Petro Matad Share News (MATD)

(Sharecast News) - Mongolia-focussed oil explorer Petro Matad announced drilling and logging results from the Red Deer-1 exploration well located in the south of Block XX on Tuesday, as well as an operational update for Heron-1 and Gazelle-1 in the north of Block XX, in eastern Mongolia.
The AIM-traded firm said Red Deer-1 had been drilled with Daton Petroleum Engineering and Oilfield Service's 'Rig DXZ1' to a total depth of 2000 metres.

It said no hydrocarbon bearing zones were identified during drilling, which was confirmed with wireline logs.

The well would now be plugged and abandoned.

Petro Matad added that the Lower Tsagaantsav primary reservoir target was encountered at 1632 metres - 30 metres shallower than the pre-drill prognosis - and comprised a thick interval of good quality sandstones interbedded with claystones.

Drilling gas values remained low throughout, with no increase and no significant oil shows observed upon entering the reservoir target.

The company said petrophysical analysis of the wireline log data confirmed the absence of hydrocarbons.

Analysis of drilling gas data suggested the presence of potential source rocks shallower in the drilled section, but the firm said the absence of significant oil shows indicated that those source rocks were not fully mature for hydrocarbon generation in the vicinity of the Red Deer prospect.

The board said well abandonment operations were now beginning, and upon completion the rig would move out and the well site restored to its pre-drill condition.

Petro Matad confirmed the well was drilled on budget, with a total cost of less than $4m (£3.23m).

In the northern part of Block XX, at Heron-1, the company said the casing operation had been completed and the well temporarily suspended.

Mobilisation of testing equipment would now begin, and testing operations were expected to start in early October and be completed during that month.

DQE's 'Rig 40105' had been moved from Heron-1 to the Gazelle-1 well site, where it was in the process of being rigged up.

The spud of Gazelle-1 was forecast before the end of September.

Petro Matad said the start of testing operations on Heron-1 and drilling operations at Gazelle-1 would be announced in further updates to shareholders.

"While the results of the Red Deer-1 well are disappointing, it was the first well to be drilled in any of the basins located in the south of Block XX and it therefore carried a lower chance of success than the wells in the north," said Petro Matad executive chairman Mike Buck.

"The company's activities are now focussed on drilling and testing operations in the north of Block XX and we look forward to updating the market further on the spudding of Gazelle-1 and the testing on Heron-1."