Wild Horse-1 was drilled within budget but failed to find hydrocarbons in the Baatsagaan Basin, Mongolia. Petro Matad (MATD) believes thin coals within the well’s secondary objective could be indicative of source rock, which is to be confirmed through post-well analysis. MATD retains $25m in cash and is fully funded for its 2019 well programme, which includes three lower-risk wells on Block XX. Our RENAV of 26.6p/share post Snow Leopard-1 would fall to 12.3p/share (- 54%) after removing Wild Horse-1 (pre-drill 9% chance of success and 480mmbo P50).
The Wild Horse 1 well drilled in the Baatsagaan Basin reached a total depth of 1,490m in granitic basement. The well encountered interbedded sands and shales but no oil shows were observed. The first objective comprised of a 250m sequence of porous sands and interbedded claystones; during drilling background gas was observed, which MATD believes is of thermogenic origin. At the second objective only thin sands were developed; management believes that thin coals within this sequence may be indicative of source rock. Lastly, the third objective was not present due to the shallower than prognosed basement at 1,440m.
Post well analysis is to focus on lithology and source rock potential in the Baatsagaan Basin. MATD’s post-well analysis of Snow Leopard-1 in Block V has shown evidence of a working petroleum system that has high graded a group of prospects on the southern flank of the basin, which could add to prospect inventory for 2019. MATD retains over $25m in cash so is fully funded for a planned 2019 drilling programme that includes three lower-risk wells on Block XX.