Mongolian oil explorer Petro Matad (LSE:MATD) was down 0.52pc to 5.8p on Thursday morning following the release of update on its 2019 drilling programme.
The business is planning to drill four wells at its Block XX asset this year on prospects called Heron, Gazelle, and Red Deer. It is also planning a further exploration well at its Block V site or the appraisal of a discovery at Block XX.
The business said that environmental permits for drilling at Heron and Gazelle have now been approved and are being amended to allow appraisal wells to be drilled in the event of success. It added that the environmental permit for its Red Deer Prospect has been approved, and includes a provision for an appraisal well in the event of success.
Meanwhile, the company’s corporate social responsibility team has been mobilised to local communities near to planned wells. So far, it has found that citizens and herders are supportive of its drilling plans.
Elsewhere, Petro Matad said it has received approval from Mongolia’s industry regulator for a two-rig strategy this year. It is currently in the process of finalising a contract with chosen drilling contractors to secure a shallow-rated rig suitable for its Red Deer and Raptor prospects. It is also working to secure a deeper-rated rig suitable for the Heron, Gazelle, and Fox prospects.
The business said the additional costs of its two-rig strategy will not be significant. However, it will enable the business to drill simultaneously. This improves the possibility that its Block XX drilling programme can be completed early enough in the 2019 drilling season to allow for appraisal drilling to immediately follow any success.
It could also facilitate an earlier move of one of its rigs to its Block V asset, mitigating the possibility of operations there running into the winter period.
Petro Matad expects its first spud to come in Q2 2019 at Heron. Here, the business has enjoyed a more than 50% resource uplift to 25 MMbo from 16 MMbo following mapping of reprocessed 2D seismic. Analysis indicates that the Heron Prospect is the southerly extension of a proven oil-bearing structure drilled in Petro China’s adjacent Block XIX.
Mike Buck, the CEO of Petro Matad said: ‘The Company has made good progress since the last operational update. I’m particularly pleased with the results of the northern Block XX seismic reprocessing which has significantly improved the mapping and structural definition of the Heron and Gazelle Prospects and has increased our resource estimate for Heron. As the first well in the programme, Heron 1, is an appraisal of a discovery made in Block XIX, the probability of encountering hydrocarbons is good.
‘The two-rig strategy further enhances the ability to appraise any discoveries made in the Block XX 2019 programme and the Raptor trend in Block V is also showing encouraging signs of prospectivity. We are well placed to commence drilling in Q2 and look forward to providing further updates.’