.

 

Heron-1 construction operations and production startup

Whilst mobilising to put temporary facilities on the Heron-1 well pad in order
to start production and avoid further delays in the construction permitting
procedure, the Company was delighted to be informed by MIMR that its proposed
reclassification of oil production well pads had been approved. MIMR also
issued instruction to Petro Matad to start oil production operations. The
contractor, DQE Construction, is now installing the long-term production
facilities with the expectation that these will be ready for production
startup from Heron-1 within the month of October.

The cooperation agreement with the operator of Block XIX is progressing well
and commercial terms are near final. They are in line with our expectation and
understanding of the costs of the ongoing transport, processing and export
operations. MRPAM has been kept informed of the negotiations and is standing
by to review the agreement once it is in final form.

Heron-2 well testing

The drilling rig will be stored for the winter by contractor DQE Drilling at
the Heron-2 location, making it readily available for any 2025 drilling
activities the Company may decide to perform. The equipment is being stacked
to avoid any impact on testing and subsequent construction operations. Well
test contractor, DQE Testing, will mobilise to site once the rig is clear of
the well head. Petro Matad is finalising the test programme and will perform a
reservoir stimulation operation on Heron-2 prior to the well test with a view
to completing the well for production provided a commercial flow rate is
achieved.

Now that the lengthy construction permitting process is no longer required the
chances of getting Heron-2 on stream this year have improved, and plans are
being made to be ready to do so in the event of a positive well test.
Suppliers of the necessary equipment have been contacted and discussions are
also ongoing with the Block XIX operator with a view to borrowing spare
equipment that may be available locally. The Heron-2 stimulation and testing
operation is now forecast to be complete in early November, giving a short
window in which to put the well on production before operational activity is
suspended for the winter.

 

Gobi Bear-1 drilling results

The Gobi Bear-1 exploration well located in the southern part of Block XX in
the Tamsag Basin has been drilled a total depth (TD) of 1,805m and wireline
logging has been completed. The primary objective Lower Tsagaantsav Formation
was penetrated at 1,425m and good sand development was seen. Basement was
encountered at 1,741m. Drilling gas shows were seen throughout the Tsagaantsav
formation and faint oil shows were also observed. Wireline logging confirmed a
total of 34m of reservoir quality sandstones within a gross interval of 70m
between 1,558m and 1,628m. From logs, the sands are computed to have 13%
average porosity which is consistent with the productive reservoirs in the
basin. Detailed log interpretation has been conducted and the resistivity
profile suggests the sands may contain a hydrocarbon charge but the absence of
good oil shows whilst drilling leads to some uncertainty. Without better
knowledge of rock properties, water salinity and temperature at this depth,
reservoir fluid determination from cuttings and logs in this well is not
definitive.

In light of the ambiguous results from drilling and logging, the well has been
cased to bottom and will be suspended whilst the Company gathers relevant
information from well samples and regional data in the Tamsag Basin in order
to refine the interpretation. The Company will then determine the forward
programme, which is anticipated to involve a well test, likely being the best
way to definitively determine the fluid content of the reservoirs in Gobi
Bear-1.

 

Mike Buck, CEO of Petro Matad, said:

"The last few weeks have seen a lot of activity and some significant progress.
We are extremely grateful to the recently appointed Ministers of Mining and
Construction for their support in reclassifying oil production well pads to
avoid the unnecessary burden of construction permitting regulations that were
not designed for works of this kind. Our focus continues to be getting Heron-1
on stream as soon as possible and hopefully Heron-2 can also be brought
onstream during the 2024 operational season.

The Gobi Bear-1 result is a teaser but if oil is present in these
well-developed reservoirs at such easily and cheaply drillable depth that
could be a very significant result for the Company. As such, suspending the
well allows us to gather data to refine our understanding and determine how
best to get a definitive answer."

 

Further operational updates will be provided in due course.

 

- Ends -

For further information please contact:

 Petro Matad Limited
 Mike Buck, CEO                                               +976 7014 1099 / +976 7575 1099
 Shore Capital (Nominated Adviser and Joint Broker)
 Toby Gibbs                                                   +44 (0) 20 7408 4090

 Rachel Goldstein
 Zeus Capital Limited (Joint Broker)

 Simon Johnson                                                +44 (0) 20 3829 5000

 Louisa Waddell

 FTI Consulting (Communications Advisory Firm)
 Ben Brewerton                                                +44 (0) 20 3727 1000

 Christopher Laing

Technical information in this news release has been reviewed by the Company's
Technical Manager, Mr. Jerry Smart. He has over 40 years of industry
experience in oil and gas exploration and production with LASMO, Eni,
Salamander Energy and Ophir Energy. He holds a B.Sc. in Geology from King's
College, London.

 

About Petro Matad

Petro Matad is the parent company of a group focused on oil exploration,
development and production in Mongolia. Currently, Petro Matad holds a 100%
working interest and the operatorship of the Matad Block XX Production Sharing
Contract with the government of Mongolia. Block XX has an area of 214 square
kilometres in the far eastern part of the country.

 

Petro Matad Limited is incorporated in the Isle of Man under company number
1483V. Its registered office is at Victory House, Prospect Hill, Douglas, Isle
of Man, IM1 1EQ.

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