Petro Matad Sees Increase in Davsan Tolgoi Prospect Resources



Petro Matad has completed a geological and geophysical reassessment of resources for the Davsan Tolgoi Prospect area of the Company's Block XX in eastern Mongolia and announced that the re-interpretation of existing seismic surveys has resulted in a notable increase in the resources of the Davsan Tolgoi Prospect and immediate environs ("the Focus Area"). The Focus Area is a 365 km2 area in the northeastern corner of Block XX.

Highlights

Following the Company's successful three well drilling program on the Davsan Tolgoi anticline in 2010, data and observations from those wells were utilized in a complete technical revision by Petro Matad of the previous 3D and 2D seismic surveys in the Focus Area. Highlights of the analysis include:

  • Revised inventory of 18 prospects and three leads
  • Additional 275 MMbbl unrisked and 211 MMbbl risked recoverable resource for prospects and leads in the Focus Area, compared to the previous (2009) inventory
  • Results greatly enhance the Company's understanding of the trapping mechanisms and reservoir characteristics
  • Discovery of a newly defined unit; the Uppermost Tsagaantsav Stratigraphic Play
  • Results will form the basis of Petro Matad's 2011 drilling program

Commenting on the results Petro Matad's CEO Douglas McGay said, "This re-defining of the Davsan Tolgoi Prospects has been another milestone for our Company. We are very pleased with the methodical and rigorous manner in which our professional team has applied the results of last year's successful drilling program to the re-interpretation of the seismic surveys. The discovery and definition of the new Uvgan Gol paleovalley prospects are very exciting and add a new dimension to resource definition in this region. In total, the results will form the basis of how the Company's 2011 drilling and exploration program in this portion of Block XX is planned and executed. The dramatic increase in the Company's resource inventory is also very welcome." 

Operational Update

Following the Company's successful three well drilling program on the Davsan Tolgoi anticline in 2010, data and observations from those wells were utilized in a complete technical revision of the previous 3D and 2D seismic surveys. Additional information was sourced from the partially completed DT-4 well and scout data from previous exploration and production in the general region carried out by others. The revision was carried out by the Company's technical team, led by Dr. James Coogan and Dr. Buyan-Arivjikh Davaa.

The Company's revised inventory comprises 18 prospects and three leads that are divided into three separate hydrocarbon plays. The total unrisked recoverable resource for all Prospects within the Focus Area is 293 MMbbl, with a risked recoverable resource of 225 MMbbl. In terms of unrisked recoverable resource, this represents an approximate tripling of what was previously postulated for Prospects at Davsan Tolgoi. 

The leads within the Focus Area provide an additional 145 MMbbl and 45 MMbbl of unrisked and risked recoverable resource, respectively. 

The above probable resource figures have been derived from a calculated 1.87 BBbl of oil-in-place in the Focus Area. The Focus Area comprises the 137 km2 3D seismic survey area that contained the previously announced main Prospect on the Davsan Tolgoi anticline and smaller closures such as Davsan Tolgoi West; plus an adjoining area of 228 km2 immediately to the east. The easterly extension has 2D seismic survey coverage of varying density. 

The new geological and geophysical results of the revision have provided a more complete understanding of critical play elements of the subsurface structure of the Focus Area. The results greatly enhance the Company's understanding of the trapping mechanisms and the reservoir characteristics for oil that was identified during drilling, logging, and subsequent petrophysical and sample analysis for DT-1, DT-2, and DT-3. This more complete understanding of critical play elements resulted in the significant revision to the Company's prospect and lead inventory for this Focus Area of Block XX.

The prime reason for the increase in the inventory is the discovery of a newly defined unit in the Focus Area, termed the Uppermost Tsagaantsav Stratigraphic Play. Previously the Company's Davsan Tolgoi Prospect resources were based solely on the Lower Tsagaansav Structural Play. In addition there is a minor new play termed the Upper Zuunbayan Structural Play. In summary, the Focus Area now comprises: 

  • The Lower Tsagaansav Structural Play
  • The Uppermost Tsagaansav Stratigraphic Play, and
  • The Upper Zuunbayan Structural Play.