News: August 16, 2012 Petro Matad Discards Its 2012 Drilling Programme To Make Preparations For A Successful 2013 Season
For larger companies with a wide range of assets and a successful history, an exploration disappointment can be quickly forgotten with new drill results, development progress and higher production moving the market’s attention on to something else. Junior companies, operating on threadbare budgets with fewer assets and opportunities to correct its mistakes, are forced into a state of extended purgatory and it is here Petro Matad has existed since it met stubborn resistance at Davsan Tolgoi in 2011. The company is obviously more cautious now and there have been several management changes since its review of the 2011 drilling programme, but Davsan olgoi retains its allure and Petro Matad is far from giving up on the licence just yet.
Davsan Tolgoi is located in Block XX in Eastern Mongolia which overlays the Tamtsag basin – a basin it shares with the adjacent and producing Tolson Uul Oil Field. The earlier unsuccessful drilling took part in one area covering approximately 100 square kilometres, so with literally thousands of square kilometres as yet unexplored Petro Matad still believes it can strike black gold.
After discussing plans with its recently employed consultants RISC, Petro Matad has suspended any drill plans for the rest of the year in the hope of developing a more balanced and lower risk exploration drilling campaign for 2013. The company expects to do this through the use of both basin specific and wider studies, including defining hydrocarbon play fairways and re-processing / interpreting some key seismic lines. However, earlier use of geochemical data and structural mapping has indicated a significant area of hydrocarbon maturity in the area west of Davsan Tolgoi (West Tolgoi) and on trend with Tolson Uul to the north. A second smaller area of potential hydrocarbon maturity east of Davsan Tolgoi (East Tolgoi) was identified and current seismic mapping is being focused on confirming these leads as potential drill targets.
The Lag Nuur thrust fault play even further to the east has also shown promise, and after further study, will likely figure in the options for drilling next year.
Blocks IV and V are located together in the Valley of Lakes region of Central Mongolia. The area is well and truly frontier country in a hydrocarbon exploration sense with such programmes having previously been virtually non-existent. Both blocks have oil potential with Block V having seen more activity in the form of surface / subsurface sampling, the drilling of a core hole, and seismic having revealed two major basins (Taatsiin Tsagaan Nuur and Tugrug) each 30-35 kilometres wide. Additional studies are now scheduled, leading up to the running of further seismic in the winter months, and an initial drill programme next year.
Where Block V has attracted more attention on its conventional targets, the roles are reversed for their oil shale potential with the Khoid Ulaan Bulag (KUB) target on the southern boundary of Block IV having shown the most promise of the 14 currently known occurrences of oil shale. Two shallow core holes were drilled on KUB with assay results indicating the high and potentially commercial values of organic content and yieldable hydrocarbons. A 50 kilogram sample has been sent to a batch retort testing facility in Colorado, USA which will determine the quality and character of possible hydrocarbons, while preliminary studies have suggested both in-situ and ex-situ processing may be possible. The company has appointed a leading authority on oil shale (Dr Jeremy Boak) as its prime consultant, but Petro Matad CEO Douglas McGay is careful to point out that while “...the potential of the resource and the energy needs of the region compel us to continue evaluating it. The Company has taken care not to detract from its conventional oil exploration efforts in this and other Blocks”.
A new CFO, COO, exploration manager, IR/PR advisor and joint corporate broker are recent changes made by Petro Matad in an effort to more closely align its skill set with its project status, as well as improve communication with stakeholders. As its share price has shown, there is a lack of confidence in the company’s ability to achieve its goals. However, with fresh faces focusing on more manageable objectives, even the prospect of defining commercial resources in frontier land can become less daunting. Risky, yes, but also high reward, and the Petro Matad has the opportunity to banish the memories of its disappointing drill results of last year through the careful planning of a successful campaign next year.
AI
