Petro Matad, the AIM quoted Mongolian oil explorer, provides a summary of the results from its Wild Horse 1 well and an operational update:
Wild Horse 1, Block IV
The Wild Horse 1 well, drilled in the Baatsagaan Basin within Petro Matad's 100% owned and operated Block IV, has reached total depth (TD) of 1,490 metres MD in granitic basement.
In line with the pre-drill prognosis, the well encountered interbedded sands and shales throughout the prospective section from 650 metres to TD but no oil shows were observed.
The first objective drilled in the well comprised a c.250 metre thick sequence of porous sands and interbedded claystones. Background drilling gases from C1 to C4 were observed in this interval and are believed to be of thermogenic origin. The prospectivity of this interval within other trap geometries in the basin will be evaluated as a priority.
At the second objective only thin sands were developed within an overall claystone interval containing both carbonaceous material and thin coals which may be indicative of the presence of potential source rock material in the well.
The third objective was not present due to the shallower than prognosed penetration of basement. Basement had been prognosed at a depth below 2,000 metres at the well location based on interpretation of high-resolution gravity and magnetic data. Wild Horse 1 provides the first well tie to the seismic database in Block IV and the seismic will now be reinterpreted to better understand the basement and basin configurations.
Post-well analyses will focus initially on determining the ages of the formations drilled and the reservoir and source rock potential. Further work on the surrounding prospectivity in the Baatsagaan Basin will depend upon the source rock potential and maturity that can be determined from these analyses. Elsewhere in Block IV, a number of other basins have been evaluated and the information provided by Wild Horse 1, particularly in terms of the ages of the formations present and their correlation with the proven productive basins to the south in northern China will help determine the next steps in exploring the area.
The Wild Horse 1 well will now be plugged and abandoned and the post well evaluation will commence. The rig and crew have operated well through the onset of winter in Mongolia and the 2018 drilling programme in Blocks IV and V has been completed within budget. The Company's current cash balance is more than $25 million and so the Company is fully funded for the 2019 drilling programme.
Planning for 2019 drilling programme
Work is progressing on the post-well evaluation of the Snow Leopard 1 well in Block V which provided good evidence of a working petroleum system in the Taats Basin. This work has high-graded a group of prospects on the southern flank of the basin which have significant resource potential and these are being worked up as potential candidates for 2019 drilling.
Meanwhile, the final drilling permits for the large Fox prospect are being secured. The Company continues technical work, incorporating the results of Snow Leopard 1 with existing seismic and other data and this work will determine the preferred drilling target and scheduling for 2019 drilling in Block V.
A number of bids have been received from contractors wishing to supply the rig and drilling services for Petro Matad's 2019 drilling programme. It is planned to complete contractual negotiations as soon as possible to give plenty of time to prepare for the commencement of drilling as early as possible in 2019 when the weather permits.
A three well programme is planned in Block XX focusing on near field exploration and appraisal drilling. The Gazelle 1 well, which is the first of the Company's lower risk exploration appraisal wells, is currently planned to spud early in the second quarter, weather permitting. Gazelle 1 will target a lookalike structure to Petro China's best producing field in Block XIX which is only 12 kilometres to the northeast. Red Deer 1, which is located in the southwest of Block XX and will target 48 MMbo of Prospective Resources, will be the second well. Seismic reprocessing and reinterpretation is underway to determine which of the prospects adjacent to the Petro China acreage will be the third well in the programme. Drilling permits are already in hand for all the northern prospects and permitting on Red Deer is well advanced with no expectation of any delays.
Unlike the frontier nature of the drilling in Blocks IV and V, the exploration targets in Block XX are located in basins that are either the continuation of proven producing areas or are adjacent to proven basins where the stratigraphy and the petroleum systems are well understood. Two of the high graded prospects in northern Block XX have actually been drilled and proven to be oil bearing across the lease line in Petro China's Block XIX. As such, the Block XX drilling campaign will focus on targets with good chances of success and with resource potential that offer excellent development economics and the possibility of rapid commercialisation in the event of success.
Mike Buck, CEO Petro Matad said:
"The Wild Horse 1 result is clearly disappointing but this was too big a structure to leave undrilled. We will use the data gathered to re-evaluate the Baatsagaan Basin and to look again at the prospectivity in the other basins in Block IV.
As we are fully-funded for the 2019 drilling programme, we are now in the process of identifying our priority targets. In Block V, our post-well analysis has highlighted three, four-way dip closed structures with large resource potential which we are working up to drillable status and we are also using Snow Leopard 1 data to calibrate the prospectivity in the neighbouring Tugrug Basin, including the high-graded Fox prospect.
Preparations for 2019 drilling operations in Block XX in the east of Mongolia, adjacent to the country's producing oil fields, are well advanced and will focus on near field and appraisal targets. We look forward to continuing our drilling campaign and to delivering success through the drill bit."