Petro Matad Updates Ops in Mongolia

Field season exploration operations have been almost completed on Petro Matad's Block IV and V Production Sharing Contract (PSC) areas in central Mongolia. The Company provided a progress report on those operations.

Summary

The Company's 2011 exploration program in Blocks IV and V consisted of stratigraphic core drilling, 2D seismic acquisition and field geology operations. Results of those activities have provided the first documentation of live oil and active oil migration in central Mongolia, and permit extrapolation of a viable hydrocarbon system along the 550km length of the "Valley of the Lakes" basins in Blocks IV & V. When combined with the 24,000 stations of gravity data acquired in 2010, the expanded seismic network has delineated a robust inventory of fold, fault and unconformity traps which will focus the Company's delineation of future drill targets.

Blocks IV and V consist of a linked system of Jurassic through Cretaceous rift basins that contain the same lacustrine and deltaic source, seal, and reservoir sequences that produce oil in similar basins throughout Central and Northeast Asia. The Block IV and V rift basins are located beneath the modern "Valley of the Lakes", where Cenozoic strike-slip faulting and local contractional folding have enhanced the trap potential compared with the producing basins of eastern Mongolia.

Highlights from the exploration program include:

• Confirmation of oil generation and migration in the Tugrug Basin of Block V
• Documentation of thick, rich oil shale source rock throughout Blocks IV & V
• Identification of favorable reservoir characteristics in core and outcrop
• Acquisition of 1,842 km of 2D seismic data for the two Blocks in 2011
• Delineation of approximately circa 6,700km2 of potential oil generation kitchen areas within the two Blocks
• Preliminary identification of multiple anticline, fault, and unconformity trap leads within and adjacent to kitchens

Ongoing activities include:

• A second, 1,600m deep stratigraphic core hole is being drilled by Major Drilling in the Biger Basin (Block IV)
• Ongoing interpretation of seismic and other work will continue over winter
• Further 2-D seismic planned in 2012
• Possibility of exploration drilling in 2012, subject to the results of the seismic studies and budget approval