Petro Matad Regulatory News (MATD)

Petro Matad Limited ("Petro Matad" or the "Company")

Operational Update

Petro Matad is pleased to provide an update on its operations, results of the interpretation of the 220 kms of seismic acquired over Blocks IV and V in November 2013 and the continuing farmout process.

In Block IV, 65 kms of seismic were shot overa thrusted anticlinal feature seen on a single east - west seismic line in the western part of the Block. The new seismic confirms a three way dip closure on the downthrown side of major strike slip fault with possible recoverable reserves of 60 to 100 million barrels oil. A smaller, but a well imaged, more robust four way dip closure with possible reserves of about six million barrels can also be mapped within this overall fault prospect.

In Block V, 155 kms of seismic were shot over a large faulted anticlinal area mapped on existing seismic. Unfortunately, the new seismic indicates that the section continues to rise towards the northeast boundary fault that forms the basin margin. There is a closure against this basin margin but the relatively shallow depth of this closure makes it relatively high risk.

However, the 2013 seismic has shown two new fault traps in the deepest part of the sub-basin in Block V. One is a tilted fault block, interpreted as a rotated (low angle) normal fault. The second is a closure in the footwall of a reverse fault. Both these leads have robust closures. They also lie within the present-day Syn-Rift source kitchen so migration and timing are considered low risk. Although both prospects are relatively small with possible recoverable reserves of 22 to 24 million barrels oil, either location would be excellent candidates for testing the potential of this Tugrug sub-basin in terms of reservoir quality and source potential.

There are no oil exploration wells and only limited seismic coverage in Central - Western Mongolia so these are the first drillable prospects identified in this frontier area. Both can be considered as locations for possible basin opener wells that will advance significantly knowledge of and confidence in the hydrocarbon potential of the area.

Further details on these prospects can be found in the Investor Section of the Company's website.

We are confident that there are many other similar basin areas and prospects within the Company's acreage. Unfortunately, the existing seismic coverage over most of Blocks IV and V and the southern half of Block XX is limited and hence insufficient to confirm this expectation. We are therefore looking at other technical alternatives to high grade our acreage. One such technique is airborne full tensor gravity gradiometry (FTG) which has been used successfully in other onshore areas such as Africa.

The objectives for a combined FTG and high resolution aeromagnetic (HRAM) survey would be to produce a preliminary map of the subsurface structures, basement architecture and sediment thickness in the frontier areas of Blocks IV, V and XX where there is currently little or no seismic. As this is an airborne survey it is able to cover a much larger area faster and more cheaply than conventional seismic. The results of the FTG survey can then be used to guide the structural interpretation where there is limited seismic coverage and target where best to acquire follow-on seismic data for prospect definition.

Alongside this activity, we have continued our efforts to seek a farm-in partner. Petro Matad's presentation and participation in the recent APPEX conference has generated renewed interest from a number of companies with whom discussions and meetings continue. Several of these have shown a high level of interest, but to-date no agreements have been reached and finalising a farm-out agreement could yet take some time.

With this in mind, the Directors of Petro Matad have agreed a number of measures to preserve cash resources and maximise the funds available for operational activities. In particular, the Non-Executive Directors have agreed unanimously that for the next six months they will forgo their usual director fees and in lieu of a cash fee will receive conditional share awards. In addition, the Executive Directors and certain employees at their own volition have also opted to trade a portion of their salary to participate in the same conditional share award programme. The European Bank for Reconstruction and Development ("EBRD") representative director, Mary Ellen Collins, will be forgoing fees even though no conditional share awards are being issued to her or the EBRD.

The conditional share awards have been issued under the Company's existing long term equity plan. The conditional share awards will vest on 1 October 2014 and participants have a maximum of one year to exercise these awards for an exercise price of 1 US dollar cent per Petro Matad ordinary share. An aggregate of 5,229,255 conditional share awards have been awarded and the table below sets out the 3,675,536 conditional share awards that have been issued to the Company's directors.

The Petro Matad Board has also implemented a number of structural changes to the operational structure of the Company, with resources being focused on a core team to support the technical studies associated with the farm-out effort, maintain relations with government and maintain the financial and administrative governance of the Company. The Company's cash position at 31 March 2014 was USD 2.35 million which, with the steps taken, is more than sufficient to maintain the Company as a going concern. The Company continues to enjoy the support of its largest shareholder in these efforts.

Although there can be no guarantee that a farm-out deal will be forthcoming, the board believes that these actions display significant confidence in the Company's prospects and its future.

Technical information in this news release has been reviewed by Mr Justin Tully. Mr Tully is Petro Matad's Exploration team leader. He has an MSc in Structural Geology and 10 years' experience in frontier exploration as a Petroleum Geoscientist. He is a member of the American Association of Petroleum Geologists, Geologic Society of America and Rocky Mountain Association of Geologists.

About Petro Matad Limited

Petro Matad is the parent company of a group focussed on oil exploration, as well as future development and production in Mongolia. The Group holds the sole operatorship of three Production Sharing Contracts with the Government of Mongolia. Block XX has an area of 10,340km² in the far eastern part of the country. Blocks, IV and V are located in central Mongolia. Block IV covers approximately 29,000km² and Block V approximately 21,150km².

Petro Matad Limited is incorporated in the Isle of Man under company number 1483V. Its registered office is at Victory House, Prospect Hill, Douglas, Isle of Man, IM1 1EQ.

Further Information:

Petro Matad Limited

George Watkins, Chairman

+976 11 331099

NOMAD and Broker

Westhouse Securities Limited

Richard Baty / David Coaten

+44 (0)20 7601 6100