Mongolian oil and gas sector heats up23 Jul 2019 10:02
https://finfeed.com/features/mongolian-oil-and-gas-sector-heats/
The Mongolian oil and gas sector is attracting attention this month with two exploration companies embarking upon drilling programs. AIM-quoted Petro Matad (LON:MATD) could be on its way to delivering a Mongolian oil discovery in just over a month with the spud of its Heron-1 exploration well.
Projects are located along the Mongolia-China border and have potential to deliver much needed energy to the region. And interestingly, each of these companies have links to multinational oil and gas company
Petro Matad is currently spudding its Heron-1 exploration well, targeting a prospect with 25MMbo of ‘mean prospective recoverable resource’. MATD’s plan is to drill to a total depth of 3050 metres — taking up to 40 days to complete.
As it progressed towards last week’s spud, the now £55.76 million capitalised Petro Matad delivered shareholders a gain of approximately 375% over the last six months, an impressive increase since its December 2018 lows.
There could be more gains to come as the company progresses its exploration program.
Heron-1 is an appraisal of the T19-46 oil field immediately to the north in Block XX, and is being drilled by the DQE International 40105 rig.
The well is in the Tamsag Basin of Block XX — a PSC issued by the Mongolian government. Petroleum exploration and production in Mongolia are performed solely under a Production Sharing Contract (PSC), signed over each block between the investor and Government of Mongolia.
In the event of a discovery, Petro Matad will bring in a separate rig for testing. Once drilling operations are complete, the rig will move to the Gazelle-1 location, approximately five kilometres away. A call-off testing contract has been signed, meaning testing operations can commence soon after discovery.
The company's second contracted rig is being mobilised to the Red Deer-1 location with a spud targeted by the end of July.
Along with the 10,340km2 Block XX in the far eastern part of Mongolia near the Chinese border, the group’s assets consist of two other PSCs — the Bogd Block IV and Ongi Block V, which are adjacent to each other in west central Mongolia totalling approximately 50,000km2.
Petro Matad is Mongolia’s leading explorer, where PetroChina (the Shanghai-listed arm of state-owned China National Petroleum Corporation (CNPC)) operates 95% of production.
Back in 2015, the UK’s own BG Group entered into a farm-in deal with Petro Matad — a major vote of confidence in Mongolia. However, following Shell’s mega £36 billion acquisition of BG Group it had to slim down non-core assets so exited the region and the working interest held by BG Group reverted to Petro Matad.
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