Source: Petro Matad                     Date: 24 June, 2011

Petro Matad listed the following highlights as it released the company's annual report for the financial year ended December 31, 2010.

·                     5 wells to-date drilled on Davson Tolgoi each of which has encountered hydrocarbons

·                     Full drilling and testing program scheduled for Davson Tolgoi during 2011

·                     Exploration continues elsewhere on Block XX and on Blocks IV and V

·                     Headcount increased from 26 to 80 including in-house exploration and engineering expertise

·                     Broadened shareholder register with an aggregate of around USD54 million raised since last Annual Report.

Speaking on the occasion, CEO Douglas J. McGay said it had been “an eventful year”. The company welcomed the European Bank for Reconstruction and Development to its share register in February 2010.  A further, larger placing in September “has provided the funding to enable an acceleration of our exploration efforts”. The “most significant event for the company was the discovery of oil in our first exploration well” in Davsan Tolgoi, on Block XX in July 2010.  The Company completed a further two wells in 2010 and made significant progress on a fourth during 2010.

Well testing is scheduled to commence shortly on the five wells drilled to date.  The workover rig and testing equipment have been contracted to the end of calendar year 2011, and testing will continue on successive wells through the year.  The logistics of importing and operating the workover rig are well advanced, Mr. McGay said.

Operationally, the company made “great strides” with the recruitment of its exploration and engineering teams.  “We now have an in-house capability that would be the envy of oil exploration companies many times our size, with longer history and operating in more developed countries, he said.  Petro Matad's “prime focus since inception has been to progress the company's assets towards petroleum discovery, so as to add real value to the company.  To that end we have maintained our main office in Ulaanbaatar and recruited the aforementioned technical team to live and operate in country alongside their Mongolian colleagues,” said Mr. McGay.

The Corporate Division has been strengthened with the addition of three appropriately qualified Mongolian personnel. An international-standard environmental team has been established, with a Mongolian manager.  A Community Relations Manager supervises a very active and meaningful Social Action Program, ensuring that Petro Matad interacts positively with local communities.

Referring to “our flourishing relationship with our partner”, the Government of Mongolia, through the good offices of both the Ministry of Energy and Resources and the Petroleum Authority of Mongolia, Mr. McGay hoped the proposed amendments to the Petroleum Law at some time in 2011 “will improve the industry and attract more investment and development”.