Petro Matad Regulatory News (MATD)

Petro Matad Limited

("Petro Matad" or the "Company")

OPERATIONS UPDATE

Petro Matad is pleased to present the following operational update on the three PSC licences that the Company holds in Mongolia. Together, these licences cover a combined area of approximately 60,000 square kilometres. With no exploration drilling to date in Blocks IV and V, and with exploration drilling in Block XX restricted to the Davsan Tolgoi uplift (an area less than 1% of Block XX), this acreage represents a significant frontier exploration opportunity.

Since joining Petro Matad in August 2012 as Exploration Director, Ridvan Karpuz has led a core team to carry out the work required to develop an appropriate work program to explore the hydrocarbon potential of these three blocks in an efficient and cost effective manner.

The results of this work can be summarised as follows:

·; The prolific Junggar, Turpan and Erlian basins of China have been identified as structural and depositional analogues for Blocks IV and V

·; In-house basin modeling has been carried out to document source rock maturation and hydrocarbon generation

·; This work has resulted in an additional petroleum system being postulated for Blocks IV and V to complement those already established

·; Play fairway analysis indicates multiple play types

·; A number of independent leads have been mapped using existing seismic coverage in Blocks IV and V and prospective resources estimated for these leads

·; The prospectivity of Block XX has been re-evaluated based on re-interpretation of existing seismic data and previous exploration results

·; Mapping of Petro Matad seismic in Block XX and public domain data in Block XIX shows the structural trends that comprise the Tolson Uul oil fields in Block XIX extending into the north western part of Block XX

·; A number of basins have been identified in the southern part of Block XX which are similarly as unexplored as those in Blocks IV and V

The next step is to conduct regional and detailed seismic in 2013 to confirm these leads as drillable prospects and to identify other independent leads that undoubtedly exist within these large basin areas. A short term (two year) and long term (five year) work program has been established for this purpose that anticipates the drilling of four to six exploration wells in 2014 with a further two or three wells in each of the following three years. Any success would lead to additional appraisal and development drilling.

A summary of the conclusions from the technical work is provided below. Further details can be found on the Petro Matad website http://www.petromatad.com/live/

Technical Summary: Blocks IV and V

Nine major sub-basins have been identified and further high-graded for their exploration potential in Blocks IV and V.

Main source rocks have been identified and modelled for their generation potential:

·; The Lower Cretaceous syn-rift lacustrine facies (Sinhudag Formation) is proven in the study basins

·; The Upper Permian pre-rift lacustrine facies, although as yet unproven in the study basis, is postulated from seismic, outcrop data and analogous basins.

Based on modelling of basin burial and inversion history, the early Cretaceous source rock appears to have been mature for oil in the basin depocentres since the mid-Late Cretaceous, and has the capacity to source a number of plays. The oil window is calculated to be between 1,300 metres and 1,700 metres.

The late Permian source rock is estimated to have matured in the Triassic-early Jurassic but may have been impacted by early syn-rift inversion. These source rocks may be late maturity or cooked at the present day.

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, indicate the possibility of more than billion barrel oil in place potential in this frontier area.

Technical Summary: Block XX

Block XX contains two very different exploration opportunities. One is in the very north of the block adjacent to the Tolson Uul oil fields. The other comprises several unexplored basins in the central and southern parts of the block. Seismic interpretation shows that the structural style in these two areas is quite different which means that exploration data acquired in the north of Block XX has very little relevance to determining exploration potential elsewhere in the block.

In the northern part of Block XX immediately adjacent to Block XIX, basin modelling and maturation studies have established the primary kitchen for oil generation is limited to the deeper part of this basin area. Seismic mapping has also confirmed that the structural trends in Block XIX extend south into Block XX.

From scout data, we understand that Daqing (a subsidiary of Petro China) has recently drilled two new wells very close to the Block XX boundary, both of which have been brought into production. One is 400 metres from the boundary between Blocks XIX and XX. 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 current Petroleum Law in Mongolia contains no provision for unitisation across block boundaries.

Five main sub-basins have been identified on the reconnaissance 2D seismic in the frontier central and southern parts of Block XX. The size of the basins range from 250 to 620 km2. The sub-basins are aligned along NW-SE trending en echelon bounding faults. The Asgat basin is a half graben with a steep bounding fault. The Uvur Khundi basin is a deep basin bounded by a major listric fault and includes potential multiple leads. The Mogoit basin is a graben along the southwest margin of the block with a steep bounding fault. Gobiin Nuur Khgain Nuur sub-basins are shallow but extending regionally. Erdenetsagaan sub-basin is defined with gravity data, covering an area of 650 km2. This basin is the target for seismic acquisition to confirm the extend of the basin.

In the northern part of Block XX, Shorvog and Lag Nuur sub-basins are the main ones situated to the west and east of Tolson Uul basin extending from Block XIX. The Shorvog basin is a compound basin with en echelon fault patterns. There is historic documentation of hydrocarbons in this basin from Soviet drilling at shallow depths.

Seismic acquisition is planned for 2013 to further delineate these basins.

OIL SHALE

A major oil shale deposit is recognised in Block IV. However, the technology for economic development of such resources is unproven at present. Petro Matad's strategy is therefore to maintain ownership of the resource at minimal cost while monitoring technology developments elsewhere.

Technical information in this news release has been reviewed by Mr Ridvan Karpuz. Mr Karpuz is a Petroleum Geologist with over 20 years' experience in oil and gas exploration.

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 Joint Broker

Westhouse Securities Limited

Richard Baty / Petre Norton

+44 (0)20 7601 6100

Joint Broker

Macquarie Capital (Europe) Limited

Jeffrey Auld / Steve Baldwin / Nicholas Harland

+44 (0) 20 3037 2000