Petro Matad publishes operational update for Mongolian mines

AIM-listed mining company Petro Matad has published an operational update on three PSC licenses that it holds in Mongolia.Hydrocarbon generating potentialThe company reported that nine major sub-basins had been identified in areas defined as "Blocks IV" and "Block V" and further high-graded for their exploration potential in the same blocks.Conventional parameters for calculating the possible amount of hydrocarbon generation, only from the syn-rift source rocks that could have taken place and been trapped, indicated the possibility of more than a billion barrel oil in place potential in the frontier area, Petro Matad reported.From scout data, Petro Matad reported that it understood that Daqing - a subsidiary of Petro China- had recently drilled two new wells very close to the Block XX boundary, both of which had been brought into production.One was 400 metres from the boundary between Blocks XIX and XX and Petro Matad stated that this well had possibly drilled a structure interpreted as continuing into Block XX.Inadequate seismic coverageThe company stated: "This well has possibly drilled a structure interpreted as continuing into Block XX. Unfortunately we cannot confirm this mapping unequivocally because of inadequate seismic coverage. We may need to conduct a 3D seismic survey to de-risk the interpretation of the area prior to any drilling."The company added that the current Petroleum Law in Mongolia contained no provision for the unitisation across block boundaries.Oil shaleA major oil shale deposit was also recognised in Block IV, the company reported, but added that "the technology for economic development of such resources is unproven at present". The company's strategy is to maintain ownership of the resource at minimal cost while monitoring technology developments elsewhere.Petro Matad's share price was down 9.09% to 6.25p at 11:24 on Thursday morning.MF