Source: oilbarrel.com                      Date: 21 June, 2011

After a run of four successful wells it was perhaps inevitable that Petro Matad, the AIM-quoted explorer focused on the little-drilled emptiness of Mongolia, would drill a less-than convincing hole.  The company’s fifth well, DT-5, was drilled to test a portion of the paleovalley-filling Uvgan Gol horizon on Block XX in Eastern Mongolia. Disappointingly, the horizon consisted of non-reservoir shales and tight sandstones, which is a blow given the company’s excitement about this new stratigraphic play in the wake of the latest seismic review in March. This is only the company’s first attempt to deliberately drill this section, however, and future wells may prove more successful.

But DT-5 also failed to put in a convincing performance in the known Lower Tsagaantsav formation, finding just three meters of net pay.  This zone will be tested later but because of low porosity and permeability will require stimulation to flow.  Chief executive Douglas McGay took the positive view that this the fifth well in the program to yield a testable zone but investors were disappointed by the result, which shows the Uvgan Gol paleovalley fill varies from the high porosities and permeabilities seen in DT-1 and DT-2 to the low porosity and permeability seen in DT-5.

Yet this is no surprise.  Mr. McGay pointed out that the block immediately to the north, Block XIX operated by Chinese oil company Daqing Oilfields, which has been aggressively drilling up the acreage, has also shown that the reservoirs in the Tamsag Basin are not uniform.  “We have always expected to see variations in well results during the exploration phase,” said Mr. McGay. “It is gratifying to see the presence of hydrocarbons in the Lower Tsagaantsav formation continuing to be relatively predictable."

Isle of Man-headquartered Petro Matad has now spudded the DT-6 well, which is being drilled to a TD of 2,100 meters some 2.3 km south-southeast of DT-1.  The well will test a very thick section of the Tsagaantsav formation, including 234 meters of the Uvgan Gol horizon and 364 meters of the underlying Lower Tsagaantsav formation.