Petro Matad has announced results from Gazelle-1, the final well in its three-well drilling campaign in Block XX, Eastern Mongolia. The well did not encounter hydrocarbons in the Lower Tsagaantsav objective and found a thin good quality pay zone in the Upper Tsagaantsav. We valued Gazelle at 1.4p/share (out of our total 20.1p RENAV for Petro Matad). The company’s operational focus will now switch to testing the successful Heron-1 well, which established a 77m gross oil-bearing interval in a structure that has proven productive in the adjacent Block XIX.
The Lower Tsagaantsav reservoir was encountered 20m deeper than prognosed pre-drill, at 2,280m, and the interval was dominated by shale with no hydrocarbon pay identified on logs. The Upper Tsagaantsav was also found to be predominantly shale prone, though there were good wet gas shows recorded during drilling and three metres of good quality sandstone were identified on logs.
Gazelle-1 was targeting 13mmbbls but was also testing the potential for material stratigraphic traps in the southern extension of the Tamsag Basin. The Upper Tsagaantsav reservoir results support this theory and will be the focus of the post well evaluation.
Petro Matad is now focusing on the testing of Heron-1, which is progressing on schedule. Plans to drill in Block V in Western Mongolia in 2019 have been postponed due to the additional expenditure involved in the testing of Heron-1 as we had previously anticipated.