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(Alliance News) - Petro Matad Ltd on Monday announced "encouraging" results from the Heron-1 well at block XX in Mongolia.
Shares in Petro Matad were up 7.5% at 8.20 pence in London in morning trade.
The well was drilled to a depth of 2,950 metres and encountered its primary target, the lower Tsagaantsav reservoir, at 2,805 metres. This was 5 metres shallower than expected.
Oil and gas shows were recorded over the interval and Petro Matad said "the gross reservoir interval in Heron-1 appears to be very similar to the productive reservoirs found in oil wells immediately to the north in block XIX."
According to Petro Matad, wireline logs have been acquired and analysed and indicate a 77 metre gross interval of possible oil reservoir, with three zones and a total gross thickness of 22 metres.
Petro Matad will now run casing to prepare for a testing programme and the company is in talks with its testing contractor to see how wuicklu equipment can be moved to the location of Heron-1.
While the contract does require a 30 day notice period, "the contractor has advised that an earlier start is possible depending on the status of its other activities".
Once Heron-1 has been suspended, the drill rig will then move to spud Gazelle-1 by September end.
Petro Matad Chief Executive Mike Buck said: "The results of the Heron-1 well are encouraging. Along with the well and wireline logging data being consistent with our pre-drill prognosis, there is also evidence of zones with better than expected porosity/permeability characteristics. The well will now be tested and we are pushing the contractor to mobilise equipment as quickly as possible. Further updates will be provided in due course."
