Source: Petro Matad                      Date: 11 November, 2010

Petro Matad  has signed an initial contract with DQE International (DQE) to drill up to two exploration wells on the company's Block XX.  DQE is the drilling and oilfield services subsidiary of CNPC Daqing Petroleum, and has extensive experience of drilling in the Tamsag basin, of which Block XX is a part. The drilling rig to be used is currently in the locality and is being mobilized to Block XX, with spudding of the first well to occur as soon as is possible.  The DQE rig is partially winterized and, under normal Mongolian weather conditions, is expected to allow drilling to continue until mid-December.

The first well to be drilled is Davsan Tolgoi 4 (DT-4).  This will test a four-way fold closure that is part of a fault block prospect named Davsan Tolgoi West.  The Davsan Tolgoi West prospect is separate from the Greater Davsan Tolgoi prospect, where DT-1, DT-2, and DT-3 (the "Three Well Program") were drilled by Petro Matad earlier this year.

By drilling DT-4, the company will evaluate a second prospect within the current inventory of 14 leads and prospects in Block XX.  DT-4 is scheduled to be completed before mid-December, but mid-winter conditions in Mongolia are unpredictable and can be severe.  Accordingly, the company is reluctant to forecast the possibility of commencing what would be a fifth well, DT-5, in calendar year 2010 although the contract with DQE extends to drill a further well using the same rig.