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
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Mike Buck, CEO
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+976 7014 1099 / +976 7575
1099
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Shore Capital (Nominated Adviser and Joint
Broker)
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Toby Gibbs
Rachel
Goldstein
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+44 (0) 20 7408 4090
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Zeus Capital Limited (Joint
Broker)
Simon Johnson
Louisa Waddell
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+44 (0) 20 3829 5000
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FTI
Consulting (Communications Advisory Firm)
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Ben Brewerton
Christopher Laing
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+44 (0) 20 3727 1000
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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.