Highlights

  • Gazelle-1 well testing exceeded expectations, producing 460 bopd of 43º API oil without water.
  • Heron-2 pumping initiated with beam pump, efficiently recovering remaining frack and acid wash fluids.
  • Heron-1 connected to national grid, cutting operating costs ~15% and reducing carbon emissions.

Petro Matad (LSE:MATD) is a Mongolian-focused oil exploration and production company. The company has a 100% working interest and operatorship in Matad Block XX, which spans 214 square kilometres in eastern Mongolia.

Gazelle-1 Well Testing Exceeds Expectations

The company has reported that testing at the Gazelle-1 well has exceeded initial expectations. Operations commenced in early October following the relocation of a service rig from the nearby Heron-2 site. An 8-metre section of the Tsagaantsav Formation, between 2,057 and 2,065 metres MD, was perforated, enabling gas and oil to flow to the surface without artificial lift.

During testing, the first flow period on a 1/8-inch choke stabilized at 160 bopd, the second period on a 3/16 inch choke achieved 300 bopd, and a 1/4-inch choke produced approximately 460 bopd. No formation water was detected, and the oil had a gravity of 43º API, similar to Heron-1 crude. The well has been shut-in to collect pressure build-up data, with the rig remaining on site to install the completion string. Petro Matad is targeting Gazelle-1 production start-up before the end of October, using equipment provided by PetroChina to expedite completion.

Plans to test the Gobi Bear-1 well have been deferred to April 2026 due to the prioritization of Gazelle-1 completion before the winter shutdown.

Heron-2 Finalisation

Pumping at Heron-2 initiated after a beam pump and temporary offloading facilities were installed. The beam pump is expected to recover remaining frack and acid wash fluids more efficiently than the previous swabbing operations conducted by DQE. This approach aims to complete the well clean-up, determine the flowing formation fluid, and assess the well’s rate capability more quickly and cost-effectively.

Heron-1 Electrification Project

The Heron-1 production facility is now connected to the national electricity grid. The newly commissioned 10kV transmission line, supported by the upgraded provincial power plant, supplies electricity to Heron-1 and several other wells in Block XX. Planning has begun for potential grid connections for Heron-2 and Gazelle-1. Final commissioning and certification are ongoing, with energization targeted for mid-October. Switching from diesel generators is expected to reduce operating costs by an estimated 15% and lower emissions.

Management Comments

Mike Buck, CEO of Petro Matad, stated:

*"We are delighted that the results from the Gazelle-1 well test have exceeded our expectations, and we are now prioritising getting the well onstream as it shows the potential to significantly increase our daily production and revenue.

We are also glad to see the start of an efficient down hole clean up at Heron-2 which should give us the definitive results on flowing fluid and well rate that we seek.

We are disappointed that we will not be able to test Gobi Bear-1 during this operational season but there is minimal additional cost to remobilise for this activity in 2026 and right now, given the enthusiasm with which Gazelle-1 has tested, the production addition must be our first priority.

The Company is very grateful to its field staff who are once again executing a very busy programme with dedication and diligence."

Share Performance of MATD

The company is currently trading at GBX 1.08, up 30.12% from its previous close of GBX 0.83