(Alliance News) - Petro Matad Ltd on Monday said the Red Deer-1 exploration well in the Asgat Sag basin of block XX in eastern Mongolia was spudded on Sunday.
The AIM-listed oil exploration company said the well is being drilled with the Daton Petroleum Engineering and Oilfield Service LLC rig, DXZ1.
Drilling at the Red Deer-1 well is targeting a prospect with 48 million barrels of oil and is planned to be drilled to a total depth of 2,100 metres. The well is expected to take up to 35 days to complete. In the event of a discovery, Petro Matad said it will bring in a separate rig for testing.
Meanwhile, at Heron-1, the first casing point at 551 metres was reached on schedule and casing has been run and cemented, Petro Matad said.
However, the provincial government has challenged Petro Matad's legal right to use the land at Heron-1 on the basis that a tripartite agreement between two central government agencies and the province has not been executed. In turn, Petro Matad said it has followed the land permitting regulations as required across all of its operations.
The rig at Heron-1 has been put on standby whilst the situation is resolved, the company noted.
"All efforts are currently directed at fixing this interruption as quickly as possible in order to minimise rig standby costs," Petro Matad said in its statement Monday. "The Red Deer-1 well is located in a different province to that in which Heron-1 is located and has not been affected."
Petro Matad shares were trading 19% lower on Monday in London at 6.4 pence each.
Petro Matad (MATD)