Petro Matad Sees Traces of Oil in Mongolia

Petro Matad provided an update on the progress of the Davsan Tolgoi-1 ("DT-1") exploration well.

DT-1 is currently drilling with oil shows in what is interpreted to be the Lower Zuunbayan Formation. The good to fair hydrocarbon shows were encountered on 12 July 2010 at 1,075m measured depth, in an 8 meter-thick sandstone zone near the top of the Lower Zuunbayan Formation. Drilling has temporarily paused at 1,093m for a bit change.

DT-1 is the first exploration well to be spudded as part of Petro Matad's 2010 drilling program on its Production Sharing Contract on Block XX in Eastern Mongolia, one of three PSCs owned and operated by the Company in Mongolia. The well was spudded on 23 June 2010 as the initial test of the Davsan Tolgoi prospect on Block XX. The planned total depth is 1,440m.

No testing is currently scheduled to be undertaken in this horizon and drilling operations are continuing with the Company anticipating to reach total depth within the next week to ten days.

Commenting on the drilling report the Company's CEO, Douglas McGay, said "These shows are encouraging because the Lower Zuunbayan and Upper Tsagaantsav formations are considered secondary objectives for this well. The well is currently 22m high to the 3D seismic prognosis toward the deeper Lower Tsagaantsav Formation that remains the Company's primary objective for DT-1. We believe the occurrence of hydrocarbons above the primary objective is both encouraging and significant.

"Drilling is progressing well and we look forward to providing a further announcement in due course."