Matra announces an operations update on progress to production from its 100% owned Sokolovskoe oil field

During a long-term test in 2011, Well A-13 established water-free oil production. Analysis of production and pressure data suggested that this well should be capable of oil production at around 100 bopd following the installation of surface production facilities and a down-hole electrical submersible pump.

Fabrication work on the production equipment for Well A-13 has commenced and the major items of equipment are expected to be on site by late February / early March. Production from the well will be restarted shortly thereafter. Once commissioned, it is anticipated oil production will commence at about 40 barrels per day. A work-over rig will then be brought in to install a down-hole electrical submersible pump to maximise production from the well which should increase to around 100 barrels per day.

The actual timings of commissioning of these facilities and production start-up is subject to change due to the spring snow thaw that can make transportation of heavy equipment to the well-site difficult and could extend the commissioning period by up to four to six weeks.

Drilling of the proposed production Well A-14 and the acquisition of the full field 3-D data are needed as the next steps to fully evaluate the Sokolovskoe oil field before proceeding with a full field development decision.

The Company anticipates that the proposed Well A-14 will confirm the presence of "Patch Reefs" that are expected to exhibit much better reservoir qualities and production characteristics than those seen in either Well A-12 or Well A-13 which are located on the flank of the field. The Company anticipates that the location of Well A-14 will allow it to intersect the oil reservoir at a higher elevation (i.e. at the top of the structure providing a thicker reservoir section) within the predicted reef build-up. The Company believes that the proposed Well A-14 to be relatively low-risk as it is located at the top of the structure, is up dip of proven oil in Well A-12 which flowed at 960 bopd on test and is located towards Well 309 on the adjacent permit which flowed at 1,850 bopd on test. If the proposed Well A-14 is successful, Matra believe it could add up to an additional 10 million barrels to the Company's contingent resources.

Completion of a full field 3-D seismic survey planned for the first half of 2012 will assist in confirming the full extent of the Sokolovskoe structure and assist in locating future drilling locations particularly in the North Eastern part of the field. Further seismic is not required before drilling Well A-14 as that area has good well and seismic control.

The Company will issue further updates as work progresses.

Matra's Managing Director, Peter Hind said:

"Good progress is being made on the fabrication and installation of production equipment on the Sokolovskoe oil discovery and we are excited about achieving oil production in the near future from our considerable oil reserves on this field."