Source: Oilbarrel.com                           Date: 13 August, 2010

Petro Matad has hit hydrocarbons with its first well in Mongolia. The company has struck oil at its Davsan Tolgol-1 wildcat well in Block XX where good reservoir quality is indicated by fast drilling breaks through all sandstone and conglomerate intervals. Petro Matad CEO Douglas McGay has 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 team.”

The company’s shares had been rising steadily before the drilling started and then rose with the successful outcome. But you never can tell. Even with great advances in technology the industry-wide success for wildcats is reckoned to be one out of six wells drilled. Mongolia is real frontier territory. Squeezed between China and Russia, Mongolia is twice the size of the UK and France combined yet very sparsely populated. It is a country of climatic extremes, with a short drilling season, creating some major logistical and technical problems for drilling crews.

We do not know as yet how much oil has been discovered. Provisional resource estimates for the DT-1 well were put at 122 million barrels. The significance of the strike, however, as Mr. McGay has said, is that it has de-risked the whole block, which is home to a further 14 prospects and where several further wells are planned.