(Alliance News) - Petro Matad Ltd on Tuesday reported disappointing drilling and logging results for the Red Deer-1 exploration well located in the south of block XX, eastern Mongolia.
Petro Matad shares were trading 20% lower on Tuesday in London at 5.41 pence each.
The Mongolian oil explorer said Red Deer-1 has been drilled with Daton Petroleum Engineering & Oilfield Service LLC's rig DXZ1 to a total depth of 2,000 metres.
No hydrocarbon bearing zones were identified during drilling and this has been confirmed with wireline logs. The well will therefore be plugged and abandoned.
Well abandonment operations are now beginning and upon completion the rig will move out and the well site will be restored to its pre-drill condition.
Turning to the northern part of block XX, at Heron-1, the casing operation has been completed, Petro Matad said, and the well has been temporarily suspended.
The company intends to start mobilisation of testing equipment shortly and testing operations are forecast to begin in early October and to be completed during the month.
The rig 40105 has been moved from Heron-1 to the Gazelle-1 well site where it is in process of being rigged up. Spud of Gazelle-1 is anticipated before the end of September.
"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," explained Chief Executive 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," added Buck.
Petro Matad (MATD)