Petro Matad CEO Mike Buck joined Steve Darling from Proactive to announce that the Company has mobilized equipment and crews for well testing operations on the Heron-2 well. Downhole work has already commenced, with testing activities designed to evaluate the reservoir’s commercial potential.
The program begins with an acid wash over the reservoir interval, followed by a retest of the well. This initial testing phase is expected to last approximately 20 days. Should the well demonstrate a commercial rate of oil production, it will be completed as a producer, and the Company will move quickly to install production facilities, targeting first oil before the end of 2025.
If the test does not confirm commercial production levels, Petro Matad plans to proceed with a water injectivity test. This would determine whether Heron-2 could serve as a water injector well, providing valuable reservoir pressure support to enhance production performance at the adjacent Heron-1 well.
Buck explained that upon completing operations at Heron-2, equipment will be mobilized to the Gazelle-1 location for well testing scheduled in the second half of September, followed by testing at the Gobi Bear-1 well.
The CEO also addressed recent regulatory developments, noting that Petro Matad has been in ongoing discussions with both the Mineral Resources and Petroleum Authority of Mongolia and the Ministry of Industry and Mineral Resources regarding delays that occurred after the award of the Block XX Exploitation Licence in July 2021. Land access was only secured in May 2024, significantly impacting timelines. In recognition of this, MIMR has now granted Petro Matad a three-year extension to the Exploitation Licence.
This extension has important financial benefits: it also prolongs the five-year customs duty holiday on imported goods and equipment by three years, which is expected to yield significant cost savings on future operations.
On the financial front, Petro Matad confirmed receipt of approximately $320,000 in payments for oil sales in May and June from PetroChina and the and the July payment is now being processed. However, PetroChina has continued to withhold 30% of the invoiced amounts, citing ongoing tax concerns with Mongolian authorities regarding the oil sales agreement. The Company has also submitted its July invoice and is actively pushing for full payment under the terms of the signed agreement.
Buck emphasized that with well testing now underway and regulatory clarity improving, Petro Matad is well-positioned to accelerate development across Block XX, with the potential to bring new production online and strengthen cash flow in the near term.
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