Petro Matad announced the results of well testing operations at its Heron-1 oil discovery in the Block XX on 24 October 2019. DST2 flowed oil at a peak rate of 821 b/d. DST1 did not flow naturally but proved at least a 70 m oil column in the well.   Two separate Interval tests (DST) were chosen based on the petrophysical analysis of log data acquired over the 77 m of potential oil reservoir in the Lower Tsagaantsav Formation.  The first test was performed over a 3 m interval at 2,872 m, near the base of the sands seen in the well. The test result indicated this zone to be tight with very limited inflow recorded but oil was present in the test string and it approved an oil column height of at least 70 m in the well. The Company will evaluate if improvements in permeability could be achieved to allow this zone to flow.   The second test was performed over a 12 m interval from 2,834 m in the upper portion of the Lower Tsagaantsav Formation and flowed oil at a peak rate of 821 b/d. The zone flowed oil and some associated gas to surface without the need for any artificial lift. This is exceptional for the Tamtsag Basin where only a few of the hundreds of wells drilled have had the capability to produce oil to surface on natural flow. For the main flow period, the well was choked back on an 0.3-inchchoke to optimise the collection of pressure data. Through this period, the well flowed at an average rate of 200 b/d of oil with a well head flowing pressure of 250 psi. The oil recovered is very light, with an API gravity of 46 degrees making it one of the lightest oils recorded in the basin.   Petro Matad had assigned a pre-drill resource estimated for the Heron structure of 165 million barrels of in place oil, with 25 million barrels (P50) recoverable resource, based on a recovery factor of 15%. The Heron-1 flowrate is very encouraging and could indicate that the assumed recovery factor is too conservative, however more wells will be required to prove up the total volumes in the structure.  The Company will now focus its activities on incorporating all the data it has gathered in its 2019 drilling campaign, and in particular the Heron-1 results, into a rapid reinterpretation of Block XX and will then engage with the Mongolian government to secure an Exploitation Licence in order to be able to put Heron-1 on to production in 2020, to pursue the development of the discovery and to investigate further the resource potential of the now proven continuation of the Tamtsag Basin petroleum system into Block XX.  Petro Matad spudded Heron-1 on 19 July 2019 in the Tamsag Basin, Mongolia. The well is situated at the Heron prospect which lies near the boundary between Block XIX and XX within the Block XX. The well was planned to be drilled to a PTD of 3,050 m with the objective of exploring the hydrocarbon potential of the extension of proven oil in the Tolson Uul oil field (or 19-46 oil field) that spills updip into Block XX, and is targeting the Tsagaantsav Formation of the Upper Jurassic - Lower Cretaceous clastic play within the area. DQE International 40105 rig is used for the drilling operation.   On 9 September 2019, Heron-1 reached a TD of 2,960 m with oil and gas shows in the Lower Tsagaantsav Formation. The well hit the top Lower Tsagaantsav reservoir at 2,803 m, only 5 m shallower than the pre-drill prognosis. Logs data indicated a 77 m gross interval of potential reservoir between 2,803 and 2,880 m, which was predominantly sandstone interbedded with shales and siltstones. Within this interval the logs data also define better porosity and permeability reservoir in three zones with a total gross thickness of 22 m (14 m net).   Petro Matad started testing operations at the Heron-1 well in Block XX in early October 2019. The DQE Testing Rig #1 was mobilized from Block XIX to the Heron-1 location. If required, reservoir stimulation equipment is in Block XIX and is readily available.   Heron prospect is one of the 5 lease line prospects in the 2018 Programme in Block XX of Petro Matad. The 5 prospects include Gazelle, Heron, Antelope, Wild Boar and Marmot, among the which, 3 high-graded prospects of Gazelle, Heron and Antelope were estimated with 50-75% chance of success. The prospects area is covered by 2D and 3D seismic and Heron prospect is estimated to contain 25 MMbo of Mean Prospective Recoverable Resource, and it is the continuations of producing trends or structures on Block XIX. Adjacent infrastructure facilitates would help quick development in the event of success.  Background Information  Tolson Uul oil field (or 19-46 oil field) is immediately to the north of the Heron prospect in Block XIX. The field was discovered by SOCO (USA) in 1995, and brought onstream on 11 February 1998, with the first crude exported to the Aershan oil field pipeline in China by truck. Once in this pipeline, the crude is pumped to a railroad terminal on the Moscow-Beijing railroad. It is then loaded from the pipeline into tank cars and transported to the Hohhot refinery for processing. on 1 April 2005, the field was transferred to PetroChina.   Two fields Tolson Uul and Tolson Uul North in the Block XIX, as of August 2014, PetroChina-Daqing had produced crude of 500 thousand tons in Block XXI and XIX, exceeding the scheduled target, according to news report in August 2014.  Petro Matad was awarded PSCA Block XX in 2006. In September 2011, the company has received approval from the Petroleum Authority of Mongolia (PAM) to have a two-year extension to its Production Sharing Contract (PSC) on Block XX. All current conditions of the Production Sharing Contract remain valid during the period of the extension, which is renewable for further terms after 19 July 2013.  Petro Matad is the parent company of a group focused on oil exploration, as well as future development and production, in Mongolia. The Group holds sole operatorship of three Production Sharing Contracts with the Government of Mongolia. Block XX has an area of 10,340kmÂ² in the far eastern part of the country. Blocks IV and V are located in central Mongolia. Block IV covers approximately 29,000kmÂ² and Block V approximately 21,150kmÂ².  Petro Matad drilled two NFWs in 2018 with drilling objective in the Jurassic â Cretaceous Play, but the both are failed to achieve oil/gas discoveries. The first well, Snow Leopard-1, is situated in Block V in the Taats Basin, as a basin play opener, was spudded on 9 July 2018 and completed reaching a TD of 2,930 m as a dry hole on 20 September 2018. The second well, Wild Horse 1, is situated in Block IV in the Baatsagaan Basin, was spudded on 23 October and completed reaching a TD of 1,490 m as a dry hole on 26 November 2018.
Heron 1 nfw in Block XX, in NE Mongolia, 1st DST on a section at the base of the Lwr Cretaceous Lower Tsagaantsav fm sands proved an oil column of at least 70m, but the zone was tight with very limited inflow, 2nd DST flowed 821 b/d of 46Â° API oil from upper portion of the sands, with no artificial stimulation. The discovery has proven a continuation of the petroleum system in the Tamsag basin from producing oilfields operated by PetroChina in Block XIX farther north TD=2960m,