Petro Matad Limited Operational update (3298S)

TIDMMATD

RNS Number : 3298S

Petro Matad Limited

25 June 2018

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.

25 June 2018

Petro Matad Limited

("Petro Matad" or the "Company")

Operational Update

Petro Matad, the AIM quoted Mongolian oil explorer, is pleased to provide an operational update for its planned 2018 work programme:

Highlights

-- Rig mobilisation has been completed ahead of the drilling of the Snow Leopard-1 well in Block V. The well is expected to spud during the week commencing 9 July 2018

-- Permits are in place for the second well, Wild Horse-1 in Block IV. The well will be drilled after operations are completed at Snow Leopard and site preparation is scheduled to start during August with well spud forecast in September 2018

-- Negotiations on the rig contract for Block XX drilling are at advanced stage, with drilling on track to commence in late Q3 / early Q4 this year

-- Management will be hosting a presentation for investors in the week commencing 9 July 2018, a notice and further details will be issued closer to the time

Drilling

All permits, including foreign worker visas, are in place for Snow Leopard-1 drilling operations. Well site construction has been completed and an onsite water well has been drilled to supply the rig's operational requirements. The circa 1,100 kilometre rig move is 100% complete and the drilling camp is substantially in place. The rig is approximately 35 per cent rigged-up. Spud of the well is expected during the week commencing 9 July 2018.

Key Company personnel have been on location for several weeks to ensure Company policies in relation to environmental protection and safe working practices are followed during the unloading and rigging-up process. They will remain on location throughout the drilling programme, augmented by the Company's technical and supervisory specialists.

The Snow Leopard-1 well, which is targeting 90 MMBO, is planned to drill to a total depth of circa 3,350 metres and is expected to take up to 70 days to complete.

Immediately following the drilling of Snow Leopard-1, the rig will be moved circa 300 kilometres West to the Wild Horse-1 well location in Block IV. The Wild Horse-1 well, which is targeting 480 MMBO, has been named by industry specialists Wood Mackenzie as one of the top 20 exploration wells worldwide to watch in 2018. Well-site construction is due to commence in August 2018. Wild Horse-1 is expected to spud in September and to be completed before the end of the 2018 drilling season in late November.

Pending shareholder approval of the recently announced fundraise, being sought at the General Meeting on the 3 July 2018, the Company intends to enter into negotiations with Sinopec to extend the rig contract for drilling of the Fox prospect in Block V. Subject to these negotiations the Company anticipates drilling the Fox-1 well at the start of the drilling season in early Q2 2019. The Fox prospect is a large three-way dip closure against normal faults in a basin with a proven petroleum system and has mean prospective resource potential of 200 MMBO. It has been matured to drillable status based upon interpretation of the high-quality 3D seismic survey acquired in late 2017.

The drilling programme scheduled for Block XX remains on track. Contract negotiations with the preferred bidder to supply and operate a rig are in the final stages. Formal award of the contract is expected by the end of July. The selected rig is in country, is operating close to Block XX and is available from Q3 2018. Permitting for drilling is progressing and the first well, on the Gazelle prospect, is planned to spud in late Q3 or early Q4 2018. The target for the second well will be selected shortly, upon completion of detailed seismic remapping. The Company intends to complete both Block XX wells before the end of the 2018 drilling season, which ends in late November, and to retain the services of the rig to drill the Red Deer prospect in Block XX at the start of the 2019 drilling season. Red Deer has 48 MMBO of prospective resource potential in a basin which the Company believes to be stratigraphically analogous to nearby producing basins in Mongolia and northern China.

The Company is also negotiating a contract with a well testing specialist operating in Mongolia. The contractor has a dedicated service rig and equipment that will allow, where appropriate, the drill stem testing of any zones of interest identified in the wells drilled in Blocks IV, V and XX.

In parallel with operational efforts, the farm out process has progressed and discussions are continuing with potentially interested parties. There is no certainty that a deal will be completed at this stage and a further update will be provided as appropriate.

A presentation that provides additional detail on the Company's plans and drilling targets has been uploaded to its website, with the following link: http://www.petromatadgroup.com/wp-content/uploads/2018/06/Company-presentation-June-2018-final.pdf

Further announcements will be made as required.

Mike Buck, the CEO of Petro Matad said: "I would like to thank shareholders for their continuing support. It has been a long road travelled to get to the point of drilling, which is finally upon us. With the funding the Company secured in January and, pending shareholder approval of the fundraise conducted earlier this month, the next twelve months will see us execute a multi-well, high impact drilling programme utilizing two rigs and targeting prospects in a number of risk independent basins. This campaign will tell us a lot about the potential of our extensive acreage portfolio in Mongolia and we are very keen to get started. It is my intention to hold a meeting/conference call for shareholders in the week commencing 9 July to present details of the programme and to answer questions arising. Details of this event will be announced shortly."

For more information, please contact:

 
 Petro Matad Limited 
                                      [phone] / [phone] 
 Mike Buck, CEO                        099 
 
 Stockdale Securities Limited (Nominated Adviser and Broker) 
 Richard Johnson 
  Andy Crossley                       [phone] 
 
    Stifel Nicolaus Europe Limited 
    (Broker) 
    Callum Stewart 
    Nicholas Rhodes 
    Ashton Clanfield                    [phone] 
 FTI Consulting (Communications Advisory Firm) 
 Edward Westropp                      [phone] 
 

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 100% working interest and operatorship of three Production Sharing Contracts with the Government of Mongolia. Block XX has an area of 10,340 km(2) in the far eastern part of the country, and Blocks IV and V have an area of 28,900 km2 and 21,100 km2, 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.

All Reserves and Resources definitions and estimates shown in this report are based on the 2007 SPE/AAPG/WPC/SPEE Petroleum Resource Management System.

Technical information in this news release has been reviewed by the Company's Senior Geological Consultant, Mr. Jerry Smart. 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 

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June 25, 2018 02:01 ET (06:01 GMT)