REG - Petro Matad Ltd - Operational Update

Petro MatadAnnouncement

14/11/2024 07:00

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RNS Number : 1447M  Petro Matad Limited  14 November 2024

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INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE
IN THE PUBLIC DOMAIN.

 

 14 November 2024

 

Petro Matad Limited

("Petro Matad" or the "Company")

 

Operational Update: Heron-1 production and Heron-2 well test results

 

Petro Matad Limited (AIM: MATD), the AIM quoted Mongolian oil company,
provides the following update on production operations at the Heron-1 well and
the well test results from Heron-2 in its Block XX Production Sharing Contract
area in eastern Mongolia.

 

Highlights

·    Heron-1 is producing well with maximum deliverability estimated to be
similar to or greater than the 821 bopd achieved on drill stem testing in
2019.

·    The oil has more associated gas than expected which improves the flow
potential but is also causing pressure fluctuations at surface and so
production is currently choked back in the 200 to 300 bpd range.

·    Production is being trucked to the neighbouring Block XIX TA-1
facilities and stored. The commercial terms of the Cooperation Agreement with
Block XIX operator have been agreed and the final wording is being prepared
for sign off by MRPAM. Once approved, export paperwork for Block XX crude can
be prepared and sales will then commence.

·    Heron-2 has been stimulated and tested with oil recovered together
with stimulation fluid at a low flow rate. The well is being suspended and the
stimulation and pressure data will be reviewed to determine the forward
programme.

Heron-1 production

As previously reported, the Heron-1 well was brought onstream on 24 October
and it continues to produce oil to surface under natural flow without the need
for pumping. The well is producing with higher amounts of associated gas and
at higher pressures than are generally observed in the basin giving the well
high initial flow potential. Rate tests have achieved flow rates similar to,
and in some tests, higher than the maximum 821 barrels of oil per day (bopd)
rate recorded during the well testing operations in 2019. Given the high
pressures observed at surface, the flow rate is being monitored carefully to
ensure that casing and production tubing pressures remain within safety
tolerances and production is currently choked back to a range between 200 and
300 bpd. Whilst this is in line with our pre-production aspiration for an
initial stabilised rate, the indications of sustained potential for the well
to produce at higher rates are under review, to see if modifications at
surface can be made to increase the stabilised flow rate.

Regular transfer of oil to the TA-1 production facilities in Block XIX is
ongoing. Meanwhile, all the commercial terms have now been agreed and the
final wording of the Cooperation Agreement is being prepared to include
details of exactly how the produced volumes will be offloaded, measured and
confirmed by the relevant parties. Once agreed with the Block XIX operator the
Cooperation Agreement will be presented to the industry regulator, the Mineral
Resources and Petroleum Authority of Mongolia (MRPAM) for their approval. The
Company is pushing to expedite these final steps after which export paperwork
will be prepared and sales of Block XX oil to the buyer in China will
commence. In the meantime, large storage capacity is available in Block XIX so
Block XX production can continue uninterrupted.

Heron-2 testing

Heron-2 well testing operations commenced on 25 October following completion
of a stimulation programme. Seven days were subsequently lost after the test
rig suffered a major engine problem but repairs were completed and operations
resumed. By end of the test, the well was producing a mixture of oil and what
is interpreted to be stimulation fluids with productive potential estimated to
be around 30 bpd. This is significantly lower than the rates observed in
Heron-1 although it is in line with flow rates reported from some other wells
in the basin. Pressure data recorded during the test and the details of the
stimulation operation will be reviewed to determine if the flow rate is an
indication of low reservoir permeability or some other down-hole issue.
Heron-2 is now being suspended and once the data evaluation is complete, the
forward programme for the well will be determined.

Mike Buck, CEO of Petro Matad, said:

"We are very pleased with the performance of the Heron-1 well so far and we
are encouraged that higher than expected stabilised flow rates may be
achievable. We are looking into this as a matter of some urgency, although if
surface modifications are needed, these will likely have to wait until after
the winter operational shut down. The transfer of production to Block XIX is
settling into a routine and we are pushing to be able to export and sell Block
XX crude as soon as possible.

The Heron-2 well testing has not achieved the flow rates we were hoping for
given the enthusiasm with which Heron-1 produces, but the presence and
recovery of oil is encouraging and we have some work ahead to understand the
outcome so far and determine the forward programme for the well. This work
will be done over the next few months as we finalise our operational programme
for 2025."

 

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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