Petro Matad Mulls Stimulation Program at DT-8 Well

Petro Matad provided an update on its operations at its Davsan Tolgoi Project, part of the Company's Production Sharing Contract (PSC) on Block XX in eastern Mongolia.

The Company has completed the analysis of the initial test results for the Davsan Tolgoi 8 well (DT-8). The DT-8 well did not flow under natural pressure and Petro Matad is considering a stimulation program to enable further assessment of the well and local reservoir.

Testing of DT-8 was conducted from 15-28 September 2011. Two zones in the Uppermost Tsagaantsav Formation were tested, including a primary test objective between 1,711m and 1,720m and a secondary interval from 1,773m to 1,779m. Limited oil and water analyses were received on 14 October 2011.

A small amount of oil and water was recovered from the 1,711m-1,720m primary zone. Pressure build-up data indicates low permeability for the zone with some permeability impairment from exposure to drilling fluids. These results are being compared to initial flow results for other low permeability and fluid-sensitive Tsagaantsav reservoirs in the region.

The presence of oil in this zone and the petrophysical log characteristics support consideration of this zone as a candidate for future stimulation.

No formation fluid was recovered from the deeper secondary test interval between 1,773m and 1,779m. Pressure build-up data indicates that this interval is tight and the interval is not being considered for stimulation.

Petro Matad CEO Doug McGay said "The DT-8 test is a continuation of Petro Matad's initial assessment of the flow characteristics of Tsagaantsav reservoirs. We are finding that the completion characteristics of both the Uppermost and the Lower Tsagaantsav reservoirs are similar to neighboring producing areas where fracture stimulation is needed to overcome the permeability challenges associated with fluid-sensitive clay and volcanic-derived cements in these complex reservoirs."