Petro Matad Ltd (MATD)

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Petro Matad’s chances to find commercial oil on Block XX boosted - Westhouse
Wednesday, July 14, 2010

Broker Westhouse responded to Petro Matad’s (LON:MATD) discovery of oil shows in its Davsan Tolgoi-1 well in Mongolia, calling it “excellent news” as it indicated that oil migrated into Block XX, probably from Block XIX to the north, which is the location of Petro China’s oilfields.

In its Daily Oil & Fas Filter report, Westhouse said this means that even if the well is unsuccessful in finding commercial quantities of oil, there is a a good chance that such quantities will be found elsewhare on the block.

The well was the first to be drilled as part of the 2010 drilling programme on Block XX in Eastern Mongolia. Drilling has temporarily paused at 1,093 metres for a bit change and it will subsequently continue to a depth of 1,440 metres with no testing scheduled at the current horizon.

The news was reported yesterday, causing the shares to soar 49%. Westhouse, however, stated there was still much upside to the company’s current value.

The report stated that the main horizon could hold 122 million barrels on a P50 basis with an independent analysis rating the chance of success at 37%. Westhouse calculated NPV (net present value) on success at US$971 million, or 421 pence per share compared to the company’s current share price of 93 pence per share.

Petro Matad is the parent company of a group focused on oil exploration, as well as future development and production in Mongolia. The group holds the sole operatorship of three PSCs with the government of Mongolia. The principal asset is the PSC for Block XX, a petroleum block of 14,250 sq km (square kilometres) in the far eastern part of the country. The two other blocks, IV and V are located in central Mongolia and jointly cover 73,498 sq km.

Shares in the company were up a further 6% in late morning trade.

Source: http://www.proactiveinvestors.com/companies/news/6987/petro-matads-chances-to-find-commercial-oil-on-block-xx-boosted-westhouse-6987.html