Source: Petro Matad Limited                     Date: 21 July, 2010

The Petro Matad Davsan Tolgoi-1 (DT-1) exploration well reached a final measured depth of 1,220m on 14 July.  The well passed through the Tsagaantsav formation from 1,075m to 1,146m, then entered metamorphic basement.  The entire 71m section of the Tsagaantsav formation contained oil shows and elevated mud gas, with indications of live oil through six sandstone and conglomerate units totaling about 35m in aggregate.  Several of these intervals included very good shows that included cut, fluorescence, oil staining and a strong petroliferous odor.  Good reservoir quality is indicated by fast drilling breaks through all sandstone and conglomerate intervals. 

Wireline logging will be carried out on the DT-1 well and following completion of that process the drill will move to DT-2. Subject to Board consideration and approval, DT-2 is to be a 2,000m test of the lower Tsagaantsav that is located 4 km west of DT-1 within an independent structural closure, and adjacent to the Tamsag Basin generative area.

CEO Douglas McGay said, "To have achieved success on the first well has been both a significant achievement for our company and Mongolia, and also a tribute to our technical teams.  Although the scientific testing and analysis of the discovery is only just commencing, DT-1 has gone a long way towards proving that the Davsan Tolgoi Prospect is, in total, as viable a target as first hypothesized.  Not only have we encountered significant hydrocarbons, the increase in our scientific knowledge will lessen the risks associated with further wells. It also adds confidence to our assessment of the other leads and prospects on Block XX, and the other 6 sub-basins in Block XX that are still to be explored and tested."