TIDMMATD
RNS Number : 0779S
Petro Matad Limited
07 March 2019
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
PETRO MATAD LIMITED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED
UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014 ("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 March 2019
Petro Matad Limited
("Petro Matad" or the "Company")
Operational Update
Petro Matad Limited (AIM: MATD), the AIM-quoted Mongolian oil
explorer, is pleased to provide an operational update.
Highlights
- 2019 four well drilling campaign: Heron, Gazelle, Red Deer
(all Block XX) and a further exploration well in Block V, or
appraisal of a Block XX discovery
- Heron
o Heron 1 well planned as first well of 2019 campaign, with
spudding targeted for Q2 2019
o More than 50% resource uplift at Heron Prospect to 25 MMbo
from 16 MMbo following mapping of reprocessed 2D seismic
o Analysis indicates the Heron Prospect is the southerly
extension of a proven oil-bearing structure drilled in Petro
China's adjacent Block XIX
- Gazelle high-graded to second Block XX well as new mapping
shows it to be directly up dip of a Petro China discovery well on
the same migration path
- Red Deer Prospect location remains unchanged, targeting 48
MMbo of mean prospective recoverable resource
- Heron, Gazelle and Red Deer environmental permits for drilling
approved and CSR teams mobilised to well sites
- Regulatory approval received for two-rig strategy for limited
additional cost to allow for simultaneous drilling of prospects -
negotiations with rig contractors nearing finalisation
- Applications for Block IV and V PSCs being prepared for
two-year extensions, with submission expected shortly
- Ongoing analysis of Snow Leopard 1 well, Block V, has
significantly enhanced the prospectivity of the Block and in
particular the Raptor trend
Block XX 2019 Drilling Programme
Mapping of reprocessed 2D seismic data in the northern part of
Block XX has confirmed and enhanced the trap definition of both the
Heron and Gazelle Prospects and final drilling locations have now
been selected.
Heron Prospect
Based on the latest mapping, the Heron Prospect appears to be
the southerly extension of a proven oil-bearing structure drilled
by the PetroChina discovery well T19-46-3 in Block XIX. The data
indicates that the majority of the structure, including the mapped
crest of the trap, lies in Block XX. The previously identified
upside potential immediately east of the Heron Prospect has now
been confirmed to be part of the same structural trap and this has
increased the mean prospective recoverable resource assessment for
the Heron Prospect to 25 MMbo. The Heron 1 well location that has
been chosen is 1100m from the T19-46-3 discovery well and the
primary reservoir targets at Heron 1 are prognosed to be at
approximately 2800m, roughly the same depth as they were
encountered in the discovery well. Overall, the Heron trap covers
13km(2) and has approximately 800m of vertical relief. Heron 1 is
planned to be the first well in Petro Matad's 2019 drilling
campaign.
Gazelle Prospect
The Gazelle Prospect has been confirmed by remapping and 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 location has been chosen and is 5km west of Heron 1
and 4.5 km southwest of PetroChina's T19-46-1 discovery well in
Block XIX. Based on Petro Matad's mapping it is difficult to define
a structural trap for the T19-46-1 discovery suggesting that in
part the accumulation may be stratigraphically trapped. This
high-grades the potential of the Gazelle Prospect which is located
on the migration pathway for oil passing through T19-46-1 and
south-westwards out of the kitchen area. There is also evidence of
an improvement in reservoir quality on the western flank of the
Tamsag Basin where Gazelle is located. Gazelle 1 will be drilled
following the completion of operations at Heron. The mean
prospective recoverable resource assessment for the Gazelle
Prospect remains unchanged at 13 MMbo which is the estimate for the
structural trap alone and does not include the stratigraphic
upside.
Red Deer 1
The previously chosen Red Deer 1 drilling location is unchanged
and the well will target a basin centre, fault bounded, structural
closure in the southern part of Block XX. It is located in a so far
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. The mean prospective recoverable resource
assessment for the Red Deer Prospect is 48 MMbo.
Environmental Permits
Environmental permits for drilling at the Heron and Gazelle
Prospects have been approved and are currently being amended to
allow for appraisal wells to be drilled in the event of
success.
The environmental permit for the Red Deer Prospect has also been
approved and already includes provision for an appraisal well in
the event of success. The Company's Corporate Social Responsibility
(CSR) team has been mobilised to the local communities near to the
planned wells and the feedback received to date is that the
citizens and herders are supportive of the Company's drilling
plans.
2019 Rig Tender
The Company has received approval from the industry regulator,
Mineral Resources and Petroleum Authority of Mongolia (MRPAM), for
a two-rig strategy and we are in the process of finalising
contracts with the chosen drilling contractors to secure a shallow
rated rig suitable for the Red Deer and Raptor Prospects, and a
deeper rated rig suitable for the Heron, Gazelle and Fox Prospects.
Both rigs are currently located close to Block XX. The shallow rig
is 125 km from the Red Deer location. The deeper rig is 20 km from
the Heron location. Both rigs were working until the end of the
2018 drilling season and have been inspected and are suitable for
the operations planned.
While the two-rig strategy will add slightly to rig mobilisation
and supervision expenditure, the cost increase is not significant.
The key benefit of the strategy is that it enables simultaneous
drilling which will improve the possibility that the three well
Block XX drilling programme can be completed early enough in the
2019 drilling season to allow for appraisal drilling to immediately
follow any success, should that be our choice. It could also
facilitate an earlier move of one rig to Block V to mitigate the
possibility of operations there running into the winter period.
We are still targeting a second quarter 2019 spud in Block XX
and the exact timing depends upon finalising the drilling contracts
and the speed with which the drilling contractors can source key
materials and mobilise. We will provide further updates on this in
due course.
Block IV and V PSC Extensions
The current exploration terms of the Blocks IV and V PSCs are
due to expire in July 2019. As the Company is sufficiently
encouraged by the results of the 2018 drilling programme, we are
currently preparing documentation to apply for two-year extensions
on both blocks. As both PSCs are in good order, with all financial
commitments having been met, we do not expect issues to arise with
these extension applications.
Block IV and V Post-Well Analyses
Post-well analysis of the 2018 wells continues. Snow Leopard 1
(Block V) well data has confirmed the presence in the Taats Basin
of organically rich source rocks, within the oil generation window
and of a similar age to the proven source rocks seen in the
producing basins of eastern Mongolia and north-eastern China. These
findings have significantly enhanced prospectivity in Block V,
particularly the Raptor Trend of prospects located on the southern
basin margin that are well placed to capture oil migrating from the
source kitchen in the basin centre to the north. Work is ongoing to
integrate the results of the post-well analyses into maturing
prospects to drillable status. We are targeting mid-year to select
the preferred target for the next well in Block V.
Further analysis of the cuttings near the base of Wild Horse 1
(Block IV) recovered an oil extract which suggests that source
rocks exist within the Baatsagaan Basin although no organically
rich rocks were encountered in the well.
Mike Buck, the CEO of Petro Matad said:
"The Company has made good progress since the last operational
update. I'm particularly pleased with the results of the northern
Block XX seismic reprocessing which has significantly improved the
mapping and structural definition of the Heron and Gazelle
Prospects and has increased our resource estimate for Heron. As the
first well in the programme, Heron 1, is an appraisal of a
discovery made in Block XIX, the probability of encountering
hydrocarbons is good.
The two-rig strategy further enhances the ability to appraise
any discoveries made in the Block XX 2019 programme and the Raptor
trend in Block V is also showing encouraging signs of
prospectivity. We are well placed to commence drilling in Q2 and
look forward to providing further updates."
Further information please contact:
Petro Matad Limited
Mike Buck, CEO +976 7014 1099 / +976 7575 1099
Stockdale Securities Limited (Nominated Adviser and Broker)
Richard Johnson
Andy Crossley
David Coaten +44 (0) 20 7601 6100
Stifel Nicolaus Europe Limited
(Broker)
Callum Stewart
Nicholas Rhodes
Ashton Clanfield +44 (0) 20 7710 7600
FTI Consulting (Communications Advisory Firm)
Sara Powell
Ben Brewerton +44 (0) 20 3727 1000
All Reserves and Resources definitions and estimates shown in
this report are based on the 2007 SPE/AAPG/WPC/SPEE Petroleum
Resource Management System ("PRMS").
Technical information in this news release has been reviewed by
the Company's Exploration Manager, Mr. Jerry Smart, who has
recently joined the Petro Matad team. He has 36 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.
Glossary
MMbo Million barrels of oil
Mean The arithmetic average of the low, mid and high case
estimates of recoverable prospective resources
Prospective Resources Estimated volumes associated with
undiscovered accumulations. These represent quantities of petroleum
which are estimated, as of a given date, to be potentially
recoverable from oil and gas deposits identified on the basis of
indirect evidence but which have not yet been drilled
About Petro Matad
Petro Matad is the parent company of a group focussed on oil
exploration, as well as future development and production in
Mongolia. At the current time, Petro Matad holds the sole
operatorship of three Production Sharing Contracts with the
Government of Mongolia. Block XX has an area of 10,340 square
kilometres in the far eastern part of the country, and Blocks IV
and V have an area of 28,900 square kilometres and 21,100 square
kilometres, respectively, in the southwest 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.
For further information on Petro Matad Limited, see the website
at: www.petromatadgroup.com
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END
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